Revenue appeal dismissed for Assessment Year 2006-07. Quantum additions partially upheld. Assessee successful in interest and penalty appeal.

The revenue's appeal challenging relief provided to the assessee for Assessment Year 2006-07 was dismissed. The Ld. CIT(A) had deleted certain additions, including House Property Income and deemed dividend, which the revenue contested. Quantum additions made by the Ld. Income Tax Officer were partially upheld, with the revenue's appeal dismissed due to low tax effect under Circular No.03/2018. The Tribunal allowed the assessee's appeal regarding disputed interest additions and penalty under section 271(1)(c), finding no conclusive proof of inaccurate particulars of income.

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Issues:
1. Contesting relief provided to the assessee by the Ld. Commissioner of Income-Tax (Appeal)-20.
2. Quantum additions made by the Ld. Income Tax Officer-9(3)(3), Mumbai for Assessment Year 2006-07.
3. Applicability of low tax effect Circular No.03/2018 by CBDT.
4. Disputed interest additions and penalty under section 271(1)(c).

Analysis:

Issue 1: Relief Provided to the Assessee
The appeal by the revenue contested the relief provided to the assessee by the Ld. Commissioner of Income-Tax (Appeal)-20 for Assessment Year 2006-07. The Ld. CIT(A) had deleted certain additions, specifically those related to House Property Income and deemed dividend. The revenue further appealed against these deletions, while the assessee contested the interest addition through cross-objection CO No.117/Mum/2014.

Issue 2: Quantum Additions
The Ld. Income Tax Officer-9(3)(3), Mumbai made quantum additions to the assessee's income for Assessment Year 2006-07, totaling to Rs. 61,890/- on account of House Property Income, Rs. 6,04,069/- on account of Interest & Bank Charges, and Rs. 37,50,000/- on account of deemed dividend. The Ld. CIT(A) deleted the additions related to House Property Income and deemed dividend, leading to further appeals by the revenue and cross-objection by the assessee.

Issue 3: Applicability of Circular No.03/2018 by CBDT
The tax effect of the quantum additions was below the prescribed limit of Rs. 20 Lacs, falling under the low tax effect Circular No.03/2018 issued by CBDT. The revenue's appeal was dismissed based on the monetary limits set by the circular for filing appeals before various appellate authorities.

Issue 4: Disputed Interest Additions and Penalty
The interest additions made by the Ld. AO were contested by the assessee through cross-objections. The onus to prove the nexus between income earned and expenditure made lay on the assessee, which was not conclusively established. The penalty under section 271(1)(c) was imposed on the assessee for furnishing inaccurate particulars of income, but the Tribunal found that it did not warrant imposition of penalty, leading to the allowance of the assessee's appeal.

In conclusion, the revenue's appeal was dismissed, the assessee's cross-objection was also dismissed, and the assessee's appeal was allowed.

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