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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI D. KARUNAKARA RAO & SHRI SANDEEP GOSAIN
सुनवाई की तायीख / Date of Hearing : 28.02.2017 घोषणा की तायीख /Date of Pronouncement : 17.03.2017 आदेश / O R D E R
PER D. KARUNAKARA RAO, AM:
This appeal filed by the assessee on 11.7.2014 is against the order of the CIT (A)-10, Mumbai dated 31.10.2013 for the assessment year 2010-2011.
In this appeal, assessee raised the only issue relating to the validity of the penalty u/s 271(1)(c) of the Act when the relatable addition involves estimations as well as multiple views. Bringing our attention to the facts of the case, Ld Counsel for the assessee submitted that the assessee received deposits in connection with the rent of premises and the said deposit was invested in HDFC Bank which paid interest income on accrual basis. Assessee is under obligation to offer the interest income at the end of the maturity of the bond. However, Assessing Officer proceeded to make addition on estimations and taxed the relatable interest income in year under consideration. This is the addition, which is the source for the present penalty u/s 271(1)(c) of the Act. 3. After hearing both the parties and on perusal of the orders of the Revenue Authorities as well as the relevant material placed before us, we find, this is the case of difference of opinion of the Assessing Officer and therefore, it is a debatable issue. As such, no penalty is levyable when the addition involves debate and estimations.
Therefore, in our view, this is not the fit case for levy of penalty. Further, we also find that the notice issued u/s 274 r.w.s 271(1)(c) of the Act dated 22.2.2013, the Assessing Officer did not tick the correct limb of clause (c) of section 271(1) of the Act. That suggests non-application of mind by the AO at the time of initiation of penalty proceedings. Considering the same, this appeal is required to be dismissed relying on the judgment of the Hon’ble jurisdictional High Court in the case of CIT vs. Shri Samson Perinchery in IT Appeal No.1154 of 2014 and others dated 5.1.2017 read with the judgment of the Hon’ble Karnataka High Court in the case of CIT vs. Manjunath Connon and Ginning Factory (359 ITR 565), which is relevant for the proposition that “penalty proceedings does not survive when the AO failed to delete from the standard profarma of the relevant clauses, such failure leads to an inference as to non-application of mind.”
Considering the above binding judgment on the issue / arguments of the Ld Counsel for the assessee, we find, the order of the CIT (A) is required to be reversed. For the said reasons, penalty has to be deleted. Accordingly we order. Thus, grounds raised
by the assessee are allowed.
4. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 17th March, 2017.