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TMI Blog2015 (1) TMI 1374X X X X Extracts X X X X X X X X Extracts X X X X ..... . Similarly, the assessee has also given reasons for not making the provision for the interest on the loans taken by the erstwhile amalgamating companies in Note-13 of notes of account. AO has made the addition in respect of interest income by reproducing a wrong note No.13 instead of relevant note being note No.14. When the assessee has adopted a uniform policy and approach in respect of interest expenditure as well as interest income, then the claim of the assessee in not recognizing the interest income would not amount to concealment of particulars of income or furnishing of inaccurate particulars of income. The assessee has furnished the relevant explanation as well as details and the addition was made by the AO on the basis of expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome. Subsequently, the AO initiated proceedings under section 271(1)(c) and levied the penalty of ₹ 23,55,377/- being 100% of tax sought to be avoided. The assessee challenged the action of the AO before the CIT(A) and contended that the assessee has neither concealed any particulars of income nor furnished inaccurate particulars of income because the assessee itself had given the explanation in the notes on account regarding non-inclusion of the interest due to the merged entity because the interest on such loans was not accrued for the year under consideration as the terms and conditions after the amalgamation was not finalized. CIT(A) did not accept the explanation and contention of the assessee and confirmed levy of penalty. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that the assessee has taken a uniform decision and has not made any provision for interest expenditure payable on the loans/ICDs taken by the erstwhile amalgamated companies. He has referred to Note No.13 to 14 of Notes on account and submitted that the assessee has fully disclosed all the details and material facts. Therefore, there is no concealment of particulars of income or furnishing of inaccurate particulars on the part of the assessee . In support of his contention he has relied upon the following judgments:- 1) Cement Mfg. Co. of India Ltd. vs. ACIT (124 ITR 15); 2) CIT vs. U.P. state Industrial Development Corporation Ltd. (225 ITR 703)(SC); 3) CIT vs. Reliance Petrochemicals Pvt. Ltd. (322 ITR 158 and at 165)(SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed in this account and such loans are considered good and no provision for the same are made. 4.1 It is undisputed fact that the merger took place during the year under consideration and consequent to the event of merger all the assets and liabilities of the erstwhile amalgamating companies were to be re-valued. Since the negotiations were going on regarding the finalization of terms and conditions of re-payment of loans granted by erstwhile amalgamating companies, therefore, the assessee took a decision not to recognize the interest income on such loans pending finalization of terms and conditions and re-payment with other parties. As it is clear from the note No.13 that a uniform decision was taken by the assessee with respect to int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstead of relevant note being note No.14. When the assessee has adopted a uniform policy and approach in respect of interest expenditure as well as interest income, then the claim of the assessee in not recognizing the interest income would not amount to concealment of particulars of income or furnishing of inaccurate particulars of income. The assessee has furnished the relevant explanation as well as details and the addition was made by the AO on the basis of explanation of the assessee in the notes of accounts therefore, not accepting the claim as well as the explanation of the assessee would not ipso facto lead to the conclusion that the assessee has concealed the particulars of income or furnished inaccurate particulars of income attra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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