Archana Ajay Mittal v. Asstt. CIT

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The Tax Publishers2015 TaxPub(DT) 4984 (Mum-Trib)div class=Section1> Archana Ajay Mittal v. Asstt. CIT INCOME TAX ACT, 1961 --Penalty under section 271(1)(c)--Concealment or furnishing of inaccurate particulars of incomeAddition having no nexus of borrowed fund with interest income --The AO found that the assessee while arriving at income from other sources had reduced certain amount on account of interest paid from the interest received. As most of the interest paid by the assessee was @ 10%, the deduction on account of interest expenses was allowed @ 10% to the extent of the utilization of interest bearing funds utilised for the purpose of earning income and the remaining was added back. The AO had disallowed the expenditure on the ground that the assessee had not established any nexus of the borrowed funds with the interest income. The AO initiated penalty proceedings under section 271(1)(c) for filing inaccurate particulars of income and thereby concealment of income. *Held:* Though the assessee could not establish with the convincing evidence before the AO with dates of the transactions to show that the borrowed funds were exclusively utilized for earning of interest income, however, taking into consideration the other facts that the assessee was an individual lady and did not know the intricacies of the Income Tax Law and further that during the year, the assessee had not only repaid some of the borrowed funds but the funds advanced by her to some of parties were also repaid back to her. There was no allegation that the borrowed funds were utilized for some other purpose. Merely because the assessee could not establish one by one nexus and as such, the disallowance was made by the AO that itself was not sufficient to hold that the assessee had furnished inaccurate particulars of income or had concealed her income. In view of the above, penalty levied was not sustainable. Income Tax Act, 1961, Section 271(1)(c) *Relied:*CIT v. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC) *REFERRED :* FAVOUR : In assessee's favour A.Y. : 2007-08 IN THE ITAT, MUMBAI A BENCH SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2015 TaxPub(DT) 4984 (Mum-Trib)div class=Section1>

Archana Ajay Mittal v. Asstt. CIT

INCOME TAX ACT, 1961

--Penalty under section 271(1)(c)--Concealment or furnishing of inaccurate particulars of incomeAddition having no nexus of borrowed fund with interest income --The AO found that the assessee while arriving at income from other sources had reduced certain amount on account of interest paid from the interest received. As most of the interest paid by the assessee was @ 10%, the deduction on account of interest expenses was allowed @ 10% to the extent of the utilization of interest bearing funds utilised for the purpose of earning income and the remaining was added back. The AO had disallowed the expenditure on the ground that the assessee had not established any nexus of the borrowed funds with the interest income. The AO initiated penalty proceedings under section 271(1)(c) for filing inaccurate particulars of income and thereby concealment of income. Held: Though the assessee could not establish with the convincing evidence before the AO with dates of the transactions to show that the borrowed funds were exclusively utilized for earning of interest income, however, taking into consideration the other facts that the assessee was an individual lady and did not know the intricacies of the Income Tax Law and further that during the year, the assessee had not only repaid some of the borrowed funds but the funds advanced by her to some of parties were also repaid back to her. There was no allegation that the borrowed funds were utilized for some other purpose. Merely because the assessee could not establish one by one nexus and as such, the disallowance was made by the AO that itself was not sufficient to hold that the assessee had furnished inaccurate particulars of income or had concealed her income. In view of the above, penalty levied was not sustainable.

Income Tax Act, 1961, Section 271(1)(c)

Relied:CIT v. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2007-08

IN THE ITAT, MUMBAI A BENCH