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2021 (2) TMI 574 - ITAT MUMBAIPenalty u/s 271(1)(c) - Disallowance u/s 14A - HELD THAT:- When the disallowance under rule 8D(2)(i) r.w.s. 14A has been made on a purely estimate basis, that too, without establishing any direct/proximate nexus with the exempt income earned, in our considered opinion, the assessee cannot be accused of furnishing inaccurate particulars of income. Merely because the assessee has not contested the disallowance in appeal, for that reason alone assessee cannot be automatically visited with penalty under section 271(1)(c). In case of CIT vs. Reliance Petroproducts Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT]while dealing with the issue of imposition of penalty on the basis of disallowance made under section 14A of the Act has observed that when the assessee had furnished all the details of its expenditure as well as income in its return which were not found to be inaccurate, it cannot lead to furnishing of inaccurate particulars of income merely because the claim made by the assessee was not accepted by the department. In case of Sir Shadilal Sugar & General Mills Ltd. vs. CIT [1987 (7) TMI 3 - SUPREME COURT] has held that merely because the assessee agreed to certain addition, it will not follow that the assessee concealed income relating to such addition. At this stage, we must observe, irrespective of the fact whether or not the assessee has accepted the disallowance, in our considered view, the validity of the disallowance made under rule 8D(2)(i) is a highly debatable one on which more than one view is possible. In the present case, we hold that a case of furnishing of inaccurate particulars of income has not been made out against the assessee. As pointed out by the learned Counsel for the assessee and noted by us, though, similar disallowances were made by the Assessing Officer in preceding assessment years and accepted by the assessee, however, no penalty proceedings for imposition of penalty under section 271(1)(c) of the Act was initiated by the Assessing Officer. - Decided in favour of assessee.
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