The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the penalty holding that the difference in perception of viewing transactions could not amount to inaccurate particulars.
Assessee, Riyasat Palaces Limited filed its return of income on 30.09.2015 reporting a loss of
Rs.7,40,68,156 which was revised on 31.03.2016 with the revised loss of Rs.4,00,07,248. The loss declared was under the head “business and profession”.
In the course of the assessment, the Assessing Officer (AO) noted that the assessee has claimed an interest expense of Rs.9,41,951 against the loan taken from Raheja Developers Ltd. In this respect, the assessee submitted that it had taken an unsecured loan for payment of day-to-day expenses from its holding company at an interest of 15% per annum.
The Assessing Officer held that the loan taken by the assessee was not utilized for earning business income and, therefore, disallowed it while completing the assessment. In addition, he initiated the penalty proceedings for furnishing inaccurate particulars of income under Section 271(1)(c) of the Income Tax Act.
Assessee placed reliance upon the Supreme Court in the case of CIT vs. Reliance Petro Products (P) Ltd and contented that difference in perception of viewing that the transaction could not be branded as furnishing inaccurate particulars of income to impose a penalty under Section 271(1)(c) of the Income Tax Act.
Assessee also contended that penalty proceedings were separate proceedings and acceptance of an addition made in the quantum proceedings with no indicator that the assessee was exigible for levying of penalty.
Ram Dhan Meena, appeared on behalf of the respondent.
The two-member Bench of Saktijit Dey, (Vice President) and Girish Agrawal (Accountant Member) allowed the appeal filed by the assessee deleting the penalty holding that the that difference in perception of viewing a transaction could not amount to furnishing of inaccurate particulars.
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