2010 (11) TMI 1044

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....2. The factual compass in this appeal can be summarized as follows. The appellant is a company incorporated under the provisions of the Companies Act, 1956, and is engaged in the business of manufacturing of automobile spare parts. For the year under consideration, it filed a return of income on 28/10/04 declaring a loss of Rs. 42,77,980/-. The said return was subject to scrutiny assessment u/s 143(3) of the Act on 21/09/06 wherein the total loss was determined at Rs. 6,36,543/-. The only disallowance made by the Assessing Officer was on account of section 43B(e) of the Act with regard to interest outstanding to a scheduled bank of Rs. 36,41,437/-. The said addition has become final, since the assessee has not preferred any appeal against s....

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....essed income has remained a loss and thus, there was no effort on the part of the assessee to save taxes by deliberately making a wrong claim. It was, therefore, contended that the omission to make the disallowance in the return was a bonafide mistake with no intention to evade taxes. It is also pointed out that directors of the assessee company are technical persons and are not aware of the legal provisions and they bonafidely relied upon the professional advice and, therefore, did not make the impugned disallowance in the return of income itself. It has also been submitted that the concerned chartered accountant has furnished an affidavit in this regard, which has been summarily brushed aside by the CIT(A). In the course of hearing, learn....

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.... to be fulfilled. The Assessing Officer has to establish either that the assessee has concealed its income or the assessee has furnished inaccurate particulars of such income. It is a well settled proposition that making of a claim, which is unsustainable in law, by itself, would not result in levy of penalty u/s 271(1)(c) of the Act for concealment or furnishing of inaccurate particulars of income. 7. Factually speaking, in the present case, the disallowance of Rs. 36,41,047/-, made in terms of section 43B(e) of the Act, has resulted in the levy of penalty U/S 271(1)(c) of the Act. Section 43B(e) of the Act prescribes that no deduction on account of any sum payable by the assessee as interest on a term loan from a scheduled bank shall b....