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TMI Blog2014 (1) TMI 893X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 making various additions. Thereafter the AO levied penalty u/s 271(1)(c ) vide order dt. 28.6.2011 on additions on account of liquidated damages and disallowance u/s 14A and disallowance u/s 40a (ia) of the Act. 3. On appeal the First Appellate Authority granted part relief by deleting penalty. On disallowance u/s 14A and u/s 40(a)(ia) of the Act and by confirming levy of penalty on the addition made of liquidated damages. 4. Aggrieved to the extent the Ld.CIT(A) confirmed the penalty, the assessee is in appeal before us. On the items on which penalty levied was deleted by the First Appellate Authority the Revenue filed an appeal. 5. We have heard Mr.Sanjay Pandey, the Ld.Sr.D.R. on behalf of the Revenue and Shri Kapil Goel, the Ld.Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of CIT vs. Reliance Petro Products (P) Ltd. reported in 322 ITR 158 (SC) was applied and relief granted to the assessee by deleting the penalty. The Ld.Counsel for the assessee submitted that the assessee has made a voluntary surrender of all the disallowable expenses on his own. He submits that all the facts and figures were correctly disclosed and this is not a case of furnishing of inaccurate particulars. On examination of the details furnished, the assessee had suo-moto agreed to the technical disallowance. He relied on the decision of Hon'ble Allahabad High Court in the case of M/s AH Sons & Co. Varanasi vs CIT, Allahabad Income tax Reference no.250/1992, wherein the decision of Hon'ble Supreme Court in the case of CIT vs. Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on being claimed due to over sight. The assessee had calculated the liquidated damages by taking the minimum quantity which is to be supplied to the buyer at 3 lakhs M.T. as against 285000 MT, which resulted in an excess claim of deduction of liquidated damages on 15,000 M.T. The Ld.CIT(A) came to a conclusion that the explanation given by the assessee is not bonafide. At page 15 para (i) he observed as follows. (i)Addition on account of liquidated damages: The first addition made by the Assessing Officer in respect of which penalty has been imposed by the A.O. is on account of liquidated damages. As already discussed in the preceding paragraphs, the appellant was fully aware of the contents of the agreement entered into by hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich a provision has been made, we are of the considered opinion that the Ld.CIT(A) should have deleted the penalty based on the same reasons given for deleting the penalty in the case of disallowance u/s 40(a)(ia) and u/s 14A. The Assessing Officer in his order u/s 271(1)(c ) has specifically stated that the Revenue does not challenge the bonafies of the assessee in making the claim for deduction. All the facts and figures regarding the claim were before the Revenue authorities and it is not a case of bogus claim. Liquidated damages have been allowed by the AO to the tune of Rs. 15,93,70,762/-. The disallowance was of Rs.1,30,53,263/- only. The variance in the claim is marginal i.e. 8.5%. This is an error in quantification. The claim of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequently, he reopened the assessment u/s 147, disallowed the expenditure and levied penalty u/s 271(1)(c) The assessee explained that the omission to make a disallowance has occurred because it had a separate accounts department and there was "some confusion" and that the return was prepared by a non-CA and was signed a director who proceeded on the basis that the return was correctly drawn up. The CIT(A), Tribunal and High Court affirmed the levy of penalty on the ground that since the assessee was a well known and reputed C.A. firm and a tax consultant, it was not expected to make such a mistjake and that there had been a failure to discharge the strict liability to furnish true and correct particulars of income. On appeal by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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