The circumstances in which required particulars could be supplied by the assessee were not under his control, and therefore, the penalty under Section 271(1)(c) of the Act, 2013 could not be imposed.

VIRENDER SINGH, J.

1. Challenging the order of Income Tax Appellate Tribunal dated 14.03.2017, passed in ITA No.658/IND/2013 whereby the learned Appellate Tribunal confirmed the order of Commissioner, Income Tax (Appeals)-I, Indore, who has reversed and quashed the order of Assessment officer (AO) of imposing penalty on the respondent for not furnishing appropriate and accurate particulars of income.

2. Relevant facts giving rise to the present appeal preferred by the revenue are that the assessee company filed its return of income for the A.Y.2005-2006 declaring net loss of Rs.13,48,849/-which was later finally settled at Rs.6,17,283/-. The assessee company had taken a loan in the form of Cash Credit Limit from State Bank of India (SBI) of Rs.1,52,23,892/- and had claimed expenditure on account of interest paid on this loan. Later, He (assessee) entered into one time settlement with the SBI. The Bank waived a total sum of Rs.2,54,42,837/-including principal as well as interest on it. He furnished this information to the IT department. His case was reopened under Section 41(1) of the Income Tax Act, 2013 (for short the Act, 2013) to consider this waiver. The Assessment Officer asked the assessee to furnish details of interest amount waived off by the Bank. The assessee submitted that the Bank has clubbed the principal amount with the interest and has settled the account on lump-sum basis without any verification and has not provided any bifurcation of both, therefore, he is not in a position to furnish such information. The assessment officer calculated the interest component on pro rata basis and determined amount of interest waived off by the bank as Rs.1,51,25,582/-. An assessment order under Section 147/143(3) was passed by the AO on 16.12.2010 determining the total income of Rs.1,45,08,299/-after set off the loss incurred of Rs.6,17,283/-. This order was never challenged by respondent.

3. While passing the order of assessment, the A.O. observed that the assessee has not furnished bifurcation of principal and interest amount in the total amount waived off by the bank and has claimed the entire amount as principal amount without giving any details, which tantamount of furnishing of incorrect particulars of income especially in view of Section 41(1) of the Act, 2013. In reply to the Notice issued by the A.O., the assessee claimed that as the bank had not provided the details of break up of the principal and the interest, he is not in a position to furnish the same. The A.O. was of the view that the burden was on the assessee to furnish the requisite information and to provide evidence in support of its claim. He further noted that all the details available as per record the amount of loan taken by the assessee was Rs.1,52,23,892/-and amount of remission was Rs.2,54,42,837/-, which establishes that the assessee had furnished incorrect particulars of income. As the assessee had not given any particulars of income under Section 41(1) of the Act neither in the return of income filed under Section 139 of the Act nor in the return filed under Section 148 of the Act. In this back drop, the A.O. held that the assessee had committed a fault within the meaning of Section 271(1)(c) of the Act and imposed a penalty of Rs.55,34,753/- vide order dated 30.06.2011.

4. The order was challenged by the respondent before the First Appellate Authority; who was of the view that the assessee had submitted particulars which were provided to him by the bank, he had fully disclosed the fact of waiver of the amount by the bank in its profit and loss account and in no-dues certificate dated 08.08.2005 issued by the bank, the bank has only mentioned the liability of the assessee which stand discharged, but the Bank nowhere mentioned as to whether the payment of Rs.1.21 Crore made by the assessee was adjusted towards the principal amount or towards interest and there was no clarity from such letter as to which amount was waived off by the bank, th