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(i). CIT vs. Zoom Communications Pvt. Ltd., 327 ITR 51 (Del.)
(ii). Thakur V. Hari Prasad vs. CIT, 167 ITR 603 (AP)
(iii). Union of India vs. Dharmendra Textile Processors, 166 Taxman 65(SC)
(iv). K.P. Madhusudan vs. CIT, 251 ITR 99.
(v). Mussadilal Ram Bharose's case, 165 ITR 14 (SC).

5. As far as the disallowance u/s. 14A is concerned, it was noticed that the assessee earned an income of Rs.3,06,59,085/- from dividends and claimed exemption u/s. 10(33) of the Act. As per computation of income, the assessee disallowed a sum of Rs.2,50,000/- in view of section 14A read with Rule 8D of the Act stating that no direct expenses like interest on borrowed capital or commission has been incurred by the assessee company to earn the exempt income and the investments to earn such dividend income were funded from the increase in paid up capital during the year and issue of fresh equity shares. The AO did not accept the claim of assessee observing that the assessee failed to file any details and evidence in support of its claim and has suo moto disallowed a sum of Rs.2,50,000/- on estimate basis. He, therefore, computed the disallowable expenditure as per Rule 8D at Rs.17,65,457/- and after giving benefit of expenditure of Rs.2,50,000/- disallowed by assessee itself, made net disallowance at Rs.15,15,457/- and added the same to the total income of the assessee company. This disallowance stood confirmed from the stages of first appellate Authority. In the penalty proceedings, the assessee reiterated the submissions made in the assessment proceedings and submitted that the assessee has neither concealed any particulars nor furnished any inaccurate particulars of income. The AO did not accept the reply of assessee observing that no details or evidence were submitted by assessee to justify its claim of suo moto disallowance of Rs.2,50,000/- and such disallowance was to be made strictly as per method provided in clause (iii) of Rule 8D(2) of the IT Rules, 1962. The AO, therefore, imposed penalty on the basis of this addition observing that the assessee has deliberately concealed the true particulars of its income.

(ii). the assessee had been adding such provision in the past and subsequent years in the computation of taxable income.

On this basis, the ld. CIT(A) observed that the mistake committed by the assessee for not including the provision for bad debts in the computation of taxable income was a bonafide mistake and the assessee cannot be penalized for furnishing inaccurate particulars of income in view of the decision in the case of Price Water Coopers (supra). We do not concur with the findings of the ld. CIT(A). It is notable that the legislative intent behind the provisions of section 271(1)(c) is to penalize the assessee for concealing particulars of income and/or furnishing inaccurate particulars of such income. It is of no consequence whether the income returned was a profit or loss. Therefore, even if there is loss return and no tax was leviable even after disallowance, penalty u/s 271(1)(c) was still leviable. For this view, we stand fortified by the decision of Hon'ble Apex Court in JCIT, Surat vs Saheli Leasing & Industries Ltd [2010] 191 TAXMAN 165 (SC). It is also evident from record that there is no voluntary offer by the assessee to tax the provision for bad debts, but it was only when the AO pointed out the discrepancy in the assessment proceedings and when the assessee was cornered, then he offered the same for taxation. The contention of assessee that it was a bona fide inadvertent mistake on the part of assessee further does not get support from the fact that he has been offering such provision to tax in past and subsequent years. This fact rather goes against the assessee for the reason that the assessee was well acquainted with law of such provision and therefore, it is not acceptable at all that return compilation was done by one of company's employee, who on account of ignorance committed the said mistake, as no support was taken from professional/tax expert. A perusal of the impugned order further shows that the ld. CIT(A) has failed to rebut the findings recorded by the Assessing Officer based on the decision of Hon'ble jurisdictional High Court in the case of CIT vs. Zoom Communications Pvt. Ltd., 327 ITR 51 (Del.), of AP High Court in Thakur V. Hari Prasad vs. CIT, 167 ITR 603 (AP) and Union of India vs. Dharmendra Textile Processors, 166 Taxman 65(SC). The decision in the case of Price Water Cooper (supra), in our opinion, does not render any help to the assessee, as in that case, the assessee had filed the revised return, which is not the case here. In view of decision of Hon'ble Apex court in Dharmendra Textile Processor's case, A.O. need not to prove that the assessee intentionally made incorrect or submitted false information or filed incorrect details in return of income. It is also worth consideration that the provision for bad debt included in the computation of total income by assessee in previous A.Yrs. 2005-06, 2006-07and 2007-08 was only for Rs.2,46,982/-, Rs.4,43,195/- and Rs. Nil respectively and in subsequent years 2009-10 and 2010-11 was for Rs.79,37,279/- and Rs.21,37,000/- respectively which was included in the respective computations of taxable income. However, such provision claimed during the year under consideration was for a huge amount of Rs.1,86,97,395/- which for want of any plausible circumstantial or documentary evidence could not be treated to be left from inclusion in the computation of taxable income due to inadvertent bona fide mistake. It is significant to mention here that the assessee could have voluntarily rectified this mistake while filing the return for the subsequent assessment year 2009-10 where he included the provision for bad debts in the computation of total income. The assessee had sufficient time to revise the return for A.Y. 2008-09 upto 31.03.2010 and by that time, the scrutiny proceedings would have also been started against the assessee as per law. However, the assessee did not file any revised return. It was only on the query of AO, the assessee admitted the default and offered the provision for taxation. It, therefore, can be hardly assumed that the default was due to bonafide inadvertent mistake on the part of assessee. We, therefore, do not find any justification to sustain the impugned order deleting the penalty on this count, as the AO has justifiably proved that the assessee has furnished inaccurate particulars of income entailing penalty u/s. 271(1)(c) of the Act. Accordingly, the penalty imposed on this account deserves to be sustained and the appeal of the Revenue deserves to be allowed.