ITAT Nagpur Judgments — February 2023

The Tribunal held that Section 43B is not applicable to interest payable on loans taken from the State Government. Since the provision for interest was on a loan from the Government of Maharashtra, the disallowance made by the AO was incorrect.

The Tribunal found that the CIT(Appeals) had considered evidence without giving the Assessing Officer an opportunity to examine them, violating Rule 46A. Many facts also remained unverified. Therefore, the issue was set aside to the Assessing Officer for fresh adjudication.

The Tribunal held that a search under Section 132 of the Income Tax Act is a mandatory prerequisite for levying penalty under Section 271AAB. Since no search was conducted in the assessee's case, the penalty was wrongly imposed.