2022 (9) TMI 834

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....are that the assessment in this case was completed u/s 143(3) vide order dated 08.12.2015, wherein the assessed income was determined at Rs.5,76,381/- against the returned income of Rs.NIL. During the course of assessment proceedings, the Assessing Officer observed that the assessee has claimed loss from business and profession at Rs.15,25,972/- and same was adjusted against income under the head "income from house property" and salary income. In response to the notice issued to the assessee, it was submitted that the said loss relates to interest paid on debit balance by the assessee to the partnership firm M/s. B.K. Rope Store where the assessee is a partner. It was also submitted that as there is a delay in filing the return of income, t....

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....ng any appeal against the order of ld. CIT(A). Against the said finding and the order of the AO, the assessee went in appeal before the Ld. CIT(A), NFAC, New Delhi, and the ld CIT(A) confirmed the order of the AO and sustained the levy of penalty. As per the order of the ld CIT(A), the contention of the assessee that merely rejection of his claim of interest on debit balance paid by the assessee to the firm does not attract penalty u/s 271(1)(c) is not acceptable as the assessee has to explain his bona fide and proper reasons for making such claim at first place. It was also held by ld. CIT(A) that reasons or the basis where submitted by the assessee may not acceptable to the Assessing Officer but there has to be some basis or bona fide rea....

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.... of assessment proceedings, a letter was submitted by the assessee stating that the loss of claim may not be allowed to be carried forward as there was delay in filing the return subject to the fact that no penalty u/s. 271(1)(c) should be levied. It was further submitted that the fact that assessee has filed an appeal against the said action on the part of the Assessing Officer and the fact that the ld. CIT(A) has acted on the said appeal shows that the assessee has not agreed for such an addition. 6. Regarding the findings of the ld CIT(A) that the assessee has failed to file any bona fide reasons for making such a claim, it was submitted by the ld AR that the same flows from the partnership deed wherein the assessee receives interest fr....

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....ness loss and hence the said loss was set off against remuneration and house property income. Thus, the claim of the appellant in the facts and circumstances of the case, even if not acceptable does not attract penalty proceedings u/s 271(1(c) Assessment proceedings and penalty proceedings are two separate proceedings and I do not find any reason to levy penalty u/s 271(1)(c) in this case. In view of above, penalty of Rs. 52,606/- levied by the AO u/s 271(1)(c) is hereby deleted. The grounds of appeal, on merits, are hereby allowed." 7. Per contra, the ld. Sr. DR relied on the findings of the Assessing Officer as well as ld. CIT(A) and it was submitted that it is a case of agreed addition which has been made by the Assessing Officer and wh....