2014 (6) TMI 332

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....3.2011. 2. The present appeal, at the instance of the assessee, contests the confirmation of the levy of penalty u/s.271(1)(c) of the Act on the following adjustments made to its returned income in assessment: a) Disallowance of provision of costs on completed/uncompleted contracts; b) disallowance of software expenses; and c) disallowance of deduction u/s.80-HHB. 3. We have heard the parties and perused the material on record. 3.1 A fundamental difference has come about since the passing of the impugned order, i.e., an order by the Tribunal in the quantum proceedings allowing the assessee a total relief qua the adjustments referred to at (b) and (c) above (in ITA Nos.651/Mum(F)/2009 dated 08.08.2012/PB pgs.46-58). Though ....

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.... cases, while not in the balance five. The confirmation of the disallowance by the tribunal is on the premise that what has been claimed are only in the nature of and by way of estimates, so that no definitiveness could be ascribed thereto. In our view, what all the assessee is required to demonstrate, more so in the penalty proceedings, is that the estimates are valid and no more, i.e., are sound, based on cogent material. As long as a provision represents a reasonable estimate, based on the best available information (at the time the same is made), the same would warrant deduction, both from the stand point of being an accounting estimates as well as in law (section 145). Of course, the same should be admissible as a cost, i.e., on the ba....