Shri Nitinbhai D. Shah, Gandhinagar V. Thw Income tax Officer,Ward-3, Gandhinagar

ITA 11/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6499 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-05-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 01-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S A BOHRA
• Assessee Lawyers: K C THAKKAR
• Keywords: Unexplained investment; Unexplained expenditure; Business income; Income from undisclosed sources; Deemed to accrue or arise in india; Bad and doubtful debts
• Section: 142(1); 133A; 133(6); 132

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE S/SHRI M.K. SHRAWAT, JM AND D.C.AGRAWAL, AM NITINBHAI D. SHAH, PLOT NO.547/1, MAHAVIRNAGAR, SECTOR-21, GANDHINAGAR. VS. ITO, WARD-3, GANDHINAGAR. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI K.C. THAKKAR, AR RESPONDENT BY:- SHRI S. A. BOHRA, SR.DR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FO LLOWING GROUNDS:- (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CON FIRMING THE ORDER IMPOSING PENALTY U/S 271(1)(C) OF THE ACT. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT(A) OUGHT TO HAVE CANCELLED THE ORDER U/ S 271(1)(C) OF THE ACT. IT IS THEREFORE PRAYED THAT THE ORDERS OF THE LOWER AUTHORITIES MAY BE CANCELLED. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS C ARRYING ON THE BUSINESS OF TRADING OF BICYCLES AND THEIR SPARE PAR TS. A SURVEY U/S 133A WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 27/12/2002. DURING THE COURSE OF SURVEY THE AO FOUND THE FOLLOWING UNEXPLA INED ITEMS :- ITA NO.11/AHD/2009 ASST. YEAR 2003-04 ITA NO.11/AHD/2009 ASST. YEAR 2003-04 2 1. EXCESS STOCK FOUND, UNEXPLAINED INVESTMENT IN STOCK RS.10,55,000/- 2. UNEXPLAINED INVESTMENT IN BUILDING RS.5,00 ,000/- 3. UNEXPLAINED EXPENDITURES AND WITHDRAWALS RS.4,00,000/- 4. UNEXPLAINED WITHDRAWALS RS.45,000/- AGAINST ABOVE UNEXPLAINED ITEMS ASSESSEE MADE A DIS CLOSURE OF RS.20,00,000/- AS INCOME FROM UNDISCLOSED SOURCES. THIS AMOUNT WAS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FI LED ON 28.11.2003 SHOWING A NET LOSS OF RS.19,23,658/-. THE ASSESSEE HAD CLAIMED IN THE RETURN A SUM OF RS.27,00,614/- AS BAD DEBT AND ACCO RDINGLY THE INCOME HAS BEEN REDUCED TO A LOSS AS DECLARED. THE AO CARR IED OUT VERIFICATION OF THE AMOUNT OF RS.27,00,614/- CLAIMED AS BAD DEBT. A T THIS STAGE THE ASSESSEE ALTERED HIS ARGUMENT AND CLAIMED THAT ABOV E AMOUNT IS A BUSINESS LOSS ALLOWABLE U/S 28. THE AO SUMMARISED T HE FACTS RELATING TO THE CLAIM AS UNDER :- I. THE AMOUNTS ON ACCOUNT OF BED DEBT WERE NEVER BEEN THE INCOME OF THE ASSESSEE. THE AMOUNTS WERE THE SUMS G IVEN TO MRI CYCLES FOR ADVANCES. WHICH WERE WRITTEN OFF IN THE BOOKS OF ACCOUNTS. II. THE ASSESSEE DEBITED RS.27,00,614/- IN PROFIT AND L OSS ACCOUNT AS BAD DEBT, AND REDUCES THE BUSINESS INCOME TO THA T EXTENT. III. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE CLAIMS IT BEING AN IRRECOVERABLE ADVANCE. THE AO, HOWEVER, DID NOT ALLOW THE ADJUSTMENT OF TH E CLAIM OF LOSS AGAINST THE DISCLOSED INCOME OF RS.20,00,000/- IN V IEW OF THE DECISION OF HON. GUJARAT HIGH COURT IN THE CASE OF FAKIR MOHMED HAJI HASAN VS. ITA NO.11/AHD/2009 ASST. YEAR 2003-04 3 CIT 247 ITR 290 (GUJ). THE QUANTUM ADDITION TRAVELL ED TO THE TRIBUNAL WHICH VIDE ITS ORDER IN ITA NO.2438/AHD/2006 ASST. YEAR 2003-04 IN THE CASE OF ITO VS. NITINKUMAR D. SHAH PRONOUNCED ON 27 .2.2009 CONFIRMED THE ORDER OF LD. CIT(A) IN ALLOWING THE SET OFF OF INCOME ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES WITH THE BUSINES S LOSS OF CURRENT YEAR OF THE ASSESSEE. IN THIS REGARD THE TRIBUNAL HAD OB SERVED AS UNDER :- 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON REC ORD. IN THE INSTANT CASE, DURING THE COURSE OF SURVEY, THE ASSESSEE DIS CLOSED ADDITIONAL INCOME OF RS.20 LAKHS ON ACCOUNT OF UNDISCLOSED INV ESTMENT IN STOCK, BUILDING AND DRAWING. THE ASSESSEE, IN HIS RETURN O F INCOME, DISCLOSED THIS ADDITIONAL INCOME OF RS.20 LAKHS BY CREDITING THE SAME IN HIS P & L A/C. THE AO WAS OF THE VIEW THAT THE ADDITIONAL INC OME OF RS.20 LAKHS IS CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES AND HE OPINED THAT IN VIEW OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF FAKIR MOHMED HAJI HASAN (SUPRA) SET OFF OF BUSINESS LOSS AGAINST THIS INCOME CANNOT BE ALLOWED AND, THEREFOR E, DID NOT ALLOW SET OFF OF BUSINESS LOSS AGAINST THIS INCOME. THE LD. C IT(A), OBSERVING THAT AS PER THE PROVISIONS OF SECTION 71(1) OF THE ACT, BUT INESS LOSS OF THE YEAR IS ALLOWABLE FOR BEING SET OFF AGAINST THE INCOME ASSE SSED UNDER THE HEAD INCOME FROM OTHER SOURCES. HE, THEREFORE, DIRECTED THE AO TO ALLOW SET OFF OF BUSINESS LOSS AGAINST THE INCOME ASSESSABLE UNDE R THE HEAD INCOME FROM OTHER SOURCES. THE REVENUE, BEFORE US, RELIED ON THE DECISION OF THE HON. GUJARAT HIGH COURT IN THE CASE OF FAKIR MOHMED HAJI HASAN (SUPRA) FOR THE SUBMISSION THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DIRECTING THE AO TO ALLOW SET OFF OF BUSINESS LOSS AGAINST DEEMED INCOME ASSESSED U/S 69B. WE FIND THAT THE DECISION OF THE HON. GUJARAT HIGH COURT IN THE CASE OF FAKIR MOHMED HAJI HASAN (SUPRA ) IS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE. IN THAT CASE, THE ASSESSEE CLAIMED DEDUCTION IN RESPECT OF UNEXPLAINED INVESTMENT AND THE HIGH COURT HAS HELD THAT THOUGH THIS INCOME WAS ASSESSABLE UNDER T HE HEAD INCOME FROM OTHER SOURCES AND DEDUCTION IN RESPECT OF SUCH INVE STMENT CANNOT BE ALLOWED. IN CONTRADICTION TO THIS IN THE INSTANT CA SE, THE ASSESSEE HAS NOT CLAIMED DEDUCTION BUT HAS CLAIMED DEDUCTION IN RESP ECT OF ASSESSED BUSINESS LOSS WHICH WAS SUFFERED DURING THE YEAR UN DER CONSIDERATION ITA NO.11/AHD/2009 ASST. YEAR 2003-04 4 AGAINST THE DEEMED INCOME ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. SECTION 71 OF THE ACT READS AS UNDER :- 71(1) SET OFF OF LOSS FROM ONE HEAD AGAINST INCOM E FROM ANOTHER. WHERE IN RESPECT OF ANY ASSESSMENT YEAR THE NET RES ULT OF THE COMPUTATION UNDER ANY HEAD OF INCOME, OTHER THAN C APITAL GAINS, IS A LOSS AND THE ASSESSEE HAS NO INCOME UN DER THE HEAD CAPITAL GAINS, HE SHALL SUBJECT TO THE PROVISIONS OF THIS CHAPTER, HE ENTITLED TO HAVE THE AMOUNT OF SUCH LOSS SET OFF AGAINST HIS INCOME, IF ANY, ASSESSABLE FOR THAT ASSESSMENT YEAR UNDER ANY OTHER HEAD. 9. THUS, IN VIEW OF THE ABOVE SPECIFIC PROVISIONS O F THE ACT, WE DO NOT FIND, ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN ALLOWING THE SET OFF OF INCOME ASSESSED UNDER THE HEAD INCOME FROM OTHER SO URCES WITH THE BUSINESS LOSS OF THE CURRENT YEAR OF THE ASSESSEE. CONSEQUENTLY, THE ORDER OF THE LD. CIT(A) IS CONFIRMED AND THE GROUND OF AP PEAL OF THE REVENUE IS DISMISSED. 3. IN PENALTY PROCEEDINGS THE AO HELD THAT IF SURVE Y HAD NOT TAKEN PLACE, THE CLAIM OF RS.27,00,614/- MIGHT NOT HAVE BEEN MADE. THE LD. CIT(A) HELD THAT THERE CANNOT BE ANY CASE OF LEVY O F PENALTY ON RS.20 LAKHS AS THE ASSESSEE HAS DECLARED THAT SUM IN THE RETURN OF INCOME FILED. IN ANY CASE, AO HAD ONLY CONSIDERED THE AMOUNT OF T RADING LOSS/BAD DEBTS IN THE BODY OF THE ASSESSMENT ORDER. IN RESPECT OF CLAIM OF BAD DEBTS, THE LD. CIT(A) CONFIRMED THE LEVY OF PENALTY BY HOLDING THAT EACH AND EVERY IRRECOVERABLE AMOUNT CANNOT BE CLAIMED AS DEDUCTION . THERE IS A MIS- REPRESENTATION OF THE CLAIM AS EARLIER IT WAS SHOWN AS BAD DEBT, SUBSEQUENTLY AS TRADING LOSS. THE LD. CIT(A) OBSERV ED AS UNDER:- 9. COMING TO THE LEVY OF PENALTY WITH RESPECT TO T HE ASSESSEES CLAIM OF RS.27,00,614/- BEING BAD DEBTS, I THINK THE AO H AS A REASONABLE CASE. ITA NO.11/AHD/2009 ASST. YEAR 2003-04 5 IT IS AN ADMITTED POSITION THAT THE AMOUNTS INVOLV ED WERE NOT DEBTS. YES, THE STAND OF THE APPELLANT GOT CHANGED ONLY WHEN TH E SCRUTINY PROCEEDINGS WERE SET INTO MOTION. NO DOUBT, THERE I S AN AUDITORS REMARK ABOUT THE IRRECOVERABILITY OF THE AMOUNT BUT EACH A ND EVERY IRRECOVERABLE AMOUNT CANNOT BE CLAIMED AS DEDUCTION. IT IS NOT TH E AOS CASE WHETHER THE LOSSES ARE REAL OR NOT, IT IS ALSO NOT HIS CASE WHETHER THE LOSSES ARE IN THE CAPITAL FIELD OR IN THE REVENUE FIELD. THE CASE OF THE AO IS THAT THE APPELLANT HAS GIVEN A MISREPRESENTATION TO ITS CLAI M WHICH WAS NEVER A DEBT, AND THEREFORE WHICH COULD NEVER HAVE BEEN CLA IMED AS BAD DEBT. THE SAID IRRECOVERABLE ADVANCES WITH M/S R.M.I. CYC LES PERTAINED TO AN EARLIER YEAR. ANY CLAIM OF IRRECOVERABILITY OF ADV ANCES AS AN EXPENSE WOULD OBVIOUSLY BE PUT TO A STRONGER TEST OF SCRUTI NY THAN A CLAIM