Shri Ketan Mehta,Bhopal, Indore v. The DCIT, Bhopal

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C.SHARMA ACCOUNTANT MEMBER PAN NO. : ABTPM8313Q I.T(SS)A.NO.102/IND/2009 BLOCK PERIOD 1.4.1989 TO 21.7.1999 SHRI KETAN MEHTA DY. CIT H-18 NISHAT COLONY VS 2(1) BHOPAL BHOPAL (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M. C. MEHTA AND SHRI HITESH CHIMNANI CAS RESPONDENT BY : SHRI P.K.MITRA SENIOR D.R. O R D E R PER R. C. SHARMA A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 21/08/2009 IN THE MATTER OF IMPOSIT ION OF PENALTY U/S 158BFA(2) OF THE INCOME-TAX ACT 1961. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. 3. WHILE FRAMING ASSESSMENT U/S 158BC THE AO DISALLOWED ASSESSEES CLAIM OF DEDUCTION ON ACCOUNT OF BANK -: 2: - 2 INTEREST. ACCORDINGLY THE ADDITION WAS MADE AND SU BSEQUENTLY PENALTY WAS IMPOSED U/S 158BFA(2) IN RESPECT OF SUC H INTEREST INCOME FROM BANK WHICH WAS NOT ALLOWED AS A DEDUCT ION WHILE COMPUTING THE INCOME OF THE BLOCK PERIOD. 4. FROM THE RECORD WE FOUND THAT THE ADDITION WAS MAD E BY THE ASSESSING OFFICER ON ACCOUNT OF UNDISCLOSED INTEREST INCOME EARNED ON FOUR FDRS AMOUNTING TO RS. 1 23 32 2/-. HOWEVER WHILE COMPUTING THE TOTAL UNDISCLOSED INCO ME THE AO DID NOT BIFURCATE THE INTEREST TO THE RESPECTIVE YEARS TO WHICH IT PERTAINED AND ACCORDINGLY DID NOT ALLOW THE DEDUCTION U/S 80L IN RESPECT OF SUCH INTEREST INCOM E. BEFORE THE LOWER AUTHORITIES THE ASSESSEE HAS FURNISHED C ORRECT YEAR- WISE BREAK UP OF INTEREST ON THESE FOUR FDRS. HOWEV ER THE AO MADE ADDITION ON ACCOUNT OF SUCH ACCRUAL OF INTERES T WHICH WAS PARTLY DELETED BY THE LD. CIT(A) TO THE EXTENT OF RS. 99 317/- AND THE MATTER WAS RESTORED BACK TO THE FI LE OF AO TO COMPUTE CORRECT INTEREST ASSESSABLE YEAR-WISE AND ALSO TO ALLOW DEDUCTION DEDUCTION U/S 80L. WHILE PASSING AP PEAL EFFECT ORDER DATED 23.9.2004 THE AO ALLOWED DEDUCT ION U/S 80L AT RS. 80 503/- HOWEVER WITH RESPECT OF THE R EMAINING -: 3: - 3 BALANCE OF RS. 42 817/- HE SUSTAINED THE ADDITION. PENALTY WAS LEVIED WITH RESPECT TO INCOME OF RS. 42 817/-. AS PER THE CHART PLACED ON RECORD DEDUCTION U/S 80L WORKS OU T TO THE EXTENT THAT TOTAL INCOME REMAINS BELOW TAXABLE LIMI T. AS PER OUR CONSIDERED VIEW WHILE COMPUTING INCOME FOR THE BLOCK PERIOD DEDUCTION U/S 80L IN RESPECT OF INTEREST ON FDR IS TO BE ALLOWED. IN THE INTEREST OF JUSTICE WE RESTORE THE MATTER BACK TO THE FILE OF AO TO RE-VERIFY THE INTEREST AC CRUED ON FDR IN THE RESPECTIVE YEARS AND TO ALLOW DEDUCTION U/S 80L IN RESPECT OF EACH OF THE YEARS FALLING WITHIN THE BLO CK PERIOD. ONCE THE INCOME OF EACH YEAR REMAINS BELOW TAXABLE LIMIT AFTER ALLOWING CLAIM OF DEDUCTION U/S 80L NO PENALTY IS IMPOSABLE U/S 158BFA(2). WE DIRECT ACCORDINGLY. 5. IN THE RESULT THE APPEAL IS ALLOWED IN TERMS INDIC ATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY 2011. SD/- SD/ (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST JANUARY 2011. -: 4: - 4 CPU* 311