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TMI Blog2015 (10) TMI 2369X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee on a debatable issue, it cannot be held that the assessee has furnished inaccurate particulars of income in respect of the said disallowance under section 14A of the Act. Where the question of disallowance and its quantification are contentious, which lead to inference that difference of opinion between the assessee and the authorities were bona-fide and in such circumstances, it cannot not be said that the assessee has furnished inaccurate particulars of income. Such was proposition laid down by the Delhi Bench of the Tribunal in Jindal Equipment Leasing & Consultancy Services Ltd. (2011 (4) TMI 130 - ITAT DELHI). Thus no merit in the levy of penalty under section 271(1)(c) of the Act and we direct the Assessing Officer to delete the same. - Decided in favour of assessee. - ITA No.651/PN/2014 - - - Dated:- 24-9-2015 - MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Appellant by : Shri Mukesh M. Patel For The Respondent : Shri Dheeraj Kumar Jain ORDER PER SUSHMA CHOWLA, JM : This appeal filed by the assessee is against the order of CIT(A)-V, Pune dated 21.01.2014 relating to assessment year 2004-05 against penalty levied under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn of income declaring total loss of ₹ 21,00,820/-. The assessee company was an Investment Company. On the verification of the Profit Loss Account, the Assessing Officer noted that the assessee had declared income from dividend of ₹ 13.14 crores, interest income of ₹ 6,999/- and redemption amount received of ₹ 1056/-. The assessee against the said income had claimed expenditure of ₹ 21,22,688/-, out of which ₹ 19,70,000/- were paid as Legal Fees to Shri S.A. Gundecha, who was appointed as consultant/retainership. Before the Assessing Officer, the assessee claimed that the said Mr. S.A. Gundecha advised the company whether the investment in shares of another company or not and also he advised the period for which the investment was to be held and also switching over to other investments benefits therefrom. The future prospects and gains for such investments were also guided by him. Further, he also advised the assessee company on income-tax matters including computation of taxable income, filing of income-tax returns, preparation of appeals with CIT(A) and Tribunal and also compliance with the provisions of the Companies Act. The Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19,70,000/- merits to be disallowed under section 14A of the Act, in addition to the disallowance of ₹ 1,52,688/- under section 14A of the Act. Consequent to the order passed by the Assessing Officer, penalty proceedings under section 271(1)(c) of the Act were completed by the Assessing Officer. The Assessing Officer noted that since though the addition made in the assessment order of ₹ 19,70,000/- was under section 40A(2)(b) of the Act, which in turn was disallowed under section 14A of the Act by the CIT(A), but the plea of the assessee requesting not to levy of penalty, in view of the deletion of disallowance under section 40A(2)(b) of the Act, was not acceptable. In view of the Explanation 1 to section 271(1)(c) of the Act, the Assessing Officer was of the view that the assessee had deliberately and intentionally omitted to make the disallowance under section 14A of the Act, therefore, the assessee was held to have furnished inaccurate particulars of income. Consequently, penalty under section 271(1)(c) of the Act was levied on the amount of ₹ 19,70,000/- at ₹ 7,06,738/-. 6. The CIT(A) noted the contention of the assessee that penalty under section 271 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. He further objected to the levy of penalty under section 271(1)(c) of the Act, where no penalty proceedings were initiated against the assessee and also the issue being debatable, there was no merit in the said levy of penalty under section 271(1)(c) of the Act. The Ld. Authorized Representative for the assessee also submitted that the order under appeal was assessment year 2004-05, wherein the provisions of Rule 8D of the Income Tax Rules, 1962 (in short the Rules ) were not applicable and hence there was no basis for quantification of any disallowance under section 14A of the Act. Reliance was placed on the ratio laid down by the Delhi Bench of the Tribunal in ACIT vs. Jindal Equipment Leasing Consultancy Services Ltd. reported in (2011) 11 taxmann.com 309 (Delhi). 9. The Ld. Departmental Representative for the Revenue pointed out that issue was not debatable and the CIT(A) had come to a finding that the said disallowance of ₹ 19,70,000/- was warranted in view of the provisions of section 14A of the Act. 10. We have heard the rival contentions and perused the record. Penalty under section 271(1)(c) of the Act is attracted where the assessee has concealed its in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, the disallowance under section 14A of the Act was made at ₹ 1,52,688/-. The Assessing Officer in the assessment order passed on 24.11.2006 has clearly initiated the penalty proceedings under section 271(1)(c) of the Act in respect of disallowance of ₹ 19,70,000/- under section 40A(2)(b) of the Act. However, in respect of the disallowance made under section 14A of the Act, no penalty proceedings under section 271(1)(c) of the Act were initiated. As pointed out by us in the para hereinabove, the CIT(A) had reversed the order of the Assessing Officer in so far as deleting the addition of ₹ 19,70,000/- made by invoking the provisions of section 40A(2)(b) of the Act but the CIT(A) had held that the disallowance under section 14A of the Act is to be made at ₹ 21,22,688/- and not ₹ 1,52,688/-, which was made by the Assessing Officer. 12. The first issue which arises in the present appeal is that irrespective of the quantum of disallowance under section 14A of the Act, where no satisfaction was recorded by the Assessing Officer for initiation of the penalty proceedings under section 271(1)(c) of the Act and merely because the ultimate disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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