Tribunal overturns penalties for interest claim, citing lack of deliberate inaccuracy & justifiable reasons.

The Tribunal allowed all three appeals of the assessee, setting aside the penalties imposed under section 271(1)(c) for the claim of interest. The decision was based on the lack of deliberate inaccurate particulars and justifiable reasons for non-compliance, aligning with legal precedents and the principles laid down by the Supreme Court.

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Issues:
Appeals against penalty under section 271(1)(c) of the I.T. Act, 1961 on the claim of interest in the assessment years.

Analysis:

Issue 1: Confirmation of Penalty by Ld. CIT(A)
The Ld. CIT(A) confirmed the penalty under section 271(1)(c) based on the assessee's inaccurate particulars leading to a false claim of interest. The penalty was upheld despite the assessee's explanation of losses and difficulties in furnishing evidence due to disputes with the bank.

Issue 2: Assessee's Arguments
The assessee contended that the disallowed interest, not paid to the bank, would also be disallowed under section 43B. Citing precedents like M/s. Avanti Laboratories Ltd. and Shri S. Prasada Rao cases, it was argued that discrepancies in claims do not warrant penalties under section 271(1)(c).

Issue 3: Tribunal's Decision
The ITAT considered the facts and held that the disallowance of interest did not amount to deliberate furnishing of inaccurate particulars. Referring to the Supreme Court's decision in CIT vs. Reliance Petro Products, it was emphasized that unsubstantiated claims do not constitute inaccurate particulars justifying penalties.

Issue 4: Precedent of Heman Fan Components P. Ltd. Case
The Tribunal referred to the case of M/s. Heman Fan Components P. Ltd., where penalties were deleted due to justifiable reasons for non-compliance with the Assessing Officer's requirements. The Tribunal upheld the deletion of penalties based on similar reasoning and the absence of inaccurate particulars.

Conclusion:
The Tribunal allowed all three appeals of the assessee, setting aside the penalties imposed under section 271(1)(c) for the claim of interest. The decision was based on the lack of deliberate inaccurate particulars and justifiable reasons for non-compliance, aligning with legal precedents and the principles laid down by the Supreme Court.

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