Tribunal reverses penalty decision under section 271(1)(c) in Assessee's favor

The Tribunal allowed the Assessee's appeal, reversing the decision to confirm the penalty under section 271(1)(c) of Rs. 11,00,922. The Tribunal found no deliberate concealment or contumacious conduct, citing frequent law amendments and lack of awareness of amended provisions for the assessment year. Relying on legal precedents, the Tribunal concluded that the interest disallowance was debatable, ultimately deleting the penalty in line with the decision in CIT vs. Reliance Petroproducts.

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Issues Involved: Confirmation of penalty u/s.271(1)(c) of the I.T.Act of Rs. 11,00,922.

Confirmation of Penalty u/s.271(1)(c): The appellant contested the penalty of Rs. 11,00,922 u/s.271(1)(c) stating no concealment or inaccurate particulars were furnished. The Assessing Officer disallowed interest of Rs. 27,83,624, leading to a net income of Rs. 79,246. The appellant, in the business of manufacturing, claimed the interest was for investment in shares. The Assessing Officer held the interest claim was not wholly for business purposes, disallowing it under section 14A. The CIT(A) affirmed this decision, stating borrowings were not for income generation. The appellant argued lack of awareness of amended provisions for the assessment year, citing past cases and legal precedents. The Tribunal found the issue debatable due to frequent law amendments, concluding there was no deliberate concealment or contumacious conduct. Relying on the decision in CIT vs. Reliance Petroproducts, the Tribunal reversed the CIT(A)'s decision and deleted the penalty.

Conclusion: The Tribunal allowed the appeal of the Assessee, reversing the decision to confirm the penalty u/s.271(1)(c) of Rs. 11,00,922.

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