mumbai the delhi incometax appellate tribunal itat has held that difference of opinion cannot be a ground for levying penalty in transfer pricing issues the itat said there should be sufficient ground to believe that the assessee had malafide intention before levying a penalty under section 271 i c of the incometax act the itat decision given in october 2009 was on an appeal filed by vertex customer services which runs a call centre the company incurred a loss of rs 43 crore after making adjustments for cost of first year operation cost of excess capacity and a provision of doubtful debts towards sum due from the parent company the adjustments were on the premise that these are extraordinary costs that need to be excluded while estimating arms length price under transfer pricing regulations the transfer pricing officer however rejected the third adjustment on the premise that provision for doubtful expenditure could not be construed extraordinary in nature on this ground a penalty was levied on the company explanation 7 to section 271 i c of the incometax act provides that in the case of an assessee who has carried out a crossborder transaction the amount added or disallowed be deemed to represent income in which particulars have been concealed or inaccurate particulars furnished unless the assessee shows that that income was calculated in good faith and with due diligence vertex moved the first appellate authority the commissioner appeal which allowed the appeal holding that the company had disclosed the full facts of the transaction and the adjustment was only on account of difference of opinion and therefore penalty could not be levied on the transaction following this the incometax department moved the itat the tribunal too dismissed the levy of penalty and observed that there can be more than one opinion on the issue of whether provision for bad debt is to be classified under ordinary item or extra ordinary itemit cited the supreme court decision in the case of hindustan steel to hold that penalty under 271 i c cannot be imposed where there is only a difference of opinion moreover penalty is warranted only if assessees intention is proved malafide