Karajgi Vanita Nagesh L/H of Late Nagesh K Karajgi, Solapur V. ACIT, Cir.-1, Solapur

ITA 537/PUN/2010

• Counselvise Citation: 53724514 RSA 2010
• Duration Of Justice: 3 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-08-2013
• Assessment Year: misc
• Appeal Filed On: 12-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNITA RAO
• Keywords: Depreciation; Search and seizure; Retrospective amendment
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 537/PN/2010 (BLOCK PERIOD 1991-92 TO 2000-01 AND 2001-02 PART) SMT.KARAJGI VANITA NAGESH, L/H OF LATE NAGESH K. KARAJGI, C/O. K.K. ASSOCIATES, SONA SHANKAR NIWAS, BARSHI ROAD, BALE, NORTH SOLAPUR, SOLAPUR 413003 PAN NO.APPPK 0529J .. APPELLANT VS. ACIT, CIRCLE-1 SOLAPUR .. RESPONDENT APPELLANT BY : SHRI PRAMOD SHINGTE RESPONDENT BY : SMT. SUNITA RAO DATE OF HEARING : 26-08-2013 DATE OF PRONOUNCEMENT : 30-08-2013 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 16- 12-2009 OF THE CIT(A)-III, PUNE RELATING TO BLOCK P ERIOD 1991-92 TO 2000-01 AND 2001-02 PART. 2. LEVY OF PENALTY OF RS.61,70,000 U/S.158BFA (2) O F THE INCOME TAX ACT BY THE ASSESSING OFFICER AND UPHELD BY THE CIT(A) I S THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE GROUNDS OF APPEAL. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE, AN INDIVIDUAL, IS ENGAGED IN THE BUSINESS OF DEVELOPERS AND REAL ESTA TE AGENT. A SEARCH AND SEIZURE ACTION U/S.132 OF THE INCOME TAX ACT WAS CA RRIED OUT AT THE BUSINESS AND OFFICE PREMISES OF THE ASSESSEE ON 29-08-2000. IN RESPONSE TO NOTICE 2 U/S.158BC THE ASSESSEE FILED HIS RETURN OF INCOME D ECLARING UNDISCLOSED LOSS OF RS.75,39,357/- PERTAINING TO 3 YEARS, I.E. A.Y. 1999-2000 TO 2001-02. WHILE ARRIVING AT THIS LOSS, THE ASSESSEE HAD CLAIM ED ACCRUED INTEREST OF RS.90,77,000/- ON ADVANCES RECEIVED FROM THE MEMBER S OF THE SOCIETY. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON 29-08 -2002 DETERMINING THE TOTAL UNDISCLOSED INCOME AT RS.58,67,526/-. IN THE SAID ORDER THE ASSESSING OFFICER DISALLOWED ACCRUED INTEREST OF RS.90,77,000 /- CLAIMED BY THE ASSESSEE IN TOTO, CHARGED TO TAX THE NOTIONAL INCOME OF RS.1 0,21,815/- AND DISALLOWED THE ADMINISTRATION AND OFFICE EXPENSES. 3.1 IN APPEAL THE LD.CIT(A) ALLOWED INTEREST TO THE EXTENT OF RS.9,07,700/-, DELETED THE NOTIONAL INCOME OF RS.10,21,815/- AND A LLOWED ADMINISTRATIVE EXPENSES OF RS.22,49,790/- AND DEPRECIATION OF RS.5 ,69,170/-. THE REVENUE FILED AN APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL CONFIRMED THE DELETION OF NOTIONAL INCOME OF RS.10,21,815/-, DISALLOWED THE I NTEREST TOTALLY AND GAVE DIRECTIONS TO ALLOW THE EXPENSES INCURRED BY THE AS SESSEE FOR EARNING UNDISCLOSED INCOME. THE ASSESSING OFFICER THEREAFT ER COMPUTED THE REVISED INCOME OF THE ASSESSEE AT RS.16,38,620/- VIDE HIS O RDER DATED 07-05-2008. 