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TMI Blog2021 (11) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... issue stands settled that in the event the payment is made before the due date of filing of returns under section 139(1) of the act, no disallowance could be made. Under such circumstances this issue is debatable and therefore levy of penalty is unwarranted. Interest advanced to related parties, the Ld. AO disallowed for the reason that, assessee did not elaborate the reasons to substantiate the interest charged at 12% on advances made to intergroup entities. Miscellaneous balances written off, the addition was made as no justification was provided. Hon'ble Supreme Court and various High Courts have held that writing off is a commercial decision by a businessman, which cannot be questioned by the authorities, unless it is found t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile sustaining the penalty and accordingly the penalty levied is opposed to law and principles of natural justice and accordingly the same is liable to be deleted. 3. The learned CIT (Appeals) erred in not following the judgment o the jurisdictional High Court in the case of Manjunatha Cotton Ginning Factory even though the same was cited before him and consequently the order of the CIT (Appeals) is opposed to law and liable to be set aside. 4. Without prejudice, the learned CIT (Appeals) ought to have appreciated that mere disallowance of the claim as made by the Appellant was not sufficient to justify the levy of penalty when the explanation given by the Appellant was not proved to be false and consequently the penalty as conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant information was not made available to substantiate the claim. Aggrieved by the order of Ld. CIT(A) assessee is in appeal before us now. 6. We have heard the submissions advanced by both sides in the light of records placed before us. At the outset, the Ld. AR placed reliance on the decision of Hon'ble Supreme Court in case of CIT vs. Manjunatha Cotton and Ginning Factory reported in 359 ITR 565. On the contrary the Ld. Sr. DR submitted that, merely because the notice under section 274 did not strike off irrelevant portion, does not vitiate the penalty proceedings. He submitted that the penalty is levied under both the limbs and therefore the notice issued by the Ld. AO cannot be quashed. We have perused the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the appeal proceedings that, there is no elaboration or reasoning given by the Appellant, against the disallowance of ₹ 3,98,792/- on account of interest charge @ 12% on the advances made to group-entities. In the facts and circumstances, the disallowance is upheld. 9.2. The assessee has not made adequate submissions in regard to this disallowance, before the AO. AO noted in the assessment order, the amounts written-off during the current year, have not been claimed/reflected as doubtful or bud, in the preceding years. The AO has not been convinced of the veracity of this claim by way of any relevant documents or explanation as to why the amounts were written-off and why debts have suddenly been given up. During the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is debatable and therefore levy of penalty is unwarranted. 7.3. In respect of interest advanced to related parties, the Ld. AO disallowed for the reason that, assessee did not elaborate the reasons to substantiate the interest charged at 12% on advances made to intergroup entities. 7.4. In respect of the miscellaneous balances written off, the addition was made as no justification was provided. Hon'ble Supreme Court and various High Courts have held that writing off is a commercial decision by a businessman, which cannot be questioned by the authorities, unless it is found to be false or bogus. In present facts, there is no such observation by the Ld. AO. In our view the disallowances, made in the assessment order does not cal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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