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2015 (10) TMI 2369 - AT - Income TaxPenalty levied under section 271(1)(c) - disallowance of Legal Charges, treating the same as disallowance u/s 14A - Held that:- We find no merit in the order passed by the Assessing Officer in this regard, where no satisfaction was recorded for initiating the penalty under section 271(1)(c) of the Act in respect of disallowance made under section 14A of the Act, while completing the assessment under section 143(3) of the Act, by the Assessing Officer or while making the enhancement by CIT(A). Though the provisions of section 14A of the Act were brought on statute on an earlier date, however, the provisions of Rule 8D of the Rules were introduced w.e.f. 01.04.2008 only. Before the insertion of Rule 8D of the Rules, no set procedure was laid down under the statute to work out the disallowance under section 14A of the Act. The disallowance made in the hands of the assessee before us is an ad-hoc disallowance, which admittedly has been accepted by the assessee because of no tax effect. But merely because an addition has been made in the hands of the assessee on a debatable issue, it cannot be held that the assessee has furnished inaccurate particulars of income in respect of the said disallowance under section 14A of the Act. Where the question of disallowance and its quantification are contentious, which lead to inference that difference of opinion between the assessee and the authorities were bona-fide and in such circumstances, it cannot not be said that the assessee has furnished inaccurate particulars of income. Such was proposition laid down by the Delhi Bench of the Tribunal in Jindal Equipment Leasing & Consultancy Services Ltd. (2011 (4) TMI 130 - ITAT DELHI). Thus no merit in the levy of penalty under section 271(1)(c) of the Act and we direct the Assessing Officer to delete the same. - Decided in favour of assessee.
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