Penalty cannot be levied for making a claim which may be erroneous or wrong

Ventura Textiles Ltd. Vs CIT (Bombay High Court) The issue under consideration is whether the levy of penalty u/s.271(1)(c) of the Act is justified in law for for making a claim which may be erroneous or wrong ? In present case, the assessee is resident company. Assessee filed its return of income. During the assessment proceedings it was found amongst others that assessee had debited Rs.62,47,460.00 under the head ‘selling and distribution expenses’ and claimed it as bad debt in the books of account thus claiming it as a deduction under Section 36(1)(vii) of the Act. Subsequently ...