TaxTMI 
TaxTMI 
TaxTMI 
2016 (6) TMI 288
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....r levying penalty u/s.271(1) (c) of Income Tax Act, 1961 in routine and mechanical manner without considering the facts of the case. 2. The learned CIT (A) erred in not appreciating the facts that the Appellant has neither concealed the particulars of its income nor filed inaccurate particulars of its income and that the income has been assessed at a higher amount an account of (a) inadvertent omission in case of disallowance u/s.94(7) and (b) honest difference of opinion between the Appellant and the department as regards the disallowance of interest claimed u/s.36(1) (iii) of Income Tax Act, 1961. 3. The learned CIT (A) further erred in confirming the order levying penalty u/s.271(1)(c) of Income Tax Act, 1961 by holding that the explanation offered by the Appellant is both false and non bonafide without any evidence and merely on surmises, assumption and guesswork and with a biased and prejudiced mind. 4. The learned CIT (A) erred in not considering the judgment of Supreme Court in the case CIT Vs. Reliance Petro Products (P) Ltd. 2010 (322 ITR 158). 5. The Appellant therefore prays that penalty of Rs. 8,36,850/- levied u/s.271(1) (c) of Income Tax Act, 1961 be delet....
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.... of CIT v. S.A.Builders (2007)288 ITR 1(SC) and decision of Hon'ble Delhi High Court in the case of CIT v. Sahni Silk Mills Private Limited (2001)253 ITR 294(Del. HC). The A.O. rejected the contentions of the assessee-firm and held that the provisions of section 94(7) of the Act are very clear and hence there is no room for ambiguity. The AO held that the omission is not justified and it cannot be said that there was no willful neglect. The assessee-firm did not contest the issue of disallowance u/s 94(7) before the learned CIT(A). With respect to the disallowance of interest which is covered u/s 40A(2)(b) of the Act, the A.O. held that the assessee-firm was aware of the unreasonable transactions carried out by the assessee-firm with sister concern and the assessee-firm has flouted the provisions of Section 40A(2)(b) of the Act, and hence it cannot be said that there was no deliberate evasion of taxes on the part of the assessee-firm. With respect to the disallowance on account of interest paid, the A.O. observed that assessee has borrowed money at higher rate of interest and deployed the same to the sister concerns at lower rate of interest and hence an amount of Rs. 22,04,282/- ....
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....what has been made before the A.O. which are not repeated here for the sake of brevity. The learned CIT(A) rejected the contentions of the assessee-firm and confirmed the penalty levied by the A.O. u/s 271(1)(c) of the Act vide appellate orders dated 25.11.2011. The learned CIT(A) relied upon the decision of UOI v. Dharmendra Textile Processors (2008) 306 ITR 277(SC) while confirming/sustaining the penalty orders of the AO levying penalty of Rs. 8,36,850/- u/s 271(1)(c) of the Act. 5. Aggrieved by the appellate order dated 25.11.2011 of the learned CIT(A), the assessee-firm is in appeal before the Tribunal. 6. The learned counsel for the assessee-firm submitted that the learned CIT(A) confirmed the penalty levied by the A.O. u/s 271(1)(c) of the Act. The quantum appeal is filed before the Tribunal in ITA No. 424/Mum/2009 which has been dismissed by the Tribunal and the additions with respect to interest disallowance of Rs. 21,42,363/- have been confirmed by the Tribunal vide orders dated 17-07-2015, while the assessee-firm did not contest before the Tribunal disallowance u/s 94(7) of the Act in quantum proceedings as no grounds of appeal was taken before the Tribunal concerning d....
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.... (1979) 118 ITR 261 (SC). The learned Counsel for the assesseefirm submitted that the reliance placed by the Revenue in the case of Union of India v. Dharmendra Textile Processors [2008] 306 ITR 277(SC) and decision of Hon'ble Delhi High Court in the case of CIT v. Zoom Communication Private Limited(2010) 191 Taxman 179(Del. HC) is misconceived, but wherein the issue under the instant appeal was debatable and penalty is not leviable. 7. The learned D.R. submitted that the assessee-firm had furnished inaccurate particulars of income. It is a related party transaction whereby the assessee-firm has entered transactions with the sister concern to evade taxes by shifting the income to other sister concerns. The learned D.R. further relied on the orders of the learned CIT(A). The learned DR relied upon the decision of Hon'ble Supreme Court in the case of Union of India v. Dharmendra Textile Processors [2008] 306 ITR 277(SC) , decision of Hon'ble Delhi High Court in the case of CIT v. Zoom Communication Private Limited(2010) 191 Taxman 179(Del. HC) and decision of Hon'ble Supreme Court in the case of UOI v. Azadi Bachao Andolan (2003) 132 Taxman 373(SC). 8. We have considered the rival ....
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....r furnished any inaccurate particulars of income. No doubt there has been slip up in filing the claim u/s 94(7) of the Act but the same keeping in view the explanation submitted by the assessee-firm was an inadvertent omission and mistake which was not intentional or deliberate on the part of the assessee-firm or otherwise with an intention to defraud revenue to fall within four corners of rigours of penalty provisions u/s 271(1)(c) of the Act , and rather the assessee-firm came forward with an bona-fide explanation accepting the inadvertent mistake on its part and did not persue the litigation further. The case laws cited by the assessee-firm supports the contentions of the assesseefirm to take it out of rigours of penalty provisions u/s 271(1)(c) of the Act. With respect to the disallowance of interest expenses, the assessee-firm has duly disclosed the transactions of borrowing and lending of funds in the return of income filed with the Revenue and made complete disclosures about the same before the Revenue. The assessee-firm came forward with an explanation which is a bonafide explanation as set out above and it cannot be said that the assessee-firm has concealed particulars of ....