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Income Tax Appellate Tribunal, DELHI BENCH “G”, NEW DELHI
Before: SHRI R. K. PANDA & MS. SUCHITRA KAMBLE
Assessee by : Shri K. L. Aneja, Adv. Department by : Shri B. S. Rajpurohit, Sr. DR Date of hearing : 06-09-2018 Date of pronouncement : 06-09-2018 O R D E R
PER R. K. PANDA, AM :
This appeal filed by the assessee is directed against the order dated 19.09.2014 of the CIT(A), Muzaffarnagar relating to assessment year 2008-09.
Levy of penalty of Rs.33,000/- u/s 271(1)(c) of the I.T. Act, 1961 by the Assessing Officer which has been confirmed by the ld. CIT(A) is the only issue raised by the assessee in the grounds of appeal
3. Facts of the case, in brief, are that the assessee is a company and derives income from running of Rice Mills. It filed its return of income on 30.09.2008 declaring Nil income. During the course of assessment proceedings, the Assessing Officer observed that the assessee has debited a sum of Rs.10,18,745/- under the head “interest to Bank”. From the various details furnished by the assessee, the Assessing Officer observed that the assessee has given interest free loans to three parties totaling to Rs.45,15,960/- on which no interest has been charged. He, therefore, confronted the same to the assessee as to why proportionate interest should not be disallowed. Rejecting the various explanations given by the assessee, the Assessing Officer made addition of Rs.5,41,915/- to the total income of the assessee.
4. In appeal, the ld. CIT(A) restricted such disallowance to Rs.1,95,898/- and deleted the balance addition made by the Assessing Officer. The above action of the ld. CIT(A) was upheld by the Tribunal. Subsequently, the Assessing Officer initiated penalty proceedings u/s 271(1)(c) of the I.T. Act.
Rejecting the various explanations given by the assessee, the Assessing Officer levied penalty of Rs.33,000/- u/s 271(1)(c) of the I.T. Act on the ground that the assessee has furnished inaccurate particulars of its income and also concealed the particulars of such income. On appeal by the assessee, the ld. CIT(A) confirmed the penalty so levied by the Assessing Officer.
Aggrieved with such order of the ld. CIT(A), the assessee is in appeal before the Tribunal.
We have considered the rival arguments made by both the sides and perused the material available on record. In the instant case, we find the penalty of Rs.33,000/- has been levied on account of part disallowance of proportionate interest on interest free loans given to others. As mentioned earlier, the Assessing Officer had made disallowance of Rs.5,41,915/- which was reduced to Rs.1,95,898/- by the ld. CIT(A) and confirmed by the Tribunal. Under these circumstances, we have to see as to whether the penalty is leviable u/s 271(1)(c) or not. It is an admitted fact that the assessee had given full details of loans given to the persons without charging any interest. These loans are already shown in the Balance Sheet of the preceding years and there was no disallowance of interest on account of such interest free loans advanced.
Although, principle of res-judicata does not apply to the Income Tax proceedings, however, it is an undisputed fact that the loans are continuing in the Balance Sheet from the preceding years and these are not new loans and details were available with the Department.
The Hon’ble Supreme Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. reported in 322 ITR 158 has held that a mere making of claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. In view of the above discussion and considering the fact that out of the total disallowance of Rs.5,41,915/- an amount of Rs.1,95,898/- only has been sustained and balance amount has been deleted, therefore, we are of the considered opinion that it is not a fit case for levy of penalty u/s 271(1)(c) of the I.T. Act. We, therefore, set-aside the order of the ld. CIT(A) and direct the Assessing Officer to cancel the penalty.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open Court at the time of hearing itself i.e. on this 06th September, 2018.