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TaxTMI 
TaxTMI 
TaxTMI 
2011 (7) TMI 594
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....terest on FCNR loans from scheduled banks which had not been paid on or before due date of filing of return of income and, therefore, the same was liable for disallowance under section 43B(d) of the Income-tax Act, 1961. During the reassessment proceedings, the assessee had submitted all relevant details including details of unsecured loans and their subsequent repayment alongwith proof of payment and the Assessing Officer after taking into consideration all details had completed assessment under section 143(3). The Assessing Officer thereafter asked the assessee to explain as to why interest payment on account of scheduled banks was not added in the return of income or in the revised returns as the return had been revised twice. The assessee submitted that it was an inadvertent mistake and not a deliberate act as interest was allowable as deduction in the subsequent year. The assessee further submitted that the assessee had not claimed deduction which showed that the claim was bona fide. The Assessing Officer however did not accept the explanation and added the said amount of interest to the total income and also initiated penalty proceedings under section 271(1)(c) for concealmen....
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.... Institutions/State Financial Corporations/State Industrial Development Corporation. In terms of Explanation-4(a) to section 43B, Public Financial Institutions had the same meaning as assigned to in section 4A of the Companies Act. The list of Public Financial Institutions as per section 4A of the Companies Act was enclosed in the paper book which did not include HSBC or ICICI Bank. Ld. AR, therefore, submitted that there was no disallowance to be made under section 43B(d). The assessee had therefore, made no mistake in not disallowing claim on the basis of observations of the auditors. It was further submitted that assessment had been completed by the Assessing Officer under section 143(3) of the Act and even the Assessing Officer did not make disallowance despite there being auditor's report which was part of the assessment record which showed that even the Assessing Officer in the original assessment agreed that no disallowance was called for. It was also pointed out that in the reassessment made under section 147/143(3), the Assessing Officer had made disallowance under section 43B(d) which is incorrect. Had the assessee challenged the order of assessment it would have succeede....
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.... account of disallowance of interest on loans taken from Scheduled Banks amounting to Rs .64,36,494. The auditors in the audit report had mentioned that interest was disallowable under section 43B(d). However, the assessee did not make disallowance either in the original return or in the subsequent two revised returns in which some other mistakes were corrected. The return had been taken by the Assessing Officer for scrutiny and the assessment was completed under section 143(3), after scrutiny, in which even the Assessing Officer did not make any disallowance. Subsequently assessment was reopened by the Assessing Officer for escapement of income on the basis of audit report as mentioned earlier and in the reassessment, the interest was disallowed under section 43B(d). The Assessing Officer also levied penalty for concealment of income in relation to said addition, which in appeal has been confirmed by CIT(A). The issue is whether on the facts and circumstances of case levy of penalty can be justified. 4.1 It is a settled legal position as held by the Hon'ble Supreme Court in the case of Anantharam Veerasinghaiah & Co. v. CIT [1980] 123 ITR 457 that penalty proceedings are differen....
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....ublic Financial Institutions. Therefore, provisions of section 43B(d) are not applicable in case of the assessee. May be because of this reason, Assessing Officer in the original assessment under section 143(3), did not make disallowance on the basis of audit report. Subsequently, assessment was re-opened under section 147 on the basis of same audit report. Re-opening of the assessment, if challenged could be considered as bad in law as the same is based on change of opinion because the Assessing Officer had already completed assessment under section 143(3) after obtaining details of loans and advances and after considering the audit report also no disallowance had been made. Even in the re-assessment addition had been made under section 43B(d) which obviously is incorrect. Therefore, not making disallowance by the assessee on the basis of audit report in the original return or in the revised return or in the return under section 147 cannot be called a mistake though it could be argued that disallowance could have been made under the provisions of section 43B(e) which relates to interest from scheduled banks. The said clause (e) applies to interest on term loan which has not been d....