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Issues involved:
The issue involves the confirmation of the order passed by the CIT (A) canceling the penalty levied u/s 271(1)(c) amounting to Rs. 11,37,949 by the Assessing Officer in respect of the addition, which stood confirmed. Summary: The Tribunal, in paragraph 5 of its order, analyzed the matter comprehensively. It acknowledged that the assessee disclosed the claim of interest u/s 36(1)(iii) and had provided explanations for the same. The Tribunal noted that the assessee had previously claimed the deduction, which was allowed by the CIT (A) and later restored by the ITAT. The Tribunal emphasized that the disallowance of interest did not imply concealment of income or inaccurate particulars by the assessee. It highlighted that the onus was on the Revenue to prove the falsity of the explanation offered by the assessee, which was not substantiated. Additionally, the Tribunal referred to a decision stating that a claim admitted by the High Court as a substantial question of law cannot be considered frivolous or mala fide for penalty u/s 271(1)(c). Ultimately, both the CIT (Appeals) and the Tribunal concluded that it was not a suitable case for imposing a penalty under Section 271(1)(c) of the Act, leading to the dismissal of the appeal.
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