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TMI Blog2022 (6) TMI 682X X X X Extracts X X X X X X X X Extracts X X X X ..... any was determined by the Assessing Officer at Rs. 161,59,58,333/- after making various additions/disallowances. Penalty proceedings under Section 271(1)(c) of the Act were also initiated by the Assessing Officer in respect of certain additions/disallowances made in the assessment. Meanwhile, an appeal was filed by the assessee in quantum proceedings against the order passed by the Assessing Officer under Section 143(3) r.w.s. 144C of the Act challenging the various additions/disallowances made by the Assessing Officer and while disposing of the said appeal vide an order dated 08.10.2014, the leaned CIT(A) allowed part relief to the assessee thereby sustaining/confirming certain additions/disallowances made by the Assessing Officer. After the disposal of the quantum appeal by the learned CIT(A), a fresh notice under Section 274 r.w.s. 271(1)(c) was issued by the Assessing Officer on 15.02.2016; in response to which, a detailed written submission was filed by the assessee vide letter dated 11.03.2016 offering its explanation in respect of each and every addition/disallowance sustained/confirmed by the learned CIT(A) in order to support and substantiate its case that there was no con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 81/- in the name of STC, J P Agrawal and other cases mentioned in the Assessment Order, the provisions of section 36(2) of the Act have not been complied with and hence the same was disallowed and added back to the total income. Penalty proceedings u/s, 271(1)(c) of the Act were also initiated on this issue. The Ld. CIT(A) confirmed Rs. 5,02,181/- out of the total addition made by the A.O. on this issue. (4) Forex Derivative - M2M losses: During the course of assessment proceedings, the A.O. noticed from the notes to accounts that the assessee charged a loss of Rs. 82,02,615/- to P & L A/c. of Marked to Marked loss on option premium. Details were called for which were submitted by the assessee. The A.O. carefully considered the same however, found not to be acceptable. Accordingly, after detailed discussion in the assessment order added the same to the total income of the assessee. Penalty proceedings u/s. 271(1)(c) of the Act were also Initiated on this issue. The Ld. CIT(A) also confirmed the addition made by the A.O. on this issue. (5) Disallowance u/s. 14A: During the course of assessment proceedings, on perusal of computation of income, the A.O. observed that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tantial relief and even on balance additions, penalty cannot be levied considering the decision of Hon'ble Supreme Court in the case of Gruh Finance Limited, 100 taxmann.com 103. So far as levy of penalty on disallowance of business loss of Rs. 5,02,181/- appellant has contended that though above addition was confirmed by Hon'ble ITAT, penalty cannot be levied as such claim is not a false claim and a very meager amount is sustained in comparison with aggregate write off of Rs. 37.95 crores. The ARs of the appellant have also relied upon the decision of Hon'ble Supreme Court in me case of PCIT V/s Reliance Petroproducts Pvt. Limited, 322 ITR 158. 3.6. On perusal of relevant material on record along with the decision of Hon'ble Ahmedabad ITAT in appellant's own case, as referred supra, it is found that AO has made TP adjustment for Rs. 4,51,82,460 which was reduced to Rs. 3,05,70,000 by CIT (Appeals). Both appellant and Department have filed appeals against such order and relevant discussion is made by Hon'ble ITAT at para - 45 to 53 of the order wherein after relying upon the decision of Micro Ink Limited 157 ITD 132 has deleted entire addition. As addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T (Appeals) - VI vide his order dated 8th October, 2014 in para 6.3 has deleted such disallowance. So far as disallowance of administrative expenses of Rs. 5,38,47,568, it is found that CIT (Appeals) -VI at para 6.5 of his order has already directed the AO to reduce the suo moto disallowance of Rs. 1,56,62,640. The Hon'ble ITAT in its consolidated order passed for A.Y. 2008-09 to 2010-11, at para - 4 has directed the AO to restrict the disallowance of administrative expenditure to the extent of investments which have resulted into tax-free income. On the basis of this observation, AR of the appellant has submitted computation of administrative expenses at para 6.2 of its written submission and contended that disallowance so computed will be less than suo moto disallowance. Considering these facts it is found that disallowance under Section 14A is a legal disallowance. The various Courts have interpreted the method of disallowance under Section 14A in different manner and mere non-acceptance of legal claim does mean that appellant has furnished inaccurate particulars of income. The Hon'ble Supreme Court in the case of Gruh Finance Limited 100 taxrnonn.com 104 has dismissed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act in respect of these three additions did not survive and the said penalty to that extent was liable to be cancelled as rightly held by the learned CIT(A) in his impugned order. 7. Insofar as the issue relating to the disallowance of business loss claimed as bad debts is concerned, it is observed that such disallowance made originally at Rs. 1,38,45,181/- by the Assessing Officer was sustained by the Tribunal only to the extent of Rs. 5,02,181/- and while sustaining this very meager amount of disallowance, the claim made by the assessee was not found to be false and it was only that the explanation of the assessee was not found acceptable. As held by the Hon'ble Supreme Court in the case of CIT vs. Reliance Petroproducts P. Ltd. (2010) 322 ITR 158 (SC), a mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars of his income attracting the penal provision of Section 271(1)(c) of the Act. Moreover, as held by Hon'ble Gujarat High Court in the case of Director of Income-Tax Vs. Skanska Cementation International Ltd. (Tax Appeal No. 2132 of 2010), when substantial additions on merits have been delete ..... X X X X Extracts X X X X X X X X Extracts X X X X
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