3.2 THE ASSESSING OFFICER THEREAFTER INITIATED PENA LTY PROCEEDINGS U/S.271(1)(C) OF THE INCOME TAX ACT. IN RESPONSE T O THE SAME, IT WAS SUBMITTED THAT HAD THE INTEREST ON ADVANCE OF RS.90 ,77,000/- BEEN ALLOWED AS CLAIMED BY THE ASSESSEE, THE ASSESSED INCOME WOULD HAVE BEEN NEGATIVE. IT WAS SUBMITTED THAT THE CIT(A) HAD ALLOWED SUCH INTE REST, ALTHOUGH PARTIALLY, TAKING INTO ACCOUNT THE FACT THAT ASSESSEE HAS ACTU ALLY PAID INTEREST TO ONE MISS. MADHURI REDEKAR ON 10-06-2000 (WHICH IS BEFOR E THE DATE OF SEARCH) @15.75% AND TO 7 OTHER DEPOSITORS DURING THE PERIOD 10-12-2000 TO 16-01- 3 2003 AT THE RATES VARYING FROM 5% TO 6%. THE ABOVE ALLOWANCE WAS ON THE BASIS OF DOCUMENTARY EVIDENCE IN THE FORM OF LETTER -CUM-RECEIPTS. HOWEVER, THE HONBLE TRIBUNAL OVERLOOKED THIS FACT AND HAS D ISALLOWED THE ENTIRE INTEREST. IT WAS SUBMITTED THAT THE INTEREST HAS B EEN DISALLOWED ON MERELY TECHNICAL GROUNDS. HOWEVER, THE ASSESSEE WAS UNDER CONTRACTUAL OBLIGATION TO PAY INTEREST AND THE CLAIM WAS NOT FRIVOLOUS OR MAL AFIDE. IT WAS SUBMITTED THAT ALTHOUGH THE CLAIM HAS BEEN DISALLOWED ON TECH NICAL GROUNDS, LEVY OF PENALTY U/S.158BFA(2) IS UNWARRANTED AND UNJUSTIFIE D. RELYING ON VARIOUS DECISIONS IT WAS SUBMITTED THAT LEVY OF INTEREST U/ S.158BFA(2) IS DISCRETIONARY AND NOT COMPULSORY. IT WAS FURTHER SUBMITTED THAT THERE IS NO CONSCIOUS OR DELIBERATE ACT ON THE PART OF THE ASSESSEE TO EVADE TAX AND THE CLAIM WAS A BONAFIDE ONE BACKED BY DOCUMENTARY EVIDENCE IN THE FORM OF LETTER-CUM- RECEIPTS AND ACTUAL TRANSACTIONS. 4. HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE NOTED THAT N O EVIDENCE WAS FOUND AT THE TIME OF SEARCH WITH REGARD TO THE LIABILITY OF THE ASSESSEE FOR MAKING ANY PAYMENT OF INTEREST ON THIS ACCOUNT TO THE PLOT HOL DERS. THE COPIES OF THE LETTERS SUBMITTED BY THE ASSESSEE AT THE TIME OF AS SESSMENT WERE NOT FOUND DURING THE COURSE OF SEARCH. THEREFORE, THE ASSESS ING OFFICER MADE THE DISALLOWANCE WHICH HAS BEEN UPHELD BY THE CIT(A). THE ASSESSING OFFICER FURTHER NOTED THAT LACK OF PARTICULARS/DETAILS REGA RDING EXPENSES CANNOT BE TREATED AS BONAFIDE OMISSION ON ASSESSEES PART AND THE CONSEQUENT ADDITION TO THE INCOME HAS TO BE CONSIDERED TO BE A SOUND BASIS FOR PENALTY. FURTHER, THE LOSS WAS CLAIMED ON THE BASIS OF BOOKS OF ACCOUNTS PREPARED AFTER THE SEARCH. THEREFORE, THE CLAIM OF THE