The DCIT, Circle-4, Baroda V. M/s. Yuvraj Industries Ltd., Baroda

ITA 1381/AHD/2009

• Counselvise Citation: 138120514 RSA 2009
• Duration Of Justice: 2 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-09-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 29-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K VOHRA
• Assessee Lawyers: M K PATEL
• Keywords: Bad and doubtful debts
• Section: 2

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, A BENCH . .. . . .. . , , , , !'# !'# !'# !'#, , , , $ $ $ $ %% % & %% % & %% % & %% % &, , , , ' ' ' ' ( # ( # ( # ( # BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND MUKUL KR. SHRAWAT, JUDICIAL MEMBER) ITA NO.1381/AHD/2009 [ASSTT. YEAR : 2004-2005] DCIT, CIR.4 BARODA. /VS. M/S.YUVRAJ INDUSTRIES LTD. C/O. MR. AJAY V. SHAH KAMDHENU BUNGALOW 36, PARICHAY PARK SOCIETY NR.J.P. ROAD, BARODA. PAN : AAACY 0665 Q ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) ' . / (/ REVENUE BY : SHRI R.K. VOHRA 1& . / (/ ASSESSEE BY : SHRI M.K. PATEL DATE OF HEARING : 13 TH SEPTEMBER, 2011 DATE OF PRONOUNCEMENT : 16 TH SEPTEMBER, 2011 (2 / O R D E R PER G.D. AGARWAL , VICE-PRESIDENT : THIS IS REVENUES APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEAL S)-III, BARODA DATED 18.2.2009 ARISING OUT OF THE ORDER OF THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. THE ONLY GROUND RAISED IN THIS APPEAL BY THE REV ENUE IS AGAINST THE CANCELLATION OF PENALTY LEVIED UNDER SECTION 271(1) (C) OF THE IT ACT AT RS.81,38,243/-. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. IT WAS POINTED OUT BY THE LEARNED COUNSEL THAT THE AO HAD LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON ACCOUNT OF DI SALLOWANCE OF BAD DEBTS CLAIMED BY THE ASSESSEE AT RS.2,26,85,000/-. THAT IN THE QUANTUM APPEAL, THE ITAT HAD UPHELD THE DISALLOWANCE OF BAD DEBTS FOLLO WING THE DECISION OF THE ITA NO.1381/AHD/2009 -2- HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DH ALL ENTERPRISES AND ENGINEERS P. LTD., 295 ITR 481 (GUJ). THAT SUBSEQU ENTLY, THE HONBLE APEX COURT IN THE CASE OF T.R.F. LTD. VS. CIT, 323 ITR 3 97 (SC) REVERSED THE DECISION IN THE CASE OF DHALL ENTERPRISES AND ENGIN EERS P. LTD. (SUPRA). THAT THE HONBLE JURISDICTIONAL HIGH COURT ADMITTED THE ASSESSEES APPEAL FILED AGAINST THE ORDER OF THE ITAT IN QUANTUM APPEAL. H E FURTHER SUBMITTED THAT IN ANY CASE THE ISSUE UNDER CONSIDERATION IS OF LEVY O F PENALTY UNDER SECTION 271(1)(C). THE CIT(A) ALLOWED THE RELIEF TO THE AS SESSEE ON THE GROUND THAT THIS ISSUE WAS HIGHLY DEBATABLE AND EVEN AT THE RELEVANT TIME VARIOUS OTHER HIGH COURTS HAVE GIVEN THE DECISION CONTRARY TO THE DECI SION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF DHALL ENTERPRISES (SUPRA) . NOW THE ISSUE IS SETTLED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONB LE APEX COURT IN THE CASE OF T.R.F. LTD. (SUPRA). THAT THE HONBLE APEX COURT A LSO CONSIDERED THE ISSUE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS P. LTD., 322 ITR 158 WHEREIN THEIR LO RDSHIPS HELD THAT MERELY BECAUSE A CLAIM OF THE ASSESSEE WAS NOT ACCEPTABLE IT WILL BY ITSELF WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS. TH US, THE ABOVE DECISION OF THE HONBLE APEX COURT WOULD BE SQUARELY APPLICABLE. 4. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDER OF THE AO AS WELL THE ORDER OF THE ITAT IN QUANTUM APPEAL. 5. HAVING HEARD BOTH THE PARTIES AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE LIMITED ISSUE IN THIS APPE AL BEFORE US IS WITH REGARD TO VALIDITY OF PENALTY LEVIED UNDER SECTION 271(1)(C) WHICH IS CANCELLED BY THE CIT(A). THE ISSUE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) IS CONSIDERED BY THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIA NCE PETROPRODUCTS P. LTD. (SUPRA) WHEREIN THEIR LORDSHIPS HELD AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. ITA NO.1381/AHD/2009 -3- SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS ' USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND T O BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY O F FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSE SSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO N, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGI NATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. (EMPHASIS ADDED) THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY TH E ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSE E CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULAR S ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRAC T PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE , NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOU S OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 2 71(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RE TURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS . (EMPHASIS ADDED) THE RATIO OF THE ABOVE DECISION WOULD BE SQUARELY A PPLICABLE IN THE CASE OF THE ASSESSEE. IN THE CASE UNDER APPEAL BEFORE US, THE PENALTY UNDER SECTION 271(1)(C) IS LEVIED MERELY BECAUSE THE ASSESSEES C LAIM FOR DEDUCTION OF BAD DEBTS WAS NOT ACCEPTED BY THE AO. HOWEVER, IT IS N OT THE CASE OF THE REVENUE THAT THE ASSESSEE FURNISHED ANY INACCURATE OR ERRON EOUS INFORMATION WITH REGARD TO SUCH CLAIM. THE HONBLE APEX COURT HAS CLEARLY HELD THAT A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITS ELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. THE ABOVE FINDING OF THE HONBLE APEX COURT WOULD BE SQ UARELY APPLICABLE IN THE CASE OF THE ASSESSEE. IN FACT IN THE CASE OF THE A SSESSEE, WHETHER THE ASSESSEES CLAIM IS SUSTAINABLE IN LAW OR NOT IS STILL IN DISP UTE BECAUSE THE MATTER IS SUB JUDICED WITH THE HONBLE JURISDICTIONAL HIGH COURT. IN VI EW OF THE ABOVE, IN OUR OPINION, THIS DECISION OF THE HONBLE APEX COUR T IN THE CASE OF RELIANCE ITA NO.1381/AHD/2009 -4- PETROPRODUCTS PVT. LTD. (SUPRA) WOULD BE SQUARELY A PPLICABLE TO THE FACTS OF THE ASSESSEES CASE. 6. IN THE GROUNDS OF THE APPEAL, THE REVENUE HAS RE LIED UPON THE DECISION IN THE CASE OