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2016 (8) TMI 1143 - AT - Income TaxPenalty under section 271(1)(c) - inaccurate particulars of income with respect to the transfer pricing (TP) adjustment - Held that:- We have no reason to disbelieve the claim that in the facts the present case that the decision not to agitate the issue beyond the ITAT was guided by prudence in order to buy peace and avoid protracted litigation where the amount at stake for the assessee was not sufficient to consider the option of further litigation. It is a fact that as a result of the additions made by the TPO wherein addition of ₹ 236.22 crores was proposed and pursuant to the order of the DRP had been made by the Assessing Officer, which stood reduced to ₹ 4.92 crore with the resultant relief of deletion of addition of ₹ 231,31 crore. The consequent addition sustained of ₹ 4.92 crores was considered to be not so big an amount that in the face of the prevalent view of the ITAT in Li & Fung [2011 (9) TMI 204 - ITAT, New Delhi] wherein the assessee understood that the ITAT was not willing to accept the argument that 15% was correct and true. The decision so made in the peculiar facts and circumstances does not make out a case that the decision not to litigate and accept was malafide. Considering the facts, arguments, legal precedent, relevant provision and the material available on record, we hold that the penalty order deserves to be quashed as no case has been made out by the Revenue to show that the assessee conducted its affairs without good faith and due diligence. On the contrary we find that at every step the assessee has been able to demonstrate that the notwithstanding the addition accepted by way of an estimate the claim that the arms length price has been computed in accordance with the provisions of section 92C of the Act stands unrebutted on record. The mere fact that addition has been partially sustained by itself in the facts and circumstances of the present case does not warrant the penal action. - Decided in favour of assessee
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