Case Law Details
Shanti Chemsteel Pvt. Ltd. Vs DCIT (ITAT Delhi)
In course of proceeding before learned first appellate authority, a query was raised as to why the amount should not be disallowed under Section 43B of the Act as it was not actually paid during the year. From the explanation of the assessee and the material placed on record, it is discernible that interest was charged to assessee’s OD account by the bank and the assessee had increased its liability to that extent.
It is also the submission of the assessee that the OD account limit had been reduced to the extent of interest debited by the bank. To demonstrate this fact, assessee drew our attention to the ledger account copy. It is a fact on record that learned Commissioner (Appeals) has imposed penalty under Section 271(1)(c) of the Act, alleging furnishing of inaccurate particulars of income.
However, facts on record clearly reveal that all material relating to the interest component was furnished before the departmental authority. In fact, learned Commissioner (Appeals) has found the interest on OD account from the profit and loss account of the assessee.
Thus, in our considered opinion, the explanation of the assessee that it is a bona fide claim of deduction, appears to be reasonable. It is to be noted that penalty under Section 271(1)(c) of the Act is not automatic. If assessee offers reasonable explanation, then, penalty cannot be imposed.
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