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TMI Blog2019 (5) TMI 1309X X X X Extracts X X X X X X X X Extracts X X X X ..... both. Only in the penalty order passed under section 271(1)(c), he has stated that penalty is imposed for furnishing inaccurate particulars of income. AO has failed to record any satisfaction with regard to the nature of offence committed by the assessee requiring imposition of penalty under section 271(1)(c) of the Act. For this reason alone, the order imposing penalty under section 271(1)(c) of the Act is unsustainable. Disputed addition on the basis of which penalty imposed is on account of deduction claimed towards interest paid to partners @ 15% as against the admissible rate of interest of 12% - addition made is on account of differential interest amounting to 3% - the contention of the assessee is that the claim of deduction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties, we are of the view that the delay in filing the appeal is due to reasonable cause. Accordingly, we condone the delay and admit the appeal for adjudication on merit. 3. Brief facts are, the assessee, a partnership firm, is engaged in the business of builders and developers. For the assessment year under dispute, the assessee filed its return of income on 29th September 2008 declaring total income of ₹ 58,93,845. In the course of assessment proceedings, the Assessing Officer noticed that the assessee had debited an amount of ₹ 23,70,477, towards interest paid to the partners @15% on their share capital. He observed, as per the provision contained under section 40(b) of the Income Tax Act, 1961 (for shor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The learned Authorised Representative submitted, the claim of deduction on account of interest payment to partners @ 15% was due to a bona fide mistake. She submitted, in other assessment years the assessee had claimed deduction on account of payment of interest to partners as per the statutory provisions. She submitted, all the facts relating to interest payment were submitted before the Assessing Officer and nothing was suppressed. Therefore, the assessee cannot be accused of furnishing inaccurate particulars of income. Further, she submitted, while initiating penalty proceedings in the assessment order, the Assessing Officer has not recorded any satisfaction with regard to the offence committed by the assessee. Thus, she ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 271(1)(c) of the Act in the assessment order, the Assessing Officer has failed to record any satisfaction with regard to the nature of offence committed by the assessee requiring imposition of penalty under section 271(1)(c) of the Act. For this reason alone, the order imposing penalty under section 271(1)(c) of the Act is unsustainable. 8. Be that as it may, it is seen that the disputed addition on the basis of which penalty has been imposed is on account of deduction claimed towards interest paid to partners @ 15% as against the admissible rate of interest of 12%. Thus, the addition made is on account of differential interest amounting to 3%. In this regard, the contention of the assessee is that the claim of deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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