2011 (6) TMI 968 - AT - Income Tax

Summary

Issues Involved: Confirmation of penalty u/s.271(1)(c) of the I.T.Act of Rs. 11,00,922.

Confirmation of Penalty u/s.271(1)(c): The appellant contested the penalty of Rs. 11,00,922 u/s.271(1)(c) stating no concealment or inaccurate particulars were furnished. The Assessing Officer disallowed interest of Rs. 27,83,624, leading to a net income of Rs. 79,246. The appellant, in the business of manufacturing, claimed the interest was for investment in shares. The Assessing Officer held the interest claim was not wholly for business purposes, disallowing it under section 14A. The CIT(A) affirmed this decision, stating borrowings were not for income generation. The appellant argued lack of awareness of amended provisions for the assessment year, citing past cases and legal precedents. The Tribunal found the issue debatable due to frequent law amendments, concluding there was no deliberate concealment or contumacious conduct. Relying on the decision in CIT vs. Reliance Petroproducts, the Tribunal reversed the CIT(A)'s decision and deleted the penalty.

Conclusion: The Tribunal allowed the appeal of the Assessee, reversing the decision to confirm the penalty u/s.271(1)(c) of Rs. 11,00,922.