Tax penalties overturned on appeal due to lack of tax evasion; foreign exchange loss not penalized.

The appeal involved cross appeals regarding the imposition of penalties under section 271(1)(c) of the Income Tax Act for the assessment year 2009-10. The Tribunal deleted penalties on major additions, including foreign exchange fluctuation loss, indicating no tax evasion. The assessee's appeal was allowed, penalties were deleted, and the revenue's appeal was dismissed. The order was pronounced on September 7, 2018.

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Issues:
Whether the assessee deserves to be penalized under section 271(1)(c) of the Income Tax Act, and if so, what should be the penalty amount.

Analysis:
1. The appeal involved cross appeals by the assessee and the revenue against the order of the Ld.CIT(A) for the assessment year 2009-10.
2. The common issue in both appeals was whether the assessee should be penalized under section 271(1)(c) of the Act and the amount of penalty to be imposed.
3. The Ld.AO determined the taxable income of the assessee at Rs. 19,67,00,320 after various disallowances and additions.
4. The Ld.CIT(A) partly deleted some disallowances/additions, leading to the imposition of a penalty by the Ld.AO.
5. The First Appellate Authority deleted a portion of the penalty but confirmed it on some additions.
6. The assessee challenged the penalty confirmed by the Ld.CIT(A), while the revenue contested the penalty deletion.
7. The assessee's counsel detailed the additions on which penalty was deleted by the Ld.CIT(A).
8. The issue of foreign exchange fluctuation loss was set aside by the Tribunal, leading to the conclusion that no penalty was imposable on this matter.
9. The Ld.DR supported the AO's order.
10. The assessee's counsel presented a chart showing major additions deleted by the ITAT in the quantum appeal, arguing for the deletion of penalties.
11. The assessee appealed against the penalty imposed on foreign exchange fluctuation loss, which was set aside by the ITAT for fresh adjudication by the AO.
12. Section 271(1)(c) provides for quantification of penalties based on additions made to the income of the assessee.
13. Major additions for penalty imposition, such as TP adjustment and disallowances, were deleted by the ITAT, indicating no tax evasion by the assessee.
14. The difference in depreciation rate did not warrant a penalty as it was a disagreement between the AO and the assessee.
15. The prior period income issue did not justify a penalty as the ITAT clarified the treatment of prior period income against expenditures.
16. Adhoc disallowances under section 14A were confirmed based on previous assessments, but the assessee disclosed all necessary facts, leading to penalty deletion.
17. The Ld.CIT(A) appreciated the disclosed facts and deleted penalties on major additions, concluding no reason to interfere in the order.
18. The issue of foreign exchange fluctuation loss was remanded for re-adjudication, indicating no basis for penalty imposition until further examination by the AO.
19. The appeal of the revenue was dismissed, and the appeal of the assessee was allowed, with the order pronounced on September 7, 2018.

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