2023 (3) TMI 1644

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.... the facts and circumstances of the case and in law the Ld. CIT(A)-11, Pune erred in confirming the levy of penalty under section 270A (9) levied by the ACIT, Central Circle Kolhapur on the disallowance of interest u/s 36(1)(iii) though: a. The notice initiating the penalty proceedings being not clear as to the default committed by the appellant. b. There is no clear finding as to the default committed by the appellant in the assessment order. c. The disallowance was treated by the same AO in the immediate succeeding year to be 'underreporting of income' and not misreporting of income'. d. The disallowance being on estimation and on an agreed basis the penalty levied on account of 'misrepr....

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..... The AO has mentioned in the assessment order that assessee failed to submit the details and merely claimed that the said advances were given out of capital, non-interest bearing funds. However, the AO held that since assessee failed to establish that non-interest bearing funds were utilized for the above mentioned advances, the AO disallowed interest amount of Rs. 6,87,222/- out of the total interest expenses of Rs.26,59,606/- on the basis of interest charged by State Bank of India(SBI) which was 13.05%. The AO had initiated penalty under section 270A of the Act for mis-representation of the fact. Accordingly, after giving opportunity to the assessee, AO levied penalty under section 270A of the Act of Rs. 4,30,700/- invoking section 270A(....