Case Law Details
Brief of the case
In the case of Income-tax Officer vs. M/s Besto Tradelink (P) Ltd ITAT has held that that quantum and penalty proceedings under the Act stand on a different footing and each and every disallowance/addition does not lead to automatic imposition of penalty as held by hon’ble apex court in Reliance Petroproducts Ltd. 322 ITR 158 (SC), Penalty cant not be levied once assessee made accurate particular of income. Further, Penalty cannot be levied on disallowances of interest amount and the one under section 40A(3) only on the basis of assessee’s accurate particulars already submitted on record in the course of scrutiny.
Facts of the case
1. The assessee had claimed depreciation relief on wind mills of Rs.2.40 crores. It would also claim deduction of interest payment amounting to Rs.60,892/- towards unsecured loans and freight payment in cash of Rs.8,63,903/-.
2. The Assessing Officer found that the assessee had not become owner of the windmills in question so as to claim depreciation relief. And that it had advanced interest bearing loans without charging any interest. He also found that its freight payments made in cash violated section 40A(3) of the Act. This made him to disallow all the three claims in assessment order dated 18.3.2004. He also initiated penalty proceedings against the assessee under section 271(1)(c) of the Act.
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