OF BAD DEBT. THE FACT THAT THE APPELLANT CONSEQUENT UPON THE SURVEY ACTION HAD TO DECLARE CERTAIN ADDITIONAL INCOME MUST HAVE PROM PTED HIM TO CHOOSE THIS INACCURATE DESCRIPTION TO REDUCE HIS TAX LIABI LITY. ON THE OTHER HAND, MERELY BECAUSE THE CLAIM OF BAD DEBT HAS BEEN PART OF THE PROFIT AND LOSS ACCOUNT, IT CANNOT BE STATED THAT THE APPELLANT HAD DECLARED ALL ITS PARTICULARS TRULY AND CORRECTLY. HAD IT TAKEN THE S TAND WHICH HE TOOK DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NAMELY THAT THEY ARE IRRECOVERABLE ADVANCES AND THE CLAIM WOULD BE JUSTI FIED WITH RESPECT TO THE YEAR OF LIABILITY, A FACT SUBSEQUENTLY BROUGHT INTO FOCUS BY THE CIT(A)S ORDER. 4. BEFORE US, THE LD. AR FOR THE ASSESSEE SUBMITTED THAT IT IS NOT CLEAR FROM THE PENALTY ORDER THAT AO HAS LEVIED PENALTY I N RESPECT OF SUM OF RS.20,00,000/- AS QUANTUM OF CONCEALMENT HAS NOT BE EN SPECIFIED IN THE BODY OF PENALTY ORDER WHERE ONLY THE MINIMUM TAX SO UGHT TO BE EVADED HAS BEEN MENTIONED. IN ANY CASE HE SUBMITTED THAT L D. CIT(A) HAS DELETED THE PENALTY IN RESPECT OF ADDITION OF RS.20 LAKHS A ND THE DEPARTMENT HAS NOT PREFERRED ANY APPEAL. NOTWITHSTANDING, HE SUBMI TTED THAT PENALTY CANNOT BE LEVIED IN RESPECT OF SUM DECLARED DURING THE COURSE OF SURVEY AND FURTHER DECLARED IN THE RETURN OF INCOME FILED. HE REFERRED TO THE DECISION OF THE TRIBUNAL C BENCH AHMEDABAD IN THE CASE OF DCIT VS. ITA NO.11/AHD/2009 ASST. YEAR 2003-04 6 DR. SATISH B. GUPTA 42 SOT 48 WHEREIN IT IS HELD TH AT IF THERE IS NO DIFFERENCE BETWEEN RETURNED INCOME AND ASSESSED INC OME THEN AS PER EXPLANATION-4 (C) THERE CANNOT BE ANY COMPUTATION O F TAX SOUGHT TO BE EVADED. IN THIS REGARD HE REFERRED TO FOLLOWING PAR A FROM THAT ORDER:- THE BASIS FOR LEVY OF PENALTY IS RETURN OF INCOME. IF ANY AMOUNT HAS BEEN SHOWN IN THE RETURN OF INCOME THEN IT CANNOT BE SAID THAT ASSESS EE HAS CONCEALED ANY PARTICULARS ABOUT THAT INCOME OR FURNISHED INACCURATE PARTICULA RS IN RELATION THERETO. THERE CANNOT BE ANY CONCEALMENT PRIOR TO FILING OF RETURN. QUESTION OF CONSIDERING WHETHER ASSESSES IS LIABLE FOR ACTION UNDER S. 271(L)(C) WOULD ARISE ON LY WHEN RETURN OF INCOME IS SCRUTINIZED BY THE AO AND HE FINDS SOME MORE ITEMS OF INCOME OR ADDITIONAL INCOME OVER AND ABOVE WHAT IS DECLARED IN THE RETURN. IF IT IS SO, THE AS SESSEE WOULD BE LIABLE FOR ACTION UNDER S. 271(L)(C) IN RESPECT OF SUCH ITEMS ONLY WHICH ARE D ISCOVERED BY THE AO ON THE SCRUTINY OF RETURN OF INCOME OR AFTER CARRYING OUT INVESTIGATIO N AND DISCOVERING SOME MORE ITEMS OF INCOME NOT FOUND DECLARED OR MENTIONED \R\ THE RETU RN OF INCOME. PRIOR TO FILING OF RETURN OF INCOME THERE JS NO CONCEPT OF CONCEALMENT OR FURNIS HING OF INACCURATE PARTICULARS. THE INITIAL PHRASE USED IN S. 271(L)(C) SUGGESTS THAT A O HAS TO FIND IN THE COURSE OF ANY .PROCEEDINGS UNDER THIS ACT THAT ASSESSEE HAS CONCE ALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IN FACT THE PROCEEDINGS AGAINST THE ASSESSEE WOULD START ONLY AFTER RETURN OF INCOME IS FIFED BY THE ASSESSEE OR AFTER ISSUANCE OF STATUTORY NOTICE AGAINST HIM SUCH AS UN DER S. 142(1) OR UNDER 5. 143(2). CARRYING OUT SURVEY UNDER S. 133A IS NOT AT ALL ANY PROCEEDINGS. PROCEEDINGS AS USED IN S. 271(L)(C) ARE STATUTORY PROCEEDINGS INITIATED AG AINST THE ASSESSEE EITHER BY ISSUANCE OF STATUTORY NOTICE OR AFTER FILING OF RETURN OF INCOM E. SURVEY UNDER S. 133A OR SEARCH UNDER S, 132 OR ISSUANCE OF NOTICE UNDER S. 133(6) FOR EX AMPLE, ARE ONLY MEANS OF COLLECTING EVIDENCE AGAINST THE ASSESSEE AND ARE NOT EQUIVALEN T TO STATUTORY PROCEEDINGS. ANOTHER CRITERIA OF FINDING OUT AS TO WHETHER PARTICULAR AC TION IS A STATUTORY PROCEEDING OR NOT IT IS TO BE SEEN WHETHER IT CAN BE BROUGHT TO A LEGAL CON CLUSION AGAINST THE ASSESSEE BY DETERMINING HIS RIGHT OR LIABILITY. MERELY CARRYING OUT SURVEY UNDER S. 133A DOES NOT CREATE ANY LIABILITY AGAINST THE ASSESSEE WHICH IS CREATED ONLY THROUGH ASSESSMENT PROCEEDINGS OR PENALTY PROCEEDINGS. THEREFORE, THE DEPARTMENTAL REPRESENTATIVE IS INCORRECT RN HRS SUBMISSION THAT SURVEY BEING A PROCEEDING AND AO HA S DISCOVERED CONCEALMENT DURING SURVEY, THEREFORE, THE ASSESSEE IS LIABLE FOR PENAL TY UNDER S, 27L(L)(C). FURTHER CL (C) TO S. 271(1) MENTIONS 'AS CONCEALED..,,,..OR FURNISHED'. THEY ARE PAST TENSE WORDS INDICATING THAT ASSESSEE HAS COMMITTED CERTAIN ACT ON WHICH PE NALTY IS LEVIABLE. THUS THE ACT OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS SHOULD BE VIEWED BY THE AO AS DONE WITH RESPECT TO RETURN OF INCOME. THE OMISSION OR C OMMISSION OR CONTUMACIOUS CONDUCT HAS TO BE VIEWED FROM THE RETURN OF INCOME AND IF C ERTAIN THING IS NOT DISCLOSED OR NOT FURNISHED THEREIN ONLY THEN IT CAN BE SAID THAT ASS ESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. PRIOR TO THIS ASSESSEE HAS NOT DONE ANY CONTUMACIOUS CONDUCT ON WHICH PENALTY CAN BE LE VIED. MERELY BECAUSE CERTAIN RECEIPTS ARE NOT RECORDED IN THE BOOKS OF ACCOUNT O R RECEIPTS ARE NOT ISSUED TO THE PATIENTS, BUT INCOME THEREFROM WAS FINALLY DECLARED IN THE RETURN OF INCOME, THEN THERE IS NO CONTUMACIOUS CONDUCT. FOR NOT MAINTAINING BOOKS OF ACCOUNT OR NOT ISSUING RECEIPTS TO THE PATIENTS FOR THE AMOUNT RECEIVED BY THE ASSESSE E, THE BOOKS, AT THE BEST, CAN BE REJECTED BY INVOKING PROVISIONS OF S. 145(3) AND IN COME CAN BE ESTIMATED IN ACCORDANCE WITH S. 144. BUT WHERE THE AO ACCEPTS THE INCOME DE CLARED IN THE RETURN OF INCOME THEN ASSESSEE CANNOT BE CHARGED FOR ANY CONTUMACIOUS CON DUCT. THUS WHERE RETURNED INCOME IS ACCEPTED THERE IS NO CASE FOR LEVY OF PEN ALTY,CIT VS. PARKASH INDUSTRIES LTD. ITA NO.11/AHD/2009 ASST. YEAR 2003-04 7 (2010) 322 ITR 622 (PE-H) AND SMT, GOVINDA DEVI VS. CIT 2008) 220 CTR (AN) 189 : (2008) 14 DTR (ALL) 341 : (2008) 304 ITR340 (ALL) R ELIED ON. 5. IN RESPECT OF OTHER ADDITION ON WHICH LD. CIT(A) HAS CONFIRMED THE PENALTY, LD. AR SUBMITTED THAT ASSESSEE HAD GIVEN A DVANCE TO A COMPANY NAMELY R.M.I.CYCLES FOR PURCHASE OF BICYCLES BUT D UE TO DIFFICULTIES IN THAT COMPANY, BICYCLES WERE NOT SUPPLIED AND AMOUNT GIVEN WAS TREATED AS BAD DEBT AND WRITTEN OFF. SUBSEQUENTLY IT WAS RE ALIZED THAT ADVANCE WAS GIVEN IN THE COURSE OF BUSINESS AND IN THE EVEN T OF NO RECOVERY OF THAT SUM IT WAS CLAIMED AS A TRADING LOSS. THEREFOR E, ASSESSEE HAD CHANGED THE STAND FROM BAD DEBT TO TRADING LOSS. BU T THE AO HAS NOT FOUND THE CLAIM AS FALSE OR FABRICATED. MERELY CLAI M BEING NOT ACCEPTED WOULD NOT INVITE PENALTY U/S 271(1)(C) AS HELD BY H ON. SUPREME COURT IN CIT VS. RELIANCE PETROPRODUCTS 322 ITR 158 (SC) 6. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDE R OF LD. AO. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. SINCE REVENUE HAS NOT FILED ANY APPEAL O N DELETION OF PENALTY ON SUM OF RS.20 LAKHS BEING THE AMOUNT DISCLOSED BY THE ASSESSEE DURING THE COURSE OF SURVEY AND FURTHER DECLARATION IN THE RETURN OF INCOME FILED AFTER SURVEY, THE QUESTION OF CONSIDERING THE LEVY OF PENALTY ON THAT AMOUNT NOW WILL NOT ARISE. NOTWITHSTANDING, WHEN AN AMOUNT IS DECLARED ITA NO.11/AHD/2009 ASST. YEAR 2003-04 8 IN THE RETURN OF INCOME NO PENALTY THEREOF CAN BE L EVIED AS HELD IN THE CASE OF DR. SATISH B. GUPTA (SUPRA). 8. SO FAR AS LEVY OF PENALTY ON SUM OF RS.27,00,614 /- IS CONCERNED, IN OUR CONSIDERED VIEW PENALTY ON THIS AMOUNT ALSO CAN NOT SURVIVE. THE REASONS ARE THAT ASSESSEE HAS MADE A CLAIM BY STATI NG CERTAIN FACTS THAT IT HAS GIVEN AN ADVANCE TO A COMPANY M/S R.M.I. CYCLES AND IT WAS UNABLE EITHER TO PROCURE BICYCLES AGAINST THAT AMOUNT, IT CONSIDERED TO WRITE IT OFF AS BAD DEBT AND IN THE ALTERNATIVE AS TRADING LOSS. SINCE THE FACTS SO STATED BY THE ASSESSEE ARE NOT FOUND FALSE AND LOSS CLAIME D BY THE ASSESSEE HAS NOT BEEN ALLOWED ONLY FOR THE REASONS THAT ASSESSEE WAS NOT ABLE TO PROVE THAT IT HAS INCURRED THE LOSS IN THE CURRENT YEAR, IT WILL NOT ATTRACT PENALTY. THE LD. AR HAS RIGHTLY RELIED ON THE DECISION OF HO N. SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (SUPRA) . FOR MERELY MAKING A CLAIM WHICH IS NOT UPHELD PENALTY CANNOT BE LEVIED. AS A RESULT, WE CANCEL THE PENALTY. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 27/5/11. SD/- SD/- (M. K. SHRAWAT) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMB ER AHMEDABAD, DATED : 27/5/11. ITA NO.11/AHD/2009 ASST. YEAR 2003-04 9 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 12/05/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 25/05/2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..