ASSESSEE CANNOT BE CONS IDERED AS A BONAFIDE ONE. 4 THE ASSESSING OFFICER FURTHER NOTED THAT THE UNDISC LOSED INTEREST INCOME HAS BEEN UTILISED BY THE ASSESSEE FOR INVESTMENT IN HIS PERSONAL ASSETS WORTH RS.59,78,282/-. REJECTING THE VARIOUS DECISIONS CI TED BEFORE HIM THE ASSESSING OFFICER LEVIED PENALTY OF RS.61,67,600/- U/S.158BFA (2) OF THE INCOME TAX ACT. 5. IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER BY HOLDING AS UNDER : 5. I HAVE CAREFULLY CONSIDERED THE CONTENTION OF T HE APPELLANT IN THE LIGHT OF THE FACTS OF THE CASE AND PROVISIONS OF LA W. THE APPELLANT'S CONTENTION THAT HIS CLAIM OF INTEREST OF RS.90,77,0 00/- WAS BONAFIDE AND GENUINE BASED ON THE CONTRACTUAL OBLIGATION OF THE PLOT HOLDERS DOES NOT APPEAR TO BE ACCEPTABLE. AS OBSERVED BY THE ASS ESSING OFFICER IN PARA 6 OF HIS ORDER THAT THERE IS NO EVIDENCE FOUND AT THE TIME OF THE SEARCH WITH REGARD TO THE LIABILITY OF THE ASSESSEE FOR MAKING ANY PAYMENT OF INTEREST TO THE PLOT HOLDERS. COPIES OF LETTER, ON THE BASIS OF WHICH, THE APPELLANT HAS CLAIMED THE EXISTENCE OF T HE SAID LIABILITY OF INTEREST OF RS.90,77,000/-, WERE NOT FOUND AT THE T IME OF THE SEARCH AND THEREFORE, NO COGNIZANCE COULD BE TAKEN OF THE FRES H EVIDENCE FILED BY THE APPELLANT DURING ASSESSMENT PROCEEDINGS OF THE BLOCK PERIOD. VARIOUS CASE LAWS RELIED UPON BY THE APPELLANT HAVE ALREADY BEEN DISTINGUISHED BY THE ASSESSING OFFICER AND AFTER DU E CONSIDERATION, I FIND MYSELF IN AGREEMENT WITH THE VIEW TAKEN BY THE ASSESSING OFFICER. 5.1. FURTHER, THE CLAIM OF THE APPELLANT THAT THE A SSESSING OFFICER SHOULD HAVE TAKEN THE BASIS FOR WORKING OUT THE QUA NTUM OF PENALTY TO BE THE AMOUNT OF TAX LEVIABLE IN RESPECT OF THE UND ISCLOSED INCOME UNDER CLAUSE (C) OF SECTION 158BC AND NOT THE DIFFE RENCE BETWEEN THE RETURNED LOSS AND ASSESSED UNDISCLOSED INCOME, TO M Y MIND, IS NOT IN ACCORDANCE WITH THE PROVISIONS OF LAW AS CONTAINED IN SECOND PROVISO TO SECTION 158BFA(2) WHICH LAYS DOWN THAT IN A CASE WHERE THE UNDISCLOSED INCOME DETERMINED BY THE ASSESSING OFFI CER IS IN EXCESS OF THE INCOME SHOWN IN THE RETURN, THE PENALTY SHALL B E IMPOSED ON THAT PORTION OF UNDISCLOSED INCOME DETERMINED WHICH IS I N EXCESS OF THE AMOUNT OF UNDISCLOSED INCOME SHOWN IN THE RETURN. I N OTHER WORDS, THE PENALTY IS LEVIABLE ON THE AMOUNT OF DIFFERENCE BET WEEN THE ASSESSED INCOME AND RETURNED INCOME. IT IS SETTLED LAW THAT INCOME INCLUDES LOSS AND THEREFORE, WHERE THE ASSESSEE HAS SHOWN A NEGAT IVE FIGURE AGAINST UNDISCLOSED INCOME IN THE BLOCK RETURN; FOR THE PUR POSE OF CALCULATING PENALTY U/S.158BFA(2), THE DIFFERENCE BETWEEN THE A SSESSED UNDISCLOSED INCOME AND THE NEGATIVE FIGURE (LOSS) SHOWN IN THE RETURN HAS TO BE TAKEN. THIS VIEW IS ALSO SUPPORTED BY THE FACT THAT , AS PER STATUTORY 5 MANDATE, THE PENALTY U/S 158BFA(2) IS LEVIABLE ON A N AMOUNT WHICH IS THE DIFFERENCE BETWEEN 'UNDISCLOSED INCOME DETERMIN ED' AND THE 'UNDISCLOSED INCOME SHOWN', AND NOT THE DIFFERENCE BETWEEN THE 'TAX ON UNDISCLOSED INCOME DETERMINED' AND THE 'TAX ON UNDI SCLOSED INCOME SHOWN' IN THE RETURN. 5.2. IN VIEW OF THE AFORESAID, I HOLD THAT, ON THE FACTS OF THE CASE, THE ASSESSING OFFICER IS JUSTIFIED IN VISITING THE APPE LLANT WITH THE PENAL PROVISIONS OF SECTION 158BFA(2) AND LEVYING PENALTY IN AN AMOUNT OF RS.61,70,000/-. ACCORDINGLY, ORDER U/S 158BFA(2) IS CONFIRMED. 5.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SAME SUBMISSIONS AS MADE BEFORE THE ASSESSING OFFICER AND THE CIT(A). CHALLENGING THE LEVIABILITY OF PENALTY HE SUBMITTED THAT THE DISALL OWANCE OF INTEREST WAS MADE ONLY ON THE BASIS OF THE RETURN OF INCOME FILED BY THE ASSESSEE AND NOT BASED ON ANY DOCUMENT FOUND DURING THE COURSE OF SEARCH. REFERRING TO THE PROVISIONS OF SECTION 158B(B) HE SUBMITTED THAT THE WORDS OR ANY EXPENSE, DEDUCTION OR ALLOWANCE CLAIMED UNDER THIS ACT WHICH IS FOUND TO BE FALSE WERE INSERTED BY THE FINANCE ACT, 2002 WITH RETROSP ECTIVE EFFECT FROM 01-07- 1995. HE SUBMITTED THAT THE DATE OF SEARCH IN THE INSTANT CASE IS 29-08-2000 AND THE BLOCK PERIOD STARTS FROM A.Y. 1991-92 TO PA RT OF 2001-02. REFERRING TO THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL (THIRD MEMBER) IN THE CASE OF SUPER METAL INDUSTRIES VS. DCIT REPORTED IN 119 ITD 153 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HA S HELD THAT THE EXPRESSION OR ANY EXPENSE, DEDUCTION OR ALLOWANCE CLAIMED UND ER THIS ACT WHICH IS FOUND TO BE FALSE NOT BEING THERE IN SECTION 158B( B) AT THE TIME OF FILING OF THE RETURN ON 31-05-2001, PENALTY U/S.158BFA(2) COU LD NOT BE VALIDLY 6 IMPOSED ON THE BASIS OF CERTAIN DISALLOWANCES OF EX PENDITURE CLAIMED AND REJECTION OF CLAIM OF SET OFF OF BUSINESS LOSS. 6.1 REFERRING TO THE DECISION OF THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF ENFIELD INDUSTRIES LTD. VS. DCIT REPORTED I N 107 ITD 1 HE SUBMITTED THAT WHEN THERE WAS NO EVIDENCE ON RECORD TO INDICA TE THAT DEPARTMENT DETECTED ANY ADDITIONAL INCOME DUE TO ITS SOLE EFFO RT, IT COULD NOT BE SAID THAT ASSESSEE KNOWINGLY AND DELIBERATELY FILED INACCURAT E INFORMATION AND PARTICULARS CONCEALING ITS INCOME AND THEREFORE NO PENALTY U/S.158BFA(2) IS LEVIABLE. 6.2 ARGUING THE SECOND PLANK OF HIS SUBMISSION HE D REW THE ATTENTION OF THE BENCH TO SUB-SECTION (2) OF SECTION 158BFA AND SUBM ITTED THAT PENALTY IS LEVIABLE ONLY ON THE ASSESSED INCOME OF RS.16,38,62 0/- AND NOT ON THE TOTAL UNDISCLOSED INCOME OF RS.61,67,600/-. 7. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND WHILE SUPPORTING THE ORDER OF THE CIT(A) SUBMITTED THAT T HE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS BEFORE THE SEARCH AND THOSE WERE PREPARED ONLY AFTER THE SEARCH. THEREFORE, BY CLAIMING SUCH INTEREST PAYABLE TO THE PLOT HOLDERS THE ASSESSEE DELIBERATELY TRIED TO EVADE HI S TAX AND THEREFORE UNDER SUCH FACTS AND CIRCUMSTANCES OF THE CASE PENALTY U/ S.158BFA(2) IS LEVIABLE. 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE IN THE RETURN OF INCOME FILED ON 23-03-2001 IN RESPONS E TO NOTICE U/S.158BC 7 CLAIMED LIABILITY FOR INTEREST PAYABLE AT RS.90,77, 000/- AS ACCRUED LIABILITY ON ACCOUNT OF ADVANCE RECEIVED FROM THE MEMBERS OF THE SOCIETY. ALTHOUGH THE ASSESSING OFFICER DISALLOWED THE ENTIRE INTEREST TH E CIT(A) ON THE BASIS OF CERTAIN DOCUMENTS ALLOWED INTEREST TO THE EXTENT OF RS.9,07,700/-. WE FIND THE TRIBUNAL REVERSED THE ORDER OF THE CIT(A) ON THIS I SSUE. THE ASSESSING OFFICER THEREAFTER LEVIED PENALTY U/S.158BFA(2) ON ACCOUNT OF DISALLOWANCE OF THE INTEREST ON SUCH ADVANCES AND LEVIED PENALTY OF RS.61,67,700/-. WHILE DOING SO, HE OBSERVED THAT THE CLAIM MADE BY THE AS SESSEE IS NOT BACKED BY ANY EVIDENCE FOUND AT THE TIME OF SEARCH AND THE LO SS WAS CLAIMED ON THE BASIS OF BOOKS OF ACCOUNT PREPARED AFTER THE SEARCH OPERA TIONS ON 29-08-2000. 8.1 IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE PROVISIONS OF SECTION 158B(B) WERE AMENDED TO INCLU DE OR ANY EXPENSE DEDUCTION OR ALLOWANCE CLAIMED UNDER THIS ACT WHICH IS FOUND TO BE FALSE BY THE FINANCE ACT, 2002 WITH RETROSPECTIVE EFFECT FRO M 01-07-1995 WHEREAS THE ASSESSMENT YEARS INVOLVED IN THE CASE OF THE ASSESS EE RELATES TO BLOCK PERIOD 1991-92 AND PART OF 2001-02 AND THE DATE OF SEARCH IS 29-08-2000 AND THE ASSESSEE FILED RETURN OF INCOME ON 23-03-2001. THE REFORE, IN VIEW OF THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL (THIRD MEMBER) IN THE CASE OF SUPER METAL INDUSTRIES (SUPRA) PENALTY U/S.158BFA(2 ) CANNOT BE LEVIED UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 8.2 WE FIND MERIT IN THE ABOVE SUBMISSION OF THE LD . COUNSEL FOR THE ASSESSEE. WE FIND THE MUMBAI BENCH OF THE TRIBUNAL (THIRD MEMBER) IN THE CASE OF SUPER METAL INDUSTRIES (SUPRA) HAS OBSERVED AS UNDER (SHORT NOTES) : FIRST OF ALL, A DISCRETION IS GIVEN TO THE AO TO