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TMI Blog2022 (9) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... to the partnership firm where the assessee is a partner and from where the assessee also draws the remuneration. Both the interest paid and remuneration received from the partnership firm has been duly reflected in the return of income and it is thus manifest that the same will falls under the head Income from business/profession and given that interest paid is more than salary income, the same has resulted in a business loss and which has further been set off against income under the other heads of income during the year and which has resulted in net loss These facts are not been disputed by the Revenue and therefore, as far as furnishing of particulars of income including claim of expenditure are concerned, the same is evident from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(3) vide order dated 08.12.2015, wherein the assessed income was determined at Rs.5,76,381/- against the returned income of Rs.NIL. During the course of assessment proceedings, the Assessing Officer observed that the assessee has claimed loss from business and profession at Rs.15,25,972/- and same was adjusted against income under the head income from house property and salary income. In response to the notice issued to the assessee, it was submitted that the said loss relates to interest paid on debit balance by the assessee to the partnership firm M/s. B.K. Rope Store where the assessee is a partner. It was also submitted that as there is a delay in filing the return of income, the assessee is voluntarily withdrawing the said claim. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the said finding and the order of the AO, the assessee went in appeal before the Ld. CIT(A), NFAC, New Delhi, and the ld CIT(A) confirmed the order of the AO and sustained the levy of penalty. As per the order of the ld CIT(A), the contention of the assessee that merely rejection of his claim of interest on debit balance paid by the assessee to the firm does not attract penalty u/s 271(1)(c) is not acceptable as the assessee has to explain his bona fide and proper reasons for making such claim at first place. It was also held by ld. CIT(A) that reasons or the basis where submitted by the assessee may not acceptable to the Assessing Officer but there has to be some basis or bona fide reasons for making such claim and in the instant case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee stating that the loss of claim may not be allowed to be carried forward as there was delay in filing the return subject to the fact that no penalty u/s. 271(1)(c) should be levied. It was further submitted that the fact that assessee has filed an appeal against the said action on the part of the Assessing Officer and the fact that the ld. CIT(A) has acted on the said appeal shows that the assessee has not agreed for such an addition. 6. Regarding the findings of the ld CIT(A) that the assessee has failed to file any bona fide reasons for making such a claim, it was submitted by the ld AR that the same flows from the partnership deed wherein the assessee receives interest from the firm, the same is offered as business in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against remuneration and house property income. Thus, the claim of the appellant in the facts and circumstances of the case, even if not acceptable does not attract penalty proceedings u/s 271(1(c) Assessment proceedings and penalty proceedings are two separate proceedings and I do not find any reason to levy penalty u/s 271(1)(c) in this case. In view of above, penalty of Rs. 52,606/- levied by the AO u/s 271(1)(c) is hereby deleted. The grounds of appeal, on merits, are hereby allowed. 7. Per contra, the ld. Sr. DR relied on the findings of the Assessing Officer as well as ld. CIT(A) and it was submitted that it is a case of agreed addition which has been made by the Assessing Officer and which has also been confirmed by the ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding claim of expenditure are concerned, the same is evident from the return of income and the particulars so furnished cannot be said to be inaccurate. Given that there has been a delay in filing of the return of income, the AO is well within his right to restrict the carry forward of the net loss so claimed by the assessee, however, as far as claim of set off under the same head of income and against other heads of income during the year under consideration are concerned, the assessee is well within his rights to claim the same. Nothing has been stated in the order of the lower authorities nor brought to my notice which restricts such set off during the year under consideration. Further, I find that the issue of levy of penalty u/s 271(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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