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TMI Blog2013 (10) TMI 1421X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee had defaulted in payment of bank interest to the tune of Rs. 7,99,20,976/-, which should have been added back. But the assessee had added back only Rs. 2,89,57,323/- as per the provisions of section 43B(e). The AO, therefore, added back Rs. 5,09,63,653/- to the income of the assessee. 3. Aggrieved the assessee approached the CIT(A) in penalty proceedings, who after deliberations held, "(a) They even after disallowed u/s. 43B, the assessed loss is at Rs. 79,57,815/-, (b) Prior to amendment by the Finance Act 2003 w.e.f. 01.04.2004 only interest on any "term loan" was disallowable. The appellant itself disallowed interest on "term loan" and could not take congnizance of the recent amendment and even the auditors did not point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the ITAT. 6. Before us, the DR submitted that the penalty has been levied because the assessee had failed to make complete disallowance as per the provisions of section 43B(e). He also submitted that since the loss had been reduced, the penalty become leviable, because it means that there is an addition. He also submitted that the CIT(A) did not go into the bonafides of the assessee to conclude the cancellation of penalty. He, therefore, submitted that the penalty is rightly levied by the AO. 7. The AR on the other hand submitted that the instant case pertains to assessment year 2004-05 and the amendment in section, adding the words "loan or advance" was inserted by the Finance Act, 2003, w.e.f. 01.04.2004 and even the auditor was unaw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly accepted his mistake on affidavit (Page No. 55 to 57) of the Paper Book in not ITA No 470/PN/2008 considering the unpaid interest on term loan while preparing the final account and statement of computation of return due to his ignorance of the amended provisions of Sec. 43B(e) regarding interest on loan from Scheduled Bank came to in effect from the A.Y. 2004-05 itself. We following the above cited decision of Pune Bench of the Tribunal thus find that in the present case, the mistake committed on the part of the consultant engaged for the purpose was bonafide in nature for which assessee cannot be penalised. We thus while setting aside the orders of the authorities below direct the A.O to delete the penalty levied u/s.271(1)(c ) at R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax authorities to dispute the bona fides of the explanation. Under the peculiar facts and circumstances it was to be held that the explanation of the assessee was bona fide and, hence, the case fell outside the ambit of the Explanation 1 to section 271(1)(c). In other words, no case was made out by the tax authorities to levy penalty under section 271(1)(c). Therefore, the orders of the tax authorities were to be set aside and the penalty levied by the Assessing Officer was to be cancelled". 9. The AR also placed reliance on the decision of PWC Pvt. Ltd vs ACIT, reported in 348 ITR 306 (SC) "... allowing the appeal, that the facts of the case were peculiar and somewhat unique. Notwithstanding that the assessee was a reputed firm and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the CA, who conducted audit and tax audit. In such a case, the bonafide of the assessee gets explained automatically. In these circumstances, the penalty, in our opinion cannot be levied on the assessee. In so far as the bonafides of the CA firm is concerned, even the Hon'ble Supreme Court has accepted the fact that certain "silly mistakes" can never be ruled out. We, therefore, cannot hold even the CA to be guilty of committing a mistake, because, the relevant expression was inserted in the relevant assessment year only which went unnoticed by everyone. 12. We, therefore, following the decisions of the Coordinate Benches and the Hon'ble Apex Court, sustain the order of the CIT(A). As a result, the grounds raised in the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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