L EVY OR NOT TO LEVY THE PENALTY. THE REASONING OF THE AM THAT MERE FAILURE ON THE PART OF THE ASSESSEE OR THE EXPLANATION GIVEN BY THE ASSESSEE W AS NOT SATISFACTORY 8 TO THE OFFICER AND THAT ITSELF IS SUFFICIENT TO LEV Y THE PENALTY, PARTICULARLY ON THE BASIS OF FACTS IN THE INSTANT CASE, IS DIFFI CULT TO ACCEPT. AS RIGHTLY NOTED BY THE JM, AT THE TIME WHEN THE ASSESSEE FILE D THE RETURN ON 31ST MAY, 2001, THE SECTION AS IT STOOD THEN WAS MATERIA LLY DIFFERENT FROM, AS IT EXISTS NOW. SEC. 158B(B), WHICH DEFINES 'UNDISCL OSED INCOME', WAS SUBJECTED TO CHANGE BY INSERTION OF THE WORDS 'OR A NY EXPENSE, DEDUCTION OR ALLOWANCE CLAIMED UNDER THIS ACT WHICH IS FOUND TO BE FALSE' WITH RETROSPECTIVE EFFECT FROM 1ST JULY, 199 5 BY THE FINANCE ACT, 2002, AFTER THE WORDINGS 'FOR THE PURPOSES OF THIS ACT'. THE JM RIGHTLY NOTED THAT 'THE WORDS UNDERLINED WERE INCLUDED BY F INANCE I ACT, 2002 WHICH SHOWS THAT AT THE TIME WHEN THE RETURN WAS FI LED, THE DISALLOWANCE OF EXPENSES WAS NOT WITHIN THE/ AMBIT OF THE EXPRESSION 'UNDISCLOSED INCOME'. SO AT THE TIME OF FILING THE RETURN, ASSESSEE WAS NOT OBLIGED TO DECLARE THE SAME IN ITS RETURN PARTI CULARLY WHEN NO MATERIAL OR EVIDENCE WAS FOUND RELATING TO SUCH EXP ENSES IN THE COURSE OF SEARCH CARRIED OUT AT THE BUSINESS PREMISES OF T HE GROUP CONCERNS. FURTHER, THERE IS NO MATERIAL ON RECORD TO PROVE EX PENDITURE CLAIMED BY THE ASSESSEE WAS FALSE. THERE IS NO SUCH FINDING IN THE ASSESSMENT ORDER. THE FACTUM OF FALSITY CANNOT BE ASSUMED OR INFERRED BUT HAS TO BE PROVED ON THE BASIS OF MATERIAL OR EVIDENCE. NO ADVERSE INFERENCE CAN BE DRAWN MERELY BECAUSE THE APPEAL WAS NOT FILE D BY THE ASSESSEE'. IN VIEW OF THE ABOVE DISCUSSION, THE VIEW TAKEN BY THE JM IS UPHELD. 8.3 CONSIDERING THE TOTALITY OF THE FACTS OF THE CA SE AND RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE MUMBAI BENC H OF THE TRIBUNAL (THIRD MEMBER) CITED SUPRA WE ARE OF THE CONSIDERED OPINI ON THAT THE FACTS AND CIRCUMSTANCES OF THE CASE DO NOT WARRANT LEVY OF PE NALTY U/S.158BFA(2). WE, THEREFORE, SET-ASIDE THE ORDER OF THE CIT(A) AND DI RECT THE AO TO CANCEL THE PENALTY LEVIED U/S.158BFA(2) ON ACCOUNT OF DISALLOW ANCE OF INTEREST EXPENDITURE. GROUND RAISED BY THE ASSESSEE IS ACCO RDINGLY ALLOWED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 30 TH DAY OF AUGUST 2013. SD/- SD/- (R.S.PADVEKAR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED : 30 TH AUGUST 2013 SATISH 9 COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-III, PUNE 4. THE CIT-III, PUNE 5. D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE