2013 (6) TMI 625

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....ring both the parties, we find that during assessment proceedings it was noticed that assessee has debited a provision of Rs. 3.5 crores in profit & loss account as provision for interest of Punjab Government & CONWARE. On enquiry, it was explained that it was a case of contra entries passed for memorandum purposes as the amount was shown as income. The reply was not accepted and a sum of Rs. 3.5 crores was added to the income of the assessee and penalty proceedings u/s 271(1) (c) of the Act were initiated. In response to the show case notice against penalty proceedings, it was submitted that it was a case of contra entry and in an y case detailed explanation was furnished before the Assessing Officer and, therefore, penalty was not leviabl....

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....stretch of imagination it can be called as concealment of particulars of income. The assessee has disclosed all the particulars and, therefore, penalty is not leviable. In this regard, he particularly relied on the decision of the Hon'ble Supreme Court in the case of C IT v Reliance Petro Products (P) Ltd 322 ITR 158 and Hon'ble Gujrat High Court in the case of C IT Vs Sambhav Media Ltd. Tax Appeal No. 589 of 2012. 6. On the other hand, the Ld. DR submitted that addition has already been confirmed by the Tribunal vide paras 23 to 25. The assessee was following mercantile system of accounting, therefore, interest was recoverable and there was no justification for making a debit entry in the Profit and loss account for the provision of int....

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....ich seems to be bonafide before the Assessing Officer for making this entry for provision towards interest. The penalty cannot be levied unless and until there is concealment or when the explanation which has been filed before the Assessing authority and which is found not bonafide. The Hon'ble Surpeme Court in the case of C IT v Cement Marketing Co of India Ltd v ACIT 124 ITR 16 had observed as under:- "If the view canvassed on behalf of the revenue were accepted, the result would be that even if the assessee raises a bona fide contention that a particular item is not liable to be included in the taxable turnover, he would have to show it as forming part of the taxable turnover in his return and pay tax upon it on pain of being held lia....