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2015 (3) TMI 1131 - ITAT MUMBAIDisallowance u/s 14A - penalty u/s Sec 271(1)(c ) - Held that:- For levy of penalty the AO must show that there was furnishing of inaccurate particulars of income or that the explanation furnished by the assessee was not bonafide one. The findings given in the assessment proceedings cannot operate as resjudicata, because the considerations that arise in the penalty proceedings are different from those in the assessment proceedings. The AO has brought nothing on record to suggest that the explanation of the assessee was false or devoid of bonafide. As per Explanation 1 to Sec 271(1)(c ), if the AO finds that the explanation offered by the assesse is false, then the penalty can be levied on the amount which is found to be concealed. Therefore, the whole idea behind Explanation 1 is that the AO has to first record reasons for arriving at a conclusion that there is concealment on the part of the assessee. After seeking an explanation if the authority comes to a conclusion that it is false, then the AO can proceed to levy the penalty. The findings given in the assessment proceedings cannot operate as res-judicata, because the considerations that arise in the penalty proceedings are different from those in the assessment proceeding. In case of Reliance Petroproducts (2010 (3) TMI 80 - SUPREME COURT ), Hon’ble Supreme Court has deleted the penalty, which was imposed on account of disallowance of interest paid on loans taken for purchase of shares. Accordingly, we do not find any infirmity in the order of CIT(A) for deleting penalty levied with reference to disallowance of expenses u/s.14A of the IT Act. - Decided in favour of assessee.
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