M/s Trident Infotech Corporation Ltd., Ludhiana V. DCIT, Ludhiana

ITA 1298/CHANDI/2010

• Counselvise Citation: 129821514 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-03-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 15-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: ASHWANI KUMAR
• Keywords: Bad and doubtful debts; Provision of bad debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.1298/CHD/2010 (ASSESSMENT YEAR : 2004-05) TRIDENT INFOTECH CORPORATION LTD., VS. THE D.C.I. T., 85, INDUSTRIAL AREA-A, CIRCLE VII, LUDHIANA. LUDHIANA. PAN: AABCT8966C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR RESPONDENT BY : SHRI N.K.SAINI, DR DATE OF HEARING : 21.03.2012 DATE OF PRONOUNCEMENT : 26.03.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, LUDHIANA D ATED 13.10.2010 RELATING TO ASSESSMENT YEAR 2004-05 AGAINST THE PEN ALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT). 2. THE ONLY GROUND OF APPEAL RAISED BY THE ASSESSEE READS AS UNDER: THAT ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 IS AGAINST LAW AND FACTS ON THE FILE IN A S MUCH THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD THE ACTION OF THE LD. ASSESSING OFFICER IN LEVYING PENALTY U/S 271(1) (C) AMOUNTING TO RS.20,30,470/- WHEREAS NO SUCH PENALTY WAS EXIGIBLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINS T THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AMOUNTING TO RS.20,30,470/ -. 4. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD FURNISHED RETURN OF INCOME SHOWING LOSS 2 OF RS.38,28,164/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE MADE A REQUEST THAT THE PROVISION FOR BAD DEBTS AMOUNTING TO RS.11,45,476/- SHOULD BE ADDED TO THE INCOME, SUBJE CT TO NON-LEVY OF PENALTY. THE ASSESSING OFFICER WHILE COMPLETING TH E ASSESSMENT PROCEEDINGS MADE ADDITION OF RS.11,45,476/-. FURTH ER THE ASSESSING OFFICER ALSO MADE ADDITION UNDER SECTION 36(1)(III) OF THE ACT ON ACCOUNT OF INTEREST ATTRIBUTABLE TO INTEREST FREE ADVANCES MADE BY THE ASSESSEE, OUT OF THE INTEREST EXPENDITURE DEBITED TO PROFIT & LOSS ACCOUNT. THE ASSESSING OFFICER DISALLOWED SUM OF RS.45,14,373/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF M//S ABHISHEK INDUSTRIES LTD.[286 ITR 1 (P&H)]. PENALTY PROCEED INGS U/S 271(1)(C) OF THE ACT WERE INITIATED FOR THE AFORESAID ADDITIONS. THE ASSESSING OFFICER REJECTING THE PLEA OF THE ASSESSEE IN RESPECT OF TH E TWO ADDITIONS MADE LEVIED PENALTY U/S 271(1)(C) OF THE ACT AT RS.2030, 470/-. THE CIT (APPEALS) UPHELD THE ORDER OF THE ASSESSING OFFICER LEVYING PENALTY U/S 271(1)(C) OF THE ACT. 5. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF T HE CIT (APPEALS). THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT THAT NO PENALTY U/S 271(1)(C) OF THE ACT IS LEVIABLE ON THE DISALLOWANC E OF INTEREST WORKED OUT UNDER SECTION 36(1)(III) OF THE ACT IN VIEW OF THE ORDER OF THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE ITSELF RELATING TO ASSESSMENT YEAR 2005-06. IN RESPECT OF THE SECOND ADDITION ON ACCOUNT OF PROVISION FOR BAD DEBTS, THE LEARNED A.R. FOR THE ASSESSEE DREW OUR ATTENTION TO THE LETTER FILED BEFORE THE A SSESSING OFFICER DATED 24.10.2006 PLACED AT PAGE 7 OF THE PAPER BOOK AND P OINTED OUT THAT THE SAID INCOME WAS OFFERED BY THE ASSESSEE TO BE ADDED BACK AS THE SAID AMOUNT WAS CLAIMED AS DEDUCTION BECAUSE OF INADVERT ENT MISTAKE. THE 3 LEARNED A.R. FOR THE ASSESSEE FURTHER POINTED OUT T O THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER WHERE IN THE ASSESSING OFFICER HAD MADE THE SAID ADDITION AT THE INSTANCE OF THE ASSESSEE AND NO OTHER EVIDENCE WAS BROUGHT ON RECORD. IT WAS FURTH ER POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE THAT SIMILAR ISSUE IN RESPECT OF THE ADDITION ON ACCOUNT OF PROVISION FOR BAD DEBTS AROSE BEFORE THE DELHI BENCH OF THE TRIBUNAL IN CASE OF HERO HONDA MOTORS LTD. VS. DCIT (2012) 14 ITR (TRIB) 161 (DELHI) AND THE PENALTY U/S 271(1)(C) OF THE ACT WAS DELETED. 7. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF THE ASSESSING OFFICER AND CIT (APPEALS). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION OF THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD CLAIMED INTEREST EXPENDITURE ON THE BORROWED FU NDS IN ITS PROFIT & LOSS ACCOUNT. THE ASSESSING OFFICER NOTED THE ASSE SSEE TO HAVE MADE INTEREST FREE ADVANCES ON WHICH NO INTEREST WAS CHA RGED BY THE ASSESSEE AND IN VIEW OF THE RATIO LAID DOWN BY THE JURISDICT IONAL HIGH COURT IN M/S ABHISHEK INDUSTRIES LTD. (SUPRA) THE ASSESSING OFFICER COMPUTED THE DISALLOWANCE UNDER SECTION 36(1)(III) OF THE ACT. THE ASSESSEE WAS HELD TO BE LIABLE FOR LEVY OF PENALTY U/S 271(1)(C) OF T HE ACT ON THE AFORESAID ADDITION OF RS.45,14,373/-. THE AFORESAID ADDITION MADE ON ACCOUNT OF APPLICATION OF THE JUDICIAL RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S ABHISHEK INDUSTRIES LTD. ( SUPRA), DOES NOT ESTABLISH THE CASE OF THE REVENUE FOR THE ASSESSEE TO HAVE EITHER CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTIC ULARS OF INCOME. IN THE ABSENCE OF NON-FULFILLMENT OF EITHER OF THE TWI N CONDITIONS NECESSARY FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, WE FI ND NO MERITS IN THE ORDERS OF THE AUTHORITIES BELOW IN LEVYING THE SAID PENALTY ON THE 4 AFORESAID ADDITION OF RS.45,14,373/-. THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2005-06 VIDE ORDER DATED 28.2.2011 IN ITA NO.1167/CHD/2009 HAD DELETED THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT ON THE AFORESAID ADDITION MADE ON ACCOUNT O F DISALLOWANCE UNDER SECTION 36(1)(III) OF THE ACT. ACCORDINGLY, WE FIN D NO MERITS IN THE ORDERS OF THE ASSESSING OFFICER AND CIT (APPEALS) I N LEVYING PENALTY U/S 271(1)(C) OF THE ACT ON THE AFORESAID ADDITION OF R S.45,14,373/-. 9. THE NEXT ADDITION MADE IN THE HANDS OF THE ASSES SEE WAS ON ACCOUNT OF PROVISION OF BAD DEBTS AMOUNTING TO RS.11,45,476 /-. THE ASSESSEE HAD CLAIMED SAID EXPENDITURE IN ITS PROFIT & LOSS ACCOU NT. HOWEVER DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE H AD FURNISHED LETTER DATED 24.10.2006 UNDER WHICH IT HAD POINTED OUT THA T THE SAID AMOUNT WAS CLAIMED AS AN EXPENDITURE BY AN INADVERTENT MIS TAKE AND THE SAME WAS OFFERED AS INCOME BY THE ASSESSEE, SUBJECT TO N ON-LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE PERUSAL OF THE ASSESSMEN T ORDER PASSED BY THE ASSESSING OFFICER ALSO REFLECTS THE SAID PLEA OF TH E ASSESSEE WHICH HAS BEEN REPRODUCED BY THE ASSESSING OFFICER AT PAGE 2 OF THE ASSESSMENT ORDER. THE ADDITION WAS MADE IN THE HANDS OF THE A SSESSEE PURSUANT TO THE DECLARATION OF THE ASSESSEE IN THIS REGARD AND NO OTHER CONTRARY EVIDENCE WAS FOUND BY THE ASSESSING OFFICER. IN TH E TOTALITY OF THE AFORESAID FACTS AND CIRCUMSTANCES WHERE THE ASSESSE E HAD DISCLOSED THE PARTICULARS IN ITS RETURN OF INCOME AND HAD WITHDRA WN ITS CLAIM OF EXPENDITURE BEING MADE BECAUSE OF AN INADVERTENT MI STAKE AND OFFERED THE SAME AS ADDITIONAL INCOME IN THE IMPUGNED YEAR ITSELF, THERE IS NO JUSTIFICATION IN CHARGE OF THE ASSESSING OFFICER TH AT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME IN THIS REGARD. WE FIND NO MERITS IN THE ORDER OF THE ASSESSING OFFICER IN LEV YING PENALTY U/S 271(1)(C) OF THE ACT ON THE AFORESAID ADDITION OF R S.11,45,476/- AND 5 DIRECT THE ASSESSING OFFICER TO DELETE THE SAME. T HE PENALTY U/S 271(1)(C) OF THE ACT ON BOTH THE GROUNDS THUS STAND S DELETED. THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH DAY OF MARCH, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 26 TH MARCH, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH