TaxTMI 
TaxTMI 
The A.O. has made addtion u/s. 40A(b) on account excess interest payment to relative (18%-12%= 6%. Penalty u/s. 271(1)(c) can levy on the above addition
Penalty on addition of 40A(b)
07 May 2011 
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Penalty under 271(1)(c) inapplicable to additions under 40A(2)(b) for excess interest to relative where no concealment.
Addition for excess interest paid to a relative was treated under Section 40A(2)(b) as a disallowance for related party interest; a penalty under Section 271(1)(c) was held inapplicable because the adjustment stemmed from an allowability issue rather than concealment or inaccurate particulars. (AI Summary)
Addition for excess interest paid to a relative was treated under Section 40A(2)(b) as a disallowance for related party interest; a penalty under Section 271(1)(c) was held inapplicable because the adjustment stemmed from an allowability issue rather than concealment or inaccurate particulars. (AI Summary)