TaxTMI 
TaxTMI 
2014 (1) TMI 1627
X X X X Extracts X X X X
X X X X Extracts X X X X
.... company suo moto disallowed Rs. 9,20,905/- u/s 14A of the Act. For the Assessment Year 2008-09, disallowance u/s 14A of the Income-tax Act, 1961 is to be made as per Rule 8D. The disallowance as Rule 8D worked out at Rs. 51,68,961/-. Further, disallowance of Rs. 43,53,486/- was made by assessee when during the assessment proceedings the Assessing Officer drew attention of assessee toward Rule 8D. The Assessing Officer held that the assessee has tried to retrieve the situation but the claim does not appear to be bonafide and penalty proceedings u/s 271(1)(c) was initiated. Assessing Officer levied penalty u/s 271(1)(c) @ 100% of Rs. 13,06,045/-. Against this order of Assessing Officer, the assessee went in appeal before the CIT (A). The CIT....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e to such total income. If the tax payable under the normal provisions is higher, such amount is the total income of the assessee, otherwise, the book. profits are deemed as the total income of the assessee in terms of section 115JB of the Act. Where the income computed in accordance with the normal procedure is less than the income determined by legal fiction, namely; the book profits under section 115JB of the Act and the income of the assessee is assessed under section 115JB and not under the normal provisions, the tax is paid on the income assessed under section 115JB of the Act. Concealment of Income would have no role to play and would not lead to tax evasion. Therefore, penalty cannot be imposed on the basis of disallowances or addit....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... case of Kanbay Software India (P) Ltd. vs. DCIT (2009) 31 SOT 153 (Pune) the Hon'ble ITAT, after considering the case law on the subject has observed broadly as under: * By no stretch of logic or rationale it can be said that imposition of penalty under section 271 (1 )(e) has a cause and effect relationship with addition being made to returned income per se * Just because penalty under section 271(1)(c) is a civil liability it must mean penalty can automatically be levied on basis of any addition to income, is not correct * Even Explanation 1 to section 271(1)(c) raises a rebuttable presumption and shifts onus on assessee to establish bona fides of claim * Judgement in the case of UOI v. Dharmendra Textile Processor does not make ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sion of facts. 15. No positive material was brought on record to prove that the assessee has furnished inaccurate particulars to reduce the taxable income. The assessee furnished an explanation which is a bonafide one with sufficient reasons. The explanation was neither found false nor unreasonable by the AO. 16. After going through the facts 6f the case and the case laws cited by the AR and the propositions laid down by the Hon'ble ITAT in the case of Kanbay Software India (P) Ltd. vs. DCIT (supra) there is no case for levy of penalty in respect of the, addition/disallowance taken into consideration for levy of penalty since there is no suppression of facts. There is only difference of opinion with regard to quantum of disallowance i....