TaxTMI 
TaxTMI 
TaxTMI 
2019 (1) TMI 930
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....(A) in view of the ratio laid down in the case of Manjunatha Cotton & Ginning Factory [359 ITR 565 (Kar.)] and therefore, the penalty levied by the A.O. in respect of the above addition is bad in law. 2] The learned CIT(A) erred in confirming the levy of penalty u/s.271(1)(c) in respect of the disallowance of interest u/s.36(1)(iii) of Rs. 2,66,982/- made by the A.O. on the ground that the assessee had utilized loan funds for construction of shed which was transferred to the brother of the assessee. 2.1] The learned CIT(A) failed to appreciate that mere making of an incorrect claim without concealing any facts does not amount to furnishing of inaccurate particulars as held by Hon'ble S.C. in the case of Reliance Petroproducts Pvt. Ltd. [322 ITR 158] and hence, there was no reason to levy penalty u/s.271(1)( c) in respect of the above disallowance. 2.2] The learned CIT(A) erred in not appreciating that the explanation given by the assessee that 'the shed was constructed by the assessee during the year for his own business purposes, however, the same was transferred to his brother as on 31.03.2001 due to unfavorable business prospects and hence, the disallowance of inte....
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....ditions and the order of Tribunal in ITA No.710/PN/2013, dated 31-03-2016 and submitted that the additions (1) Rs. 8,50,861/- on account of inflated purchases, (2) Rs. 2,30,000/- on account of undervaluation of closing stock, (3) Rs. 6,50,000/- on account of adhoc disallowance towards expenses debited to P&L account, (4) 2,66,982/- on account of interest u/s.36(i)(iii) of the Act, (5) Rs. 75,000/- on account of addition u/s.68 of the Act and (6) Rs. 2,11,000/- stands deleted/partly allowed by the order of CIT(A)/Tribunal and therefore, the levy of penalty on these additions shall not arise. Further, he submitted that these are the additions made by the AO and the penalty was initiated by the AO. Therefore, in view of the order of the Tribunal on all these additions, the penalty is unsustainable. Further, Ld. Counsel for the assessee relied on the orders of Pune Bench of the Tribunal in the case of Arya Hybrids Seeds Ltd. Vs. DCIT in ITA No.291/PUN/2013, dated 18-01-2017 for the A.Y. 2008-09 and in the case of Aarti Govind Talerja Vs. ACIT, dated 13-12-2017 for the A.Y. 2007-08. Referring to the way the addition of Rs. 5 lakhs was confirmed by the CIT(A) in lieu of the above 3 add....
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....ssee has incurred the expenditure relevant to assessment year 2001-02 when such proviso was not present in the statute. Therefore, we find no justification in the action of the Revenue in resorting to the disallowance of interest expenses. No disallowance is thus called for under section 36(1)(iii) of the Act. In the result, Ground No.2 of appeal of the assessee is allowed. 12............................ ............................. We do not find any substance in the premise taken by the CIT(A) in sustaining the addition. The assessee has furnished the confirmation letter as well as 7/12 extracts concerning the agricultural land showing the agricultural activity. This, in our view, is plausible and reasonable evidence to support the source in the hands of the lender. It is common knowledge that the agricultural produce are sold in cash. The impugned loan is very small having regard to the agricultural land available for cultivation. In view of these facts and considering the totality of circumstances of the case, the bonafides of loan of Rs. 75,000/- received from agriculturist brother deserves to be accepted. Accordingly, Ground No.3 of appeal of the assessee is allowed." ....
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....this ground also, assessee gets relief. 7.3 We find the Tribunal in the case of Arya Hybrids Seeds Ltd. Vs. DCIT in ITA No.291/PUN/2013, dated 18-01-2017 also had an occasion to delete the penalty u/s.271(1)(c) of the Act. We proceed to reproduce the findings given by the Tribunal here as under : "5. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. It is an undisputed fact that the assessee has not contested the additions made during the assessment proceedings. It is a trite law that levy of penalty is not automatic and every addition made during the assessment proceedings need not necessarily result in levy of penalty. The Hon'ble Supreme Court of India in the case of Commissioner of Income Tax Vs. Khoday Eswarsa and Sons reported as 83 ITR 369 has held that the assessment proceedings and penalty proceedings are two independent and separate proceedings. The Hon'ble Bombay High Court in the case of Commissioner of Income Tax Vs. Dharamchand L. Shah reported as 204 ITR 462 has held : "It is by now trite law that the assessment proceedings and penalty proceedings are two separate and distinct proceedin....