Under reporting of income: inadmissible interest deduction that neutralises disclosed income and lacks material disclosure attracts penalty.

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Treatment of interest deduction under Income from Other Sources: an inadmissible claim of interest deduction that neutralises disclosed interest income and is not substantiated attracts penalty under the penalty regime for under reporting of income. Principle of consistency was held inapplicable where earlier returns were processed under summary intimation and no scrutiny assessment was carried out, because such intimation does not preclude re examination. Immunity clauses for bona fide explanations or estimation do not apply where the assessee fails to disclose all material facts, specifically the nexus between funds borrowed and loans given; on that factual failure the assessing officer's disallowance and consequent penalty were sustained.....