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2021 (3) TMI 105 - AT - Income TaxPenalty u/s 271(1)(c) - disallowance of depreciation on computers and the disallowance of expenses - CIT-A deleted the addition - HELD THAT:- Disallowance of expenses cannot attract penal provisions due to the reason that assessee has claimed the expenses for maintaining the status and structure of the assessee company during the BIFR proceedings and part of which has been disallowed by the AO on only estimate basis. Similarly, depreciation claimed on computers, and other assets cannot be disallowed on proportionate basis, when the AO has admitted part of the depreciation as allowed. CIT(A) has relied on the decision of in the case of Reliance Petro Product Ltd. [2010 (3) TMI 19 - SUPREME COURT] wherein it is held that merely rejection of the claim of the assessee cannot invite penalty under section 271(1)(c) - AO has failed to substantiate any failure on the part of the assessee in disclosing all material facts fully and truly. AO has also failed to substantiate, as how the contention of the assessee was not bona fide. As noticed that in the grounds raised, the Revenue has only contested penalty in respect of depreciation on computers, whereas there is no separate computation of the depreciation on computers, either in the assessment order or in the penalty order. The finding of the Ld. CIT(A) on the issue in dispute is well reasoned and we do not find any infirmity in the same - Appeal of the Revenue is dismissed.
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