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TMI Blog2019 (8) TMI 845X X X X Extracts X X X X X X X X Extracts X X X X ..... diture attributable to earning exempt income by the assessee and by the AO and same cannot be tantamount to furnishing of any inaccurate particulars of income. Merely making a claim, which is held as non-sustainable under the law, should not lead to penalty under section 271(1)(c) of the Act, when the assessee has furnished details of particulars in the return of income. The assessee is not found to be involved in camouflaging or filing inaccurate details of expenses. Every disallowance made does not justify and mandate levy of penalty u/s 271(1)(c) - in the case of CIT versus Reliance Petro Products Private Limited [ 2010 (3) TMI 80 - SUPREME COURT] held that where no information given in the return of income is found to be incorrec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was completed on 11/03/2011 after making disallowance of ₹ 6,55,61,826/- under section 14A of the Act as against suomotu disallowance of ₹ 1,00,000/- made by the assessee in the return of income filed on 22/09/2009. The disallowance made by the Assessing Officer was restricted by the Ld. CIT(A) to ₹ 181.79 lakhs. On further appeal by the Revenue, The Income Tax Appellate Tribunal (in short the tribunal) set aside the order of the Ld. CIT(A) and restored the issue to the file of the Assessing Officer. In consequent assessment proceedings before the Assessing Officer, the assessee accepted the disallowance under section 14A of the Act at ₹ 181.79 lakhs and accordingly, the Assessing Officer in the order passed under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Investment Private Limited in ITA No. 117/2015 dated 20/05/2015. According to him, merely making an incorrect claim would not tantamount to furnishing of inaccurate particulars of income, unless it is established that the assessee had acted with a malafide intention. He submitted that disallowance under section 14A of the Act has been upheld and restricted to the extent of the dividend income earned, which is purely an estimate and not an exact amount based on any investigation by the Assessing Officer. In support of his claim, he relied on the decision of the Hon ble Supreme Court in the case of Commissioner of income tax versus Reliance Petroproducts (P) Ltd (2010) 322 ITR 158 (SC) and PricewaterhouseCoopers Private Limited versus Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t may be seen here that the above judgments cited by the appellant are pertaining to the cases of disallowance u/s 14A prior to AY 2008-09. From AY 2001-02 to AY 2007-08 provision of section 14A was debatable issue and no methodology was prescribed by the Department for quantifying the expenses pertaining to earning exempt income. Therefore, for those assessment years if any disallowance was made by the AO, the same was debatable and penalty was not leviable. The Finance Act, 2006 has incorporated sub section (2) in section 14A which has given power to the AO to examine and quantifying disallowance pertaining to exempt income. Simultaneously, the CBDT made the Rule 8D applicable from AY 2008-09 for quantifying the disallowance u/s 14A as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , under the very scheme under section 14A of the Act, the apportionment of the expenditure attributable to earning exempt income, was difficult for identifying exactly on the precise, numerical and mathematical basis and to have rationality in the disallowance, the rule 8D has been introduced by the CBDT, but that too is a kind of estimate only. In such scenario, the difference between the suo-motu disallowance by the assessee in the return of income and the amount upheld by the Assessing Officer, can be termed as variation in the estimate of expenditure attributable to earning exempt income by the assessee and by the Assessing Officer and same cannot be tantamount to furnishing of any inaccurate particulars of income. Merely making a claim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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