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2016 (12) TMI 554 - AT - Income TaxPenalty u/s 271(1)(c) - disallowance on account of Rule 8D r.w.s. 14A - Held that:- he action of the AO in making disallowance of expenditure incurred by the assessee in relation to earning of exempt income in the afore-stated manner without complying with the provisions of Section 14A of the Act to identify the expenditure incurred by the assessee in relation to earning of exempt income having regards to the accounts of the assessee or coming to the conclusions that it is not possible to identify the amount of expenditure incurred by the assessee in relation to earning of exempt income keeping in view the manner in which the accounts are maintained by the assessee , the mandate for levying of penalty u/s 271(1)(c) of the Act is not fulfilled more-so it was the contention of the assessee that no expenditure has been incurred by the assessee in relation to earning of exempt income which does not form part of the total income . The contention of the assessee was that no expenditure was incurred by the assessee for earning of exempt income and it was all the more incumbent on the authorities below to have identify and ascertained the expenditure incurred by the assessee in relation to earning of exempt income having regard to the accounts of the assessee, which exercise to ascertain disallowance having regard to the accounts of the assessee was unfortunately had not been undertaken by the authorities below and in the absence thereof, we are afraid penalty proceedings u/s 271(1)(c) of the Act are not sustainable despite the fact that the assessee voluntarily came forward with the amount of disallowance as per Section 14A of the Act read with Rule 8D and did not file appeal against the additions so made by the AO in assessment proceedings. Thus penalty deleted. - Decided in favour of asssessee
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