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Asstt. Commissioner of Income Tax, Central Circle-6,New Delhi Vs Sh. I. Ahmad, 1, Kapoorthala Complex,Aliganj, Lucknow (UP)
December, 22nd 2014
             DELHI BENCHES: `C' : NEW DELHI
 Before Sh. G. D. Agrawal, Vice President And Sh. H.S. Sidhu, JM
         ITA No. 5391/Del/2013 : Asstt. Year : 1994-95
         ITA No. 5392/Del/2013 : Asstt. Year : 1995-96
         ITA No. 5393/Del/2013 : Asstt. Year : 1996-97
Asstt. Commissioner of Income       Vs Sh. I. Ahmad,
Tax, Central Circle-6,                 1, Kapoorthala Complex,
New Delhi                              Aliganj, Lucknow (UP)

(APPELLANT)                             (RESPONDENT)
         CO No. 112/Del/2014 : Asstt. Year : 1994-95
         CO No. 113/Del/2014 : Asstt. Year : 1995-96
         CO No. 114/Del/2014 : Asstt. Year : 1996-97
Sh. I. Ahmad,                    Vs Asstt. Commissioner of Income
1, Kapoorthala Complex,             Tax, Central Circle-6,
Aliganj, Lucknow (UP)               New Delhi
(APPELLANT)                         (RESPONDENT)
              Assessee by : Sh. M. H. Khan, Adv.
              Revenue by : Sh. Vikram Sahay, Sr. DR
Dt. of Hearing : 15.12.2014      Dt. of Pronouncement:19.12.2014

Per Bench:
     These appeals by the Revenue and Cross Objections by the
assessee are directed against the order of learned CIT(A)-1, New Delhi
dated 23.07.2013 for the assessment years 1994-95 to 1996-97.
                                                     ITA No.5391 to 5393/Del/2013
                                                         & CO 112 to 114/Del/2014

2.    The only ground raised in all these appeals by the Revenue is
against the cancellation of penalty levied u/s 271(1)(c) as under:

        Assessment year                     Penalty levied
     1. 1994-95                             Rs. 5,66,500/-
     2. 1995-96                             Rs. 4,28,700/-
     3. 1996-97                             Rs. 8,85,300/-

3.    We have heard both the parties and perused the material before us.
The facts of the case are that the assessee claimed deduction for interest
against the investment made by the assessee in the shares of limitd
companies, which was disallowed by the Assessing Officer but allowed
by the CIT(A) and the ITAT. However, the Hon'ble Jurisdictional High
Court reversed the findings of the ITAT and upheld the disallowance of
interest. After the decision of Hon'ble Jurisdictional High Court, the
Assessing Officer levied penalty u/s 271(1)(c) in all the three years. The
CIT(A) cancelled the penalty with the following findings:

     "5.2 I have considered the relevant orders, submissions of the
     appellant and the relevant law on the subject. On facts, the
     allowability of interest on borrowed capital used for
     investments in share capital as expenditure for the purposes of
     computing income under the head `other sources' was settled
     law as per ruling of Hon'ble Supreme Court in the case of
     Rajendra Prasad Modi 115 ITR 519 (SC). In the present case,
     while the AO and the Hon'ble High Court have opined against
     the appellant, the CIT(A) and Hon'ble ITAT have ruled in
     favour of the appellant. Thus, it is a clear case of difference of
     opinion and the ruling of the Hon'ble Apex Court in CIT Vs
     Reliance Petroproducts Pvt. Ltd. 322 ITR 158 (SC) would be
                                                     ITA No.5391 to 5393/Del/2013
                                                         & CO 112 to 114/Del/2014

     applicable. Accordingly, penalty imposed cannot be sustained
     for the present and is cancelled."

4.    After considering the arguments of both the sides and the facts of
the case, we do not find any infirmity in the order of the CIT(A). On
these facts, the decision of Hon'ble Apex Court in the case of Reliance
Petroproducts Pvt. Ltd. 322 ITR 158 relied upon by the ld. CIT(A)
would be squarely applicable. In the above case their Lordships held as

     "Where there is no finding that any details supplied by the
     assessee in its return are found to be incorrect or erroneous or
     false there is no question of inviting the penalty under section
     271(1)(c). A mere making of a claim, which is not sustainable
     in law, by itself, will not amount to furnishing inaccurate
     particulars regarding the income of the assessee. Such a claim
     made in the return cannot amount to furnishing inaccurate

5.    In the case under appeal before us, the assessee claimed the
deduction of interest in respect of money invested by him in shares of
various companies. His claim was not accepted by the Assessing Officer
but was accepted by CIT(A) and ITAT. Hon'ble Jurisdictional High
Court reversed the findings of the ITAT and upheld the disallowance.
However, there is no finding that the details supplied by the assessee in
its return of income were incorrect or erroneous or false. Merely because
the claim of interest made by the assessee was not accepted, such a
claim in itself does not amount to furnishing of inaccurate particulars.

                                                    ITA No.5391 to 5393/Del/2013
                                                        & CO 112 to 114/Del/2014

6.    In view of the above, in our opinion, the CIT(A) rightly deleted the
penalty following the decision of Hon'ble Apex Court in the case of
Reliance Petroproducts Pvt. Ltd. (supra). Accordingly, his order is
upheld and the Revenue's appeals are dismissed.

7.    As regards the Cross Objections, it is submitted by the ld. Counsel
that if the Revenue's appeals are dismissed then the assessee would not
like to press the Cross Objections, Since we have dismissed the
Revenue's appeals, the Cross Objections furnished by the assessee are
treated as not pressed and rejected as such.

8.    In the result, the Revenue's appeals and the assessee's Cross
Objections are dismissed.
Order pronounced in the open Court on 19/12/2014.

           Sd/-                                             Sd/-
   (H. S. Sidhu)                                   (G. D. Agrawal)
JUDICIAL MEMBER                                   VICE PRESIDENT

Dated: 19/12/2014
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
                                                  ASSISTANT REGISTRAR

                                                          ITA No.5391 to 5393/Del/2013
                                                              & CO 112 to 114/Del/2014
                                                 Date     Initial
1.    Draft dictated on                      15.12.2014             PS
2.    Draft placed before author             15.12.2014             PS
3.    Draft proposed & placed before the                            JM/AM
      second member
4.    Draft discussed/approved by Second                            JM/AM
5.    Approved Draft comes to the Sr.PS/PS                          PS/PS
6.    Kept for pronouncement on                                     PS
7.    File sent to the Bench Clerk                                  PS
8.    Date on which file goes to the AR
9.    Date on which file goes to the Head
10.   Date of dispatch of Order.

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