TaxTMI 
TaxTMI 
2022 (11) TMI 962
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....is consolidated order. 2. The penalty has been imposed by the Assessing Officer on various additions in quantum as noted hereunder: a) The addition on account of disallowance interest amounting to Rs. 84,737/- (Assessment Year 2010-11); Rs.69,73,346/- (Assessment Year 2011-12); and Rs.16,31,794/- (Assessment Year 2013-14). b) Disallowance of loss of Rs.997988 (AY 2010-11) and Rs.59577 (AY 2011-12) with reference to Section 94(7)/94(8) of the Act. c) Disallowance of club expenses Rs.694890 (AY 2011-12) and Rs.928880 (AY 2013-14) d) Disallowance of Rs.40,79,283/- under Section 14A of the Act. e) Addition of Rs.14,250/- in Assessment Year 2013-14 towards computation error. f) Quantification of penalty on reduction of claim of 80G ....
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....not be the case of the Revenue that the loss reported has not been actually incurred. The loss reported is supported by the documentary evidences but however the dividend stripping is not admissible due to legal fiction of Section 94(7)/94(8) of the Act. The judgment rendered by the Hon'ble Delhi High Court in Pr.CIT vs. Harish Kumar HUF (2022) 140 taxmann.com 134 (Del) was adverted in this regard in the similarly placed factual matrix. It was thus urged that owing to peculiar facts, the imposition of penalty for bona fide error is not justified. 5. Having regard to the facts noted above and in the light of the judgment rendered by the Hon'ble Jurisdictional High Court, we are of the view that it is a case of a bona fide error in failing t....
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....nce on account of club expenses is not justified on the touchstone of law interpreted by the Hon'ble Supreme Court in Reliance Petro Products Pvt . Ltd. (2010) 322 ITR 158 (SC) and other host of judgments. The penalty imposed on club expenses is thus reversed. 8. Next issue concerns imposition of penalty on disallowances under Section 14A r.w. Rule 8D of the Income Tax Rules amounting to Rs.41,79,283/-. In the quantum appeal, the ITAT has granted relief and directed to restrict the disallowance only in respect of investment yielding exempt income. The assessee contends that Section 14A has many legal facets and disallowance under Section 14A is a highly debatable issue and considerable varies having regard to the facts of the case. The Co-....
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....tute visualizes the assessment proceedings and penalty proceedings to be wholly distinct and independent of each other. While the Assessing Officer may be justified in making estimated disallowance in quantum proceedings, such disallowance of expenses and that too on estimated basis and further substantially reduced in the appellate proceedings, could not automatically fall within the mischief of Sect ion 271(1)(c) of the Act on the grounds of concealment etc. While the claim towards expenditure may not be found acceptable in quantum proceedings, such disallowance per se cannot invite rigors of penalty. Where all material facts relevant to the issue were placed on record, mitigating circumstances to disprove any culpability of any sort agai....
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.... 9. In the light of the decision of Co-ordinate Bench and the peculiar factual matrix of the present case, the action of the Assessing Officer imposing penalty under Section 271(1)(c) on disallowance made under Section 14A appears to be mechanical exercise and thus stands reversed. 10. The other issue involved is computational error of Rs.14,250/- which is not substantial. One needs to bear in mind that a tax payer can be prone to such human error. Having regard to the smallness of the amount involved and in the absence of any falsity in such explanation, the penalty on such error is also reversed. 11. The assessee inter alia also pointed out that the Assessing Officer passing penalty order for Assessment Year 2013-14 has also quantified....