Case Law Details
Bhawneshwar Kumar Vs ITO (ITAT Chandigarh)
In the instant case, the matter relates to claim of interest paid by the assessee to the partnership firm where the assessee is a partner and from where the assessee also draws the remuneration. Both the interest paid and remuneration received from the partnership firm has been duly reflected in the return of income and it is thus manifest that the same will falls under the head “Income from business/profession” and given that interest paid is more than salary income, the same has resulted in a business loss and which has further been set off against income under the other heads of income during the year and which has resulted in net loss. These facts are not been disputed by the Revenue and therefore, as far as furnishing of particulars of income including claim of expenditure are concerned, the same is evident from the return of income and the particulars so furnished cannot be said to be inaccurate. Given that there has been a delay in filing of the return of income, the AO is well within his right to restrict the carry forward of the net loss so claimed by the assessee, however, as far as claim of set off under the same head of income and against other heads of income during the year under consideration are concerned, the assessee is well within his rights to claim the same. Nothing has been stated in the order of the lower authorities nor brought to my notice which restricts such set off during the year under consideration. Further, I find that the issue of levy of penalty u/s 271(1)(c) in the instant appeal is pari-materia to A.Y 2014-15 wherein under identical set of facts and circumstances of the case, the penalty so levied by the AO has been deleted by the ld CIT(A), NFAC, New Delhi. In light of aforesaid discussions and in the entirety of facts and circumstances, the penalty so levied under section 271(1)(c) is hereby directed to be deleted.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
This is an appeal filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi, dated 22.06.2021 wherein the assessee has challenged the action of the ld CIT(A) in sustenance of penalty amounting to Rs.46,634/- u/s. 271(1)(c) of the Income Tax Act, 1961.
2. Briefly the facts of the case are that the assessment in this case was completed u/s 143(3) vide order dated 08.12.2015, wherein the assessed income was determined at Rs.5,76,381/- against the returned income of Rs.NIL. During the course of assessment proceedings, the Assessing Officer observed that the assessee has claimed loss from business and profession at Rs.15,25,972/- and same was adjusted against income under the head “income from house property” and salary income. In response to the notice issued to the assessee, it was submitted that the said loss relates to interest paid on debit balance by the assessee to the partnership firm M/s. B.K. Rope Store where the assessee is a partner. It was also submitted that as there is a delay in filing the return of income, the assessee is voluntarily withdrawing the said claim. The submission so filed by the assessee was considered but not found acceptable. As per the Assessing Officer, salary and interest is allowable by virtue of partnership deed as well as in terms of Section 40(b) of the Act. However, as far as adjustment of loss of interest paid to partnership firm is concerned, the same is not allowable against salary income and income from house property.
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