Income Tax Appeal: Penalty deleted under section 271(1)(c) upheld, share control intention debatable.

The appeal under section 260A of the Income Tax Act, 1961 regarding the deletion of penalty under section 271(1)(c) was allowed. The CIT(A) and tribunal held that the issue of disallowance under section 14A was debatable, favoring the assessee. The tribunal considered the intention of retaining control over shares as a factor but clarified it as the assessee's submission. The appeal was ultimately dismissed with no order as to costs, upholding the tribunal's decision that in debatable matters, it cannot be concluded that the assessee concealed income.

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"Whether the Income Tax Appellate Tribunal is justified in deleting the penalty of Rs. 17,84,593/- imposed by the assessing officer under Section 271(1)(c) on the ground that the assessee has not concealed its particulars of income and further whether the assessee has the shares of its principal company itself shows that the intention of the assessee was to retain control, the same being incidental?" Assessing officer imposed penalty under Section 271(1)(c) after disallowance under Section 14A for interest claimed under Section 36(1)(iii). CIT(A) allowed the assessee's appeal on the ground that the Section 14A issue was debatable; the Tribunal concurred, referring to precedent (Mimosa Investment Co. (P) Ltd. v. ITO) and held that, as a matter of law, "when the issue is a debatable one, it cannot be said that the assessee had concealed any particulars of income." Revenue's challenge failed. The Tribunal's remark suggesting the assessee acquired shares to "retain control" and that dividend earning was "incidental" was treated as the assessee's submissions; those observations are not binding. Appeal dismissed; no costs.

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