RABO INDIA FINANCE LTD, MUMBAI v. ACIT RG 1(3), MUMBAI

ITA 3356/MUM/2009 | 2001-2002
Pronouncement Date: 29-07-2011 | Result: Allowed

Appeal Details

RSA Number 335619914 RSA 2009
Assessee PAN AARCR6065R
Bench Mumbai
Appeal Number ITA 3356/MUM/2009
Duration Of Justice 2 year(s) 2 month(s) 8 day(s)
Appellant RABO INDIA FINANCE LTD, MUMBAI
Respondent ACIT RG 1(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 29-07-2011
Date Of Final Hearing 09-05-2011
Next Hearing Date 09-05-2011
Assessment Year 2001-2002
Appeal Filed On 21-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D : MUMBAI BEFORE SHRI R.V. EASWAR (PRESIDENT) AND SHRI RAJENDRA SINGH (ACCOUNTANT MEMBER) ITA NO.3356/MUM/2009 ASSESSMENT YEAR : 2001-02 RABO INDIA FINANCE LIMITED FORBES BUILDING 2 ND FLOOR CHARANJIT RAI MARG FORT MUMBAI-400 001. ..( APPELLANT ) P.A. NO. (AARCR 6065 R) VS. ASSTT. COMMISSIONER OF INCOME TAX RANGE-1(3) AAYAKAR BHAVAN MUMBAI-. ..( RESPONDENT ) APPELLANT BY : KANC HAN KAUSHAL SHRI DHANESH BAFNA AND SHRI JIGNESH DESAI RESPONDENT BY : SHRI M .R. KUSAL DATE OF HEARING : 20.7 .2011 DATE OF PRONOUNCEMENT : . O R D E R PER RAJENDRA SINGH (AM). THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER D ATED 25.2.2009 OF CIT(A) FOR ASSESSMENT YEAR 2001-02. THE O NLY DISPUTE RAISED BY THE ASSESSEE IN THIS APPEAL IS REGARDING LEVY O F PENALTY FOR CONCEALMENT OF INCOME UNDER SECTION 271(1)(C) OF THE INCOM E TAX ACT. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE FOR TH E RELEVANT YEAR THE ASSESSEE HAD FILED RETURN OF INCOME ON 30.10.2 001 SHOWING ITA NO.3356/M/09 A.Y:01-02 2 INCOME OF RS.42 96 10 800/-. THE ASSESSMENT WAS COMPLETED ON 30.1.2004 UNDER SECTION 143(3) OF THE INCOME TAX ACT AT TOTAL INCOME OF RS.43 20 86 709/-. SUBSEQUENTLY ASSESSMENT WAS REOPENE D UNDER SECTION 147 OF THE ACT ON 16.3.2005 ON THE BASIS OF AUDI T REPORT IN THE FORM NO.3CD IN WHICH IT WAS POINTED THAT THE ASSESSEE HAD INCURRED EXPENDITURE OF RS.64 36 494/- TOWARDS INTEREST ON FCNR LOANS FROM SCHEDULED BANKS WHICH HAD NOT BEEN PAID ON OR BEFORE DU E DATE OF FILING OF RETURN OF INCOME AND THEREFORE THE SAME W AS LIABLE FOR DISALLOWANCE UNDER SECTION 43B(D) OF THE INCOME TAX ACT 1961. DURING THE REASSESSMENT PROCEEDINGS THE ASSESSEE HAD SUBMITT ED ALL RELEVANT DETAILS INCLUDING DETAILS OF UNSECURED LOANS AND THEIR SUBSEQUENT REPAYMENT ALONGWITH PROOF OF PAYMENT AND T HE ASSESSING OFFICER AFTER TAKING INTO CONSIDERATION ALL DETAILS HAD COMPLETED ASSESSMENT UNDER SECTION 143(3). THE ASSESSING OFFICER THEREA FTER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY INTEREST PAYMENT O N ACCOUNT OF SCHEDULED BANKS WAS NOT ADDED IN THE RETURN OF INCOM E OR IN THE REVISED RETURNS AS THE RETURN HAD BEEN REVISED TWICE. T HE ASSESSEE SUBMITTED THAT IT WAS AN INADVERTENT MISTAKE AND NOT A DELIBERATE ACT AS INTEREST WAS ALLOWABLE AS DEDUCTION IN THE SUBSEQUENT Y EAR. THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE HAD NOT CLAIMED DEDUCTION WHICH SHOWED THAT THE CLAIM WAS BONAFIDE. THE ASSESSING OFFICER HOWEVER DID NOT ACCEPT THE EXPLANATION AND ADD ED THE SAID ITA NO.3356/M/09 A.Y:01-02 3 AMOUNT OF INTEREST TO THE TOTAL INCOME AND ALSO INITIA TED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) FOR CONCEALMENT OF IN COME. 2.1 IN RESPONSE TO SHOW CAUSE NOTICE ISSUED BY ASSESSING OFFICER THE ASSESSEE REITERATED THE EARLIER SUBMISSION AND THAT IT WAS AN INADVERTENT MISTAKE AND THERE WAS NO CONCEALMENT OF INCO ME. THE ASSESSING OFFICER HOWEVER DID NOT ACCEPT THE EXPLANATION. IT WAS OBSERVED BY HIM THAT THE DISALLOWABILITY OF THE CLAIM WAS CLEARLY REPORTED BY THE AUDITORS IN THE AUDIT REPORT AND DESP ITE THIS NO DISALLOWANCE WAS MADE WHICH SHOWED THAT IT WAS NOT AN INA DVERTENT MISTAKE. FURTHER THE ASSESSEE HAD REVISED THE RETURN TW ICE TO CORRECT OTHER MISTAKES BUT THE MISTAKE ON ACCOUNT OF DISALLOWAN CE OF INTEREST WAS NOT CORRECTED. EVEN IN RESPONSE TO NOTICE UNDER SECTIO N 148 THE ASSESSEE DID NOT OFFER THE INCOME BY DISALLOWING THE INTE REST. THE ASSESSING OFFICER THEREFORE CONCLUDED THAT THE ASSESSEE DEEM ED TO HAVE CONCEALED THE PARTICULARS OF INCOME UNDER THE PROV ISIONS OF EXPLANATION-I TO SEC. 271(1)(C) OF THE ACT. ACCORDINGLY HE LEVIED THE PENALTY @ 100% OF TAX SOUGHT TO BE EVADED AMOUNTING TO RS.19 01 608/-. 2.2 IN APPEAL CIT(A) AGREED WITH THE FINDING OF THE ASSESSING OFFICER THAT THE ASSESSEE WAS DEEMED TO HAVE CONCEALED PARTICULARS O F INCOME ITA NO.3356/M/09 A.Y:01-02 4 UNDER PROVISIONS OF EXPLANATION-1 TO SECTION 271(1)(C). IT WAS OBSERVED BY HIM THAT THE ASSESSEE DID NOT DECLARE INCOME E ITHER IN THE ORIGINAL RETURN OR IN THE REVISED RETURNS DESPITE THER E BEING A SPECIFIC REPORT OF THE AUDITORS. THEREFORE HAD THE ASSESSING OF FICER NOT ISSUED NOTICE UNDER SECTION 148 INCOME WOULD HAVE ESCAPED ASSESSMEN T. HE ALSO REFERRED TO THE JUDGMENT OF HON'BLE SUPREME COUR T IN UNION OF INDIA VS. DHARAMENDRA TEXTILES PROCESSORS AND OTHERS (30 6 ITR 277) IN WHICH IT WAS HELD THAT THE PENALTY UNDER SECTION 271 (1)(C) IS ONLY A CIVIL LIABILITY AND MENS REA WAS NOT REQUIRED TO BE PR OVED BY THE REVENUE. CIT(A) ACCORDINGLY CONFIRMED THE PENALTY LEV IED BY THE ASSESSING OFFICER AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEA L BEFORE TRIBUNAL. 3. BEFORE US THE LD. AR FOR THE ASSESSEE SUBMITTED THAT MO MISTAKE IN FACT HAD BEEN COMMITTED BY THE ASSESSEE IN NO T MAKING DISALLOWANCE OF INTEREST RECEIVED ON LOANS OBTAINED FROM HONG KONG AND SHANGHAI BANKING CORPORATION (HSBC) AND ICICI BA NK LTD. WHICH ARE SCHEDULED BANKS ON THE BASIS OF AUDIT REPORT. TH E AUDITORS HAD MENTIONED THAT CLAIM WAS DISALLOWABLE UNDER SECTION 43B( D) BUT THE CLAUSE(D) RELATED TO INTEREST ON LOANS/BORROWINGS FROM PUBLIC FINANCIAL INSTITUTIONS/STATE FINANCIAL CORPORATIONS/STATE INDUS TRIAL DEVELOPMENT CORPORATION. IN TERMS OF EXPLANATION-4(A) TO SECTION 43B PUBLIC FINANCIAL INSTITUTIONS HAD THE SAME MEANING AS ASSIGNED TO IN SECTION ITA NO.3356/M/09 A.Y:01-02 5 4A OF THE COMPANIES ACT. THE LIST OF PUBLIC FINANCIAL I NSTITUTIONS AS PER SECTION 4A OF THE COMPANIES ACT WAS ENCLOSED IN THE PA PER BOOK WHICH DID NOT INCLUDE HSBC OR ICICI BANK. LD. AR THE REFORE SUBMITTED THAT THERE WAS NO DISALLOWANCE TO BE MADE UND ER SECTION 43B(D). THE ASSESSEE HAD THEREFORE MADE NO MISTAKE IN NOT DISALLOWING CLAIM ON THE BASIS OF OBSERVATIONS OF THE A UDITORS. IT WAS FURTHER SUBMITTED THAT ASSESSMENT HAD BEEN COMPLETED BY T HE ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT AND EVEN THE ASSESSING OFFICER DID NOT MAKE DISALLOWANCE DESPITE THERE BEING AUDITORS REPORT WHICH WAS PART OF THE ASSESSMENT RECORD WH ICH SHOWED THAT EVEN THE ASSESSING OFFICER IN THE ORIGINAL A SSESSMENT AGREED THAT NO DISALLOWANCE WAS CALLED FOR. IT WAS ALSO POINTED OUT THAT IN THE REASSESSMENT MADE UNDER SECTION 147/143(3) T HE ASSESSING OFFICER HAD MADE DISALLOWANCE UNDER SECTION 43B(D ) WHICH IS INCORRECT. HAD THE ASSESSEE CHALLENGED THE ORDER OF ASSESSMENT IT WOULD HAVE SUCCEEDED IN APPEAL BECAUSE THE ADDITION HAD BEEN MADE BY THE ASSESSING OFFICER INCORRECTLY BUT THE ASSESSEE DID NOT WANT TO RAISE LITIGATION AS AMOUNT WAS ALLOWABLE IN THE SUBSEQU ENT YEAR. IT WAS ALSO SUBMITTED THAT NEITHER THE ASSESSING OFFICER OR T HE ASSESSEE HAD CONSIDERED THE PROVISIONS OF SECTION 43B(E) WHICH REL ATES TO DISALLOWANCE OF INTEREST ON TERM LOANS FROM SCHEDULED BAN KS. THE PHRASE TERM LOAN HAD NOT BEEN DEFINED IN THE ACT BU T IT GENERALLY ITA NO.3356/M/09 A.Y:01-02 6 MEANT LOANS FOR TERMS EXCEEDING ONE YEAR. HE REFERRED TO THE BOOK ON PRACTICAL BANKING ADVANCES (TENTH EDITION) WRITTEN BY H .L. BEDI AND V.K. HARDIKAR IN WHICH IN REFERENCE TO TERM LOANS IT W AS MENTIONED THAT SUCH LOANS WERE REPAYABLE BY INSTALLMENTS OVER A N UMBER OF YEARS RANGING FROM 3 TO 10 YEARS AND SOMETIMES MORE. IN CASE OF THE ASSESSEE THE LOAN WAS TAKEN FOR LESS THAN ONE YEAR. MAY BE BECAUSE OF THIS REASON NEITHER THE AUDITORS NOR ASSESSING OFFICER HAD APPLIED PROVISIONS OF SECTION 43B(D). EVEN IF THESE PROVISIONS WE RE APPLICABLE CONSIDERING THE FACT THAT NEITHER THE AUDITORS NOR THE ASSESSING OFFICER HAD APPLIED THE PROVISIONS THE ACTION OF THE ASSESSEE N OT DISALLOWING THE CLAIM UNDER THE SAID PROVISIONS HAS TO BE CONSIDERED A S BONAFIDE AND NO PENALTY FOR CONCEALMENT IN SUCH CASES CAN BE LEVIED. THERE WAS NO DISPUTE ABOUT THE ALLOWABILITY OF THE CLAIM IF NOT THIS YEAR IN THE SUBSEQUENT YEAR. IT WAS FURTHER ARGUED THAT MEREL Y BECAUSE NO APPEAL HAD BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF ASSESSMENT PENALTY COULD NOT BE LEVIED BECAUSE PENALTY PR OCEEDINGS WERE DIFFERENT FROM ASSESSMENT PROCEEDINGS. IT WAS ACCORDI NGLY URGED THAT THE PENALTY LEVIED SHOULD BE DELETED. 3.1 LD. DR ON THE OTHER HAND STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW AND PLACED RELIANCE ON THE FINDINGS G IVEN IN THESE ORDERS. HE ALSO PLACED RELIANCE ON THE JUDGEMENT OF HON BLE HIGH COURT DELHI IN CIT VS. ZOOM COMMUNICATION (P.) LTD. DATED 24.5.2010 ITA NO.3356/M/09 A.Y:01-02 7 IN WHICH IT WAS HELD THAT IF THE ASSESSEE MAKES CLAIM WHICH IS NOT ONLY INCORRECT BUT ALSO WITHOUT ANY BASIS THE EXPLANATION F URNISHED BY THE ASSESSEE FOR MAKING SUCH A CLAIM COULD NOT BE CONSIDERED BONA FIDE AND PENALTY HAS TO BE LEVIED. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING LEVY OF PENALTY FOR CONCEALMENT OF INCOME UNDER SECTION 271(1)(C) IN RELATIO N TO THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISAL LOWANCE OF INTEREST ON LOANS TAKEN FROM SCHEDULED BANKS AMOUNTING TO RS.64 36 494/-. THE AUDITORS IN THE AUDIT REPORT HAD MENTIONED THAT INTEREST WAS DISALLOWABLE UNDER SECTION 43B(D). HOWEVER THE ASSESSEE DID NOT MAKE DISALLOWANCE EITHER IN THE ORIGINAL RETU RN OR IN THE SUBSEQUENT TWO REVISED RETURNS IN WHICH SOME OTHER MISTAKE S WERE CORRECTED. THE RETURN HAD BEEN TAKEN BY THE ASSESSING OF FICER FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143( 3) AFTER SCRUTINY IN WHICH EVEN THE ASSESSING OFFICER DID NOT MAKE ANY DISALLOWANCE. SUBSEQUENTLY ASSESSMENT WAS REOPENED BY THE ASSESSING OFFICER FOR ESCAPEMENT OF INCOME ON THE BASIS OF A UDIT REPORT AS MENTIONED EARLIER AND IN THE REASSESSMENT THE INTEREST WAS DISALLOWED UNDER SECTION 43B(D). THE ASSESSING OFFICER ALSO LEVIED PENALTY FOR CONCEALMENT OF INCOME IN RELATION TO SAID A DDITION WHICH IN ITA NO.3356/M/09 A.Y:01-02 8 APPEAL HAS BEEN CONFIRMED BY CIT(A). THE ISSUE IS WHETH ER ON THE FACTS AND CIRCUMSTANCES OF CASE LEVY OF PENALTY CAN BE JUSTIFI ED. 4.1. IT IS A SETTLED LEGAL POSITION AS HELD BY THE HONB LE SUPREME COURT IN THE CASE OF ANANTHARAM (123 ITR 457) THAT PENALTY PROCEEDINGS ARE DIFFERENT FROM ASSESSMENT PROCEEDINGS AND T HE FINDINGS GIVEN IN THE ASSESSMENT THOUGH IT MAY CONSTITUTE GOOD EVIDENCE BUT SAME IS NOT CONCLUSIVE IN THE PENALTY PROCE EDINGS IN WHICH THE ASSESSEE IS FREE TO ARGUE THAT ON THE FACTS OF TH E GIVEN CASE NO PENALTY CAN BE LEVIED. FURTHER MERELY BECAUSE ADD ITIONS HAVE BEEN CONFIRMED IN APPEAL OR NO APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ADDITIONS MADE IT CANNOT BE THE SOLE GROUND FOR COMING TO THE CONCLUSION THAT THE ASSESSEE HAD CONCEALED ANY INCOME. FURTHER THOUGH THE PENALTY IS A CIVIL LIABILITY & MENS REA IS NOT REQUIRED TO BE PROVED BY THE REVENUE FOR LEVY OF PENALTY UNDER SECTI ON 271(1)(C) AS HELD BY HONBLE SUPREME COURT IN CASE OF DHARAMENDRA T EXTILES PROCESSORS AND OTHERS (306 ITR 277) EACH AND EVERY ADDI TION MADE IN THE ASSESSMENT CANNOT AUTOMATICALLY LEAD TO PENALTY. A C ASE FOR LEVY OF PENALTY FOR CONCEALMENT OF INCOME HAS TO BE EVALUATE D IN TERMS OF PROVISIONS OF EXPLANATION-1 TO SECTION 271(1)(C) AS PER WHICH IF IN RELATION TO ANY ADDITION IN THE ASSESSMENT THE ASSESSEE OF FERS NO EXPLANATION OR OFFERS EXPLANATION WHICH IS FOUND TO BE FALSE OR IS NOT ABLE TO SUBSTITUTE THE EXPLANATION AND IS ALSO NOT A BLE TO PROVE THAT THE ITA NO.3356/M/09 A.Y:01-02 9 EXPLANATION IS BONAFIDE THE ADDITION MADE WOULD AMO UNT TO CONCEALMENT OF PARTICULARS OF INCOME. 4.2 WE HAVE THEREFORE TO ANALYSE THE FACTS AND CIRCUM STANCES OF THE CASE CAREFULLY TO GIVE A FINDING WHETHER ON THE FA CTS OF THE CASE EXPLANATION OF THE ASSESSEE FOR NOT MAKING DISALLOWANCE O F INTEREST CAN BE CONSIDERED AS BONAFIDE. THERE IS NO DISPUTE THAT THE AUDITORS IN THE AUDIT NOTE HAD CLEARLY MENTIONED THAT INTEREST WA S DISALLOWABLE UNDER SECTION 43B(D) BUT IT IS ALSO NOT IN DISPUTE THAT DESPITE THE AUDIT NOTE IN THE ORIGINAL ASSESSMENT COMPLETED AFTER SCRUTINY UNDER SECTION 143(3) THE ASSESSING OFFICER DID NOT MAKE DISALLOWANCE OF INTEREST. CLAUSE (D) OF SECTION 43B RELATES TO DISALLOWANCE OF INTE REST FROM PUBLIC FINANCIAL INSTITUTIONS STATE FINANCIAL CORPORATI ON OR STATE INDUSTRIAL INVESTMENT CORPORATION. THE ASSESSEE HAD TA KEN LOANS FROM HSBC AND ICICI BANK WHICH ARE NOT STATE FINANCIA L CORPORATION OR STATE INDUSTRIAL INVESTMENT CORPORATION. PUBLIC FI NANCIAL INSTITUTION HAS BEEN DEFINED IN THE EXPLANATION 4(A) TO SECTION 43 B TO HAVE THE SAME MEANING AS ASSIGNED IN SECTION 4A OF THE COMPANIES A CT. UNDER SECTION 4A OF THE COMPANIES ACT ALSO HSBC AND ICICI BANK DO NOT FIGURE IN THE LIST OF PUBLIC FINANCIAL INSTITUTIONS. T HEREFORE PROVISIONS OF SECTION 43B(D) ARE NOT APPLICABLE IN CASE OF THE ASSESSEE. MAY BE BECAUSE OF THIS REASON ASSESSING OFFICER IN THE ORIGINAL A SSESSMENT UNDER SECTION 143(3) DID NOT MAKE DISALLOWANCE ON THE BASIS OF AUDIT ITA NO.3356/M/09 A.Y:01-02 10 REPORT. SUBSEQUENTLY ASSESSMENT WAS RE-OPENED UNDER SECT ION 147 ON THE BASIS OF SAME AUDIT REPORT. RE-OPENING OF THE ASSESSMENT IF CHALLENGED COULD BE CONSIDERED AS BAD IN LAW AS THE SAME I S BASED ON CHANGE OF OPINION BECAUSE THE ASSESSING OFFICER HAD ALREADY COMPLETED ASSESSMENT UNDER SECTION 143(3) AFTER OBTAINING DETAILS OF LOANS AND ADVANCES AND AFTER CONSIDERING THE AUDIT REPOR T ALSO NO DISALLOWANCE HAD BEEN MADE. EVEN IN THE RE-ASSESSMENT AD DITION HAD BEEN MADE UNDER SECTION 43B(D) WHICH OBVIOUSLY IS INCORR ECT. THEREFORE NOT MAKING DISALLOWANCE BY THE ASSESSEE ON THE BASIS OF AUDIT REPORT IN THE ORIGINAL RETURN OR IN THE REVISE D RETURN OR IN THE RETURN UNDER SECTION 147 CANNOT BE CALLED A MISTAKE THOU GH IT COULD BE ARGUED THAT DISALLOWANCE COULD HAVE BEEN MADE UNDER TH E PROVISIONS OF SECTION 43B(E) WHICH RELATES TO INTEREST FROM SCHEDULED BANKS. THE SAID CLAUSE(E) APPLIES TO INTEREST ON TERM LOAN WHICH H AS NOT BEEN DEFINED AND IT IS DEBATABLE WHETHER LOANS TAKEN BY T HE ASSESSEE FOR A PERIOD OF LESS THAN ONE YEAR CAN BE TERMED AS TERM LOAN . ASSESSEE HAS PLACED ON RECORD RELEVANT EXTRACTS FROM THE BOOK WRI TTEN BY H.L. BEDI AND V.K. HARDIKAR IN WHICH THE TERM LOAN HAS B EEN DEFINED AS LOANS REPAYABLE IN INSTALLMENTS OVER A PERIOD OF 3 TO 10 YEARS OR MORE. IN ANY CASE THE APPLICABILITY OF PROVISIONS OF SECTION 43 A(E) WAS NEITHER CONSIDERED BY THE AUDITORS NOR THE AO IN THE O RIGINAL ASSESSMENT OR IN THE REASSESSMENT COMPLETED AFTER SCRUTINY A ND ITA NO.3356/M/09 A.Y:01-02 11 THEREFORE THE OMISSION BY THE ASSESSEE TO NOT CONSIDER TH E PROVISIONS OF SECTION 43B(E) HAS TO BE CONSIDERED AS BONAFIDE. 4.3 THE LD. DR APPEARING FOR THE REVENUE HAS REFERR ED TO THE JUDGMENT OF HONBLE HIGH COURT OF DELHI IN CASE OF CIT VS. ZOOM COMMUNICATION (P.) LTD. (SUPRA). THE SAID CASE IS FOUND TO BE DISTINGUISHABLE. IN THAT CASE IT HAS BEEN HELD THAT IN CASE THE ASSESSEE MADE A CLAIM WHICH IS NOT ONLY INCORRECT IN LAW BUT ALSO WITHOUT ANY BASIS EXPLANATION OFFERED FOR MAKING AN Y SUCH CLAIM WHICH IS WHOLLY UNTENABLE IN LAW CAN NOT BE CONSIDERED B ONAFIDE. THE ASSESSEE IN THAT CASE HAD MADE CLAIM OF DEDUCTION ON ACCOUNT OF INCOME TAX WHICH IS UNDISPUTEDLY NOT ALLOWABLE AND TH EREFORE THE EXPLANATION FOR CLAIMING DEDUCTION COULD NOT BE CONSI DERED BONAFIDE. THE CASE OF THE ASSESSEE IS DIFFERENT. 5. CONSIDERING THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE AND THE LEGAL POSITION DISCUSSED ABOVE WE ARE OF THE V IEW THAT EXPLANATION OF THE ASSESSEE FOR NOT MAKING DISALLOWANCE O F INTEREST HAS TO BE CONSIDERED AS BONAFIDE. PENALTY CANNOT BE LEV IED ONLY ON THE GROUND THAT THE ASSESSEE DID NOT DISPUTE THE ADDITION I N APPEAL. THE ASSESSEE MAY NOT FILE APPEAL BECAUSE OF IGNORANCE OR BECAUSE OF LACK OF PROPER ADVICE OR TO AVOID ANY LITIGATION AS IN TH IS CASE INTEREST WAS ITA NO.3356/M/09 A.Y:01-02 12 ALLOWABLE AS DEDUCTION IN THE SUBSEQUENT YEAR. WE ARE THEREFORE UNABLE TO SUSTAIN THE ORDER OF CIT(A) CONFIRMING THE P ENALTY. THE SAME IS THEREFORE SET ASIDE AND PENALTY LEVIED IS DELE TED. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.7.2011. SD/- SD/- (R.V. EASWAR) (RAJENDRA SINGH ) PRESIDENT ACCOUNTANT MEMBER MUMBAI DATED: 29.7.2011. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.