Penalty Cannot Be Levied for Erroneous DTAA Claim Due to Bona Fide Interpretation of Law

CIT Vs Indian Overseas Bank (Madras High Court) Summary: The Madras High Court considered appeals filed by the Revenue challenging a common order of the Income Tax Appellate Tribunal (ITAT) that had set aside the levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961 for Assessment Years 2006–07 and 2007–08. The Tribunal had confirmed the order of the Commissioner of Income Tax (Appeals) [CIT(A)], which had deleted the penalty imposed by the Assessing Officer. The dispute arose from the assessee, a nationalised bank, claiming the benefit of the Double Taxation Avoidance Agreem...