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2016 (10) TMI 353 - ITAT MUMBAIPenalty u/s 271(1) - disallowance made under deeming provisions of section 94(7) - Held that:- We find that in the case of Reliance Petro product Pvt Ltd reported (2010 (3) TMI 80 - SUPREME COURT ), in which it has been held that in order to expose to the vigour of penal provision, the case is required to be strictly covered by the provisions of section 271(1)(c) of the Act. It was further held that wrong claim made by the assessee which is not accepted to the revenue cannot be subjected to the provisions of section 271(21)( c ) of the Act merely on the ground that the claim of the assessee was wrong. In this case, the assessee had made genuine claim which was found to be wrong by applying deeming provisions of section 94(8) of the Act and thus the penalty was imposed by the AO and also sustained by the ld. CIT(A). In the case of Zoom Communications P Ltd (2010 (5) TMI 34 - DELHI HIGH COURT), held that where the assessee makes a claim which is not only incorrect in law but also wholly without any basis and explanations furnished by him are not bonafide for making such claim. In that case, the penalty would be levied under section 271(1)(c) of the Act. In our opinion the case of the assessee is squarely covered by the ratio laid down in the case of Reliance Petro Products Ltd (supra). The facts of the case in Zoom Communications P Ltd (supra) are distinguishable from that of the assessee’s case, as in the case of assessee wrong claim was under bonafide belief of the accountant which was disallowed under the deeming provisions of section 94(8) of the Act and therefore, the ld.CIT(A) has wrongly relied on the decision in order to uphold the order of the AO. In view of the above discussion and legal position, we set aside the order of the ld. CIT(A) and direct the AO to delete the penalty. - Decided in favour of assessee.
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