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आदेश/Order
Per Annapurna Gupta, A.M.:
The present appeal has been preferred by the assessee against the order dated 07.03.2016 of the Commissioner of Income Tax(Appeals)-2, Chandigarh [hereinafter referred to as ‘CIT(A)’] agitating the levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act').
In this case, the Assessing officer during the assessment proceedings found that the assessee had set of interest income earned from the FDRs against the project expenses. He observed that the expenditure relating to the project was required to be capitalized and that the assessee was not entitled to set off the interest income against the property expenditure. He,
ITA No. 677-Chd-2016- M./s Preet Land Promoters & Developers Pvt.Ltd, Mohali 2
therefore, disallowed the aforesaid claim of the assessee treating the
interest income separately under the head ‘income from other sources’ and
allowed the assessee to carry forward the expenditure relating to the
project till the competition of the project. The Assessing officer initiated
penalty proceedings u/s 271(1)(c) of the Act for claiming wrong deduction
/ set off of expenditure and, thereby, levied the impugned penalty.
The assessee unsuccessfully contested the appeal before the Ld.
CIT(A).
Before us, Ld. Counsel for the assessee has invited our attention to
the para 6.2 of the order of the CIT(A) and submitted that, in fact, the
assessee had taken Over Draft limit from bank. The assessee incurred
interest expenditure on the utilization of the amount out of the said over
draft limit. The said amount was used for the purpose of project only. The
assessee to maintain the said over draft limit had to furnish security to the
bank in the shape of the FDR upon which interest income was earned. The
assessee was of the bonafide belief that the interest income earned was
eligible for set off against the expenditure including that one spent on the
overdraft limit. It has been pleaded that the aforesaid claim of the assessee
was a bonafide claim and there was no intention to evade the tax. The Ld.
Counsel has submitted that even otherwise non-allowance of set off of the
interest income would go to increasing the claimed expenditure which the
assessee otherwise would have been entitled to claim on offering income
from the project at the completion stage. He, therefore, has submitted that
the assessee had no intention to furnish the inaccurate particulars of
income or conceal its income.
ITA No. 677-Chd-2016- M./s Preet Land Promoters & Developers Pvt.Ltd, Mohali 3
Considering the above submissions of the assessee , we are of the view that it is not a fit case for levy of penalty u/s 271(1)(c) of the Act as the assessee has proved his bonafide for the claim of the aforesaid set off of interest income. It has been held time and again that every disallowance
made by the Assessing officer does not suo moto attract penalty provisions. Considering the overall facts of the case, we are of the view, that it is not a fit case for levy of penalty u/s 271(1)(c) of the Act and the same is ordered to be deleted.
The appeal of the assessee is therefore, allowed.
Order dictated and pronounced in the Open Court immediately on completion of hearing.
Sd/- Sd/- (संजय गग� / SANJAY GARG) अ�नपूणा� गु�ता / ANNAPURNA GUPTA) �या�यक सद�य/ Judicial Member लेखा सद�य/ Accountant Member Dated : 11.12 .2018 “आर.के.” आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File
आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar