UJJAL SINHA,KOLKATA vs. DCIT, CENTRAL CIRCLE 4(1),, KOLKATA

Per Pradip Kumar Choubey, Judicial Member:

This appeal filed by the assessee is directed against the order dated
05.08.2025 of the CIT (Appeals)-27, Kolkata [‘CIT(A)’] passed under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2011–12. 2. Brief facts of the case are that the assessee had filed his Return of Income u/s.139(1) of the Act for the A.Y. 2011-12 on 11/02/2012
declaring a total income of Rs.19,12,432/-. In the instant case, a search and seizure operation was conducted on 24.01.2012 in the residential premises of the assessee wherein no incriminating material was found.
Thereafter. the assessment was completed u/s 153A/143(3) of the Act on 31/03/2014 assessing the total income at Rs.92,12,430/- wherein the following two additions to the total income were made:
(i) Loan given from undisclosed sources

Rs.71,50,000/-
Ujjal Sinha

(ii) Disallowance of deduction claimed u/s 24(b)
Rs. 1,50,000/-
2.1
Based on the said disallowances additions, notice u/s. 271(1)(c) of the Act dated 23/08/2022 was issued by the Assessing Officer and the reply objecting to the same was duly submitted. Thereafter, the Assessing Officer passed the order u/s. 271(1)(c) of the Act on 31/03/2023 wherein a penalty of Rs.22,55,699/- being 100% of the amount of tax sought to be evaded was imposed.
3. Being aggrieved by the said order, the assessee filed an appeal before the Ld. CIT(A), who vide his appellate order dated 05.08.2025
confirmed the said penalty so levied by the Assessing Officer.
4. Being aggrieved and dissatisfied by the order of the Ld. CIT(A), the assessee has filed this appeal before us. The ld. AR submits that there was no concealment of income or inaccurate particulars of income. He further submits that the assessee had given a loan of Rs.71,50,000/- from his Indian Bank account no.701654811 maintained with Sarat
Bose Road Branch, Kolkata to the company namely M/s. Genesis
Advertising Pvt. Ltd. in which the assessee is a director and the said loan was given out of the funds received from the sale of house property by the assessee. He also submits that the said property was sold during the A.Y 2010-11 by the assessee and the sale proceeds was transferred to fixed deposit by the assessee and thereafter, during the assessment year under consideration, the said amount was withdrawn from the fixed deposit and loan was given to the company namely M/s. Genesis advertising Pvt Ltd. His submission is that the assessee duly submitted that the sale deed, fixed deposit statement, bank statement of Indian
Bank reflecting the said transaction of amount received on maturity of fixed deposit, bank statement of M/s. Genesis Advertising Pvt Ltd
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showing receipt of the loan of Rs.71,50,000/-. He further submits that there is no unexplained money or undisclosed source as alleged in the assessment order and the assessee duly explained the source of fund for giving the said loan of Rs.71,50,000/- and there is no question of any concealment of income or furnishing of inaccurate particulars of income by the assessee, hence the penalty levied u/s. 271(1)(c) of the Act is required to be deleted. With regard to the deduction of Rs.1,50,000/- claimed in the return of income u/s 24(b) of the Act on account of payment of interest on housing loan, the ld. AR submits that deduction was available only in respect of loan taken for purchase of house property and not against loan taken by mortgaging the house property.
He has placed reliance on the various decisions including the decision of CIT vs. Reliance Petroproducts Pvt. Ltd. (SC) [2010] 322 ITR 158, CIT vs.
Harshvardhan Chemicals and Mineral Ltd. (Raj) [2003] 259 ITR 212. 5. Contrary to that, the ld. DR supports the impugned order thereby submitting that there is no response by the assessee before the lower authorities.
6. Upon hearing the submissions of the counsels of the respective parties, we have perused the records and find that the addition made by the Assessing Officer was on account of loan given from undisclosed source and disallowance on account of interest on housing loan u/s 24(b) of the Act. It is pertinent to mention here that the assessee filed an appeal before the ld. CIT(A) against the assessment order but the assessee withdrew the said appeal on the ground that it was pending for long time. After confirmation of the order of the Assessing Officer by the ld. CIT(A), the penalty proceedings have been initiated. We further find that the submission of the assessee is that there is no concealment of income or furnishing of inaccurate particulars of income in the present case. We also find that the assessee had given a loan of Rs.71,50,000/-
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to M/s. Genesis Advertising Pvt. Ltd. and the said loan was given out of the funds received from the sale of house property by the assessee which was sold during the A.Y 2010-11 by the assessee and the sale proceeds was transferred to fixed deposit by the assessee and also during the A.Y
2011-12 the said amount was withdrawn from the fixed deposit and loan was given to the company M/s. Genesis advertising Pvt Ltd. It is pertinent to note that the assessee submitted that details of sale deed executed for transfer of property, statement of fixed deposit showing transfer of sale proceeds, bank statement of Indian Bank reflecting the transaction of the said loan of Rs.71,50,000/- with M/s. Genesis
Advertising Pvt Ltd. We also note that the loan was given by the assessee to the said company through proper banking channel and duly recorded in the books of account of the assessee. With regard to the deduction of Rs.1,50,000/- claimed in the return of income u/s 24(b) of the Act on account of payment of interest on housing loan, we note that said deduction was available only in respect of loan taken for purchase of house property and the assessee provided true and fully disclosure of details of income, loan details etc. We have gone through the cited decision of CIT vs. Reliance Petroproducts Pvt. Ltd. (supra), wherein the Hon’ble Apex Court has held as under:
“18. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars.
19. It was tried to be suggested that Section 14A of the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It was further pointed out that the dividends from the shares did not form the part of the total income. It was, therefore, reiterated before us that the Assessing Officer had correctly reached the conclusion that since the assessee had claimed excessive deductions
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knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; (i) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income.
20. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its Return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the Return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under Section 271(1)(c). If we accept the contention of the Revenue then in case of every
Return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under Section 271(1)(c). That is clearly not the intendment of the Legislature.”
6.1
Considering the above discussion and following the decision of Hon'ble Supreme Court, we hold that the penalty levied u/s 271(1)(c) of the Act is not justified in the case of the assessee as the assessee disclosed all relevant particulars of its income and there was no concealment of facts or filing of inaccurate particulars of income and also the authorities below have not brought any material to show that the assessee has concealed any particulars of its income or furnished inaccurate particulars. We, therefore, reverse the orders of authorities below and delete the penalty imposed under Section 271(1)(c) of the Act.
7. In the result, the appeal filed by the assessee is allowed.
Kolkata, the 13th November, 2025. [Rajesh Kumar]

[Pradip Kumar Choubey]
Accountant Member

Judicial Member

Dated: 13.11.2025. RS
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Copy of the order forwarded to:
1. Appellant -
2. Respondent -
3. CIT(A)-
4. CIT- ,

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By order