TMI Blog2022 (11) TMI 962X X X X Extracts X X X X X X X X Extracts X X X X ..... e contends that Section 14A has many legal facets and disallowance under Section 14A is a highly debatable issue and considerable varies having regard to the facts of the case - HELD THAT:- The action of the AO imposing penalty under Section 271(1)(c) on disallowance made u/s 14A appears to be mechanical exercise and thus stands reversed. Donation claimed u/s 80G - As pointed out on behalf of the assessee, the amount of donation claimed under Section 80G is correct per se but however the quantum of deduction eligible under Section 80G is restricted to 10% of the total income in accordance with law. Thus, no allegation of furnishing of inaccurate particulars of income is justified. Coupled with this, AO has not applied his mind towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Addition of Rs.14,250/- in Assessment Year 2013-14 towards computation error. f) Quantification of penalty on reduction of claim of 80G by Rs.16,97,924/- in Assessment Year 2013-14. 3. As pointed out on behalf of the assessee, the quantum addition stood deleted by the ITAT in ITAs No.2104, 2105 and 2107/Del/2017 order dated 29.01.2020. The quantum additions having been deleted, the basis for imposition of penalty on account of disallowance interest does not survive. Consequently, the penalty imposed by the Assessing Officer for such disallowance of interest stands deleted in all assessment years as capsulated in para 2 above. 4. The second issue concerns imposition of penalty on account of disallowance of loss under Section 94(7) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the light of the judgment rendered by the Hon ble Jurisdictional High Court, we are of the view that it is a case of a bona fide error in failing to apply deeming provisions of Section 94(7)/94(8) of the Act for which the assessee ought not to be visited with onerous penalty susceptible under Section 271(1)(c) of the Act. The imposition of penalty on this score is thus deleted. 6. The next issue concerns imposition of penalty on club expenses incurred Rs.6,94,890/- (Assessment Year 2011-12) and Rs.9,28,880/- (Assessment Year 2013-14) disallowed by the Assessing Officer. The assessee in this regard submits that the assessee is one of the holding company of Dabur India Ltd. The assessee had acquired the membership of a health club namely M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... many legal facets and disallowance under Section 14A is a highly debatable issue and considerable varies having regard to the facts of the case. The Co-ordinate Bench itself has shown indulgence and directed re-working of such disallowance. In such circumstances, the Co-ordinate Bench of ITAT in the case of R.L. Steel and Energy Ltd. vs. JCIT in ITA No.1917/Del/2020 order dated 20.07.2022 has held as under: 4. We straightway note that in order to attract penalty under Sect ion 271(1)(c) of the Act, it is necessary that there must be concealment by the assessee of particulars of his income or furnishing of inaccurate particulars thereof. The disallowance of certain expenditure on estimated basis on some notional basis is neither the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te rigors of penalty. Where all material facts relevant to the issue were placed on record, mitigating circumstances to disprove any culpability of any sort against the assessee is established by implication. The claim of depreciation allowance, at best, can be taken as erroneous claim by the assessee. The Hon ble Delhi High Court in the case of CIT (International Taxation) vs. Gracemac Corporation, in ITA No. 47/2022 and C.M. No. 12833/2022 judgment dated 15th March, 2022 held that penal ty under Section 271(1)(c) is not leviable as a matter of course in the absence of any element of falsity per se. 7. The Hon ble Apex Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. as reported in 322 ITR 158 (SC) held that penalty unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on such error is also reversed. 11. The assessee inter alia also pointed out that the Assessing Officer passing penalty order for Assessment Year 2013-14 has also quantified the penalty on account of a sum of Rs.16,97,924/- being the difference in the claim made under Section 80G of the Act and restricted to 10% of total income. It was pointed out that no discussion has taken place on this amount in the body of the penalty order but however the penalty has been quantified on this amount without giving any show cause on the issue. 12. As pointed out on behalf of the assessee, the amount of donation claimed under Section 80G is correct per se but however the quantum of deduction eligible under Section 80G is restricted to 10% of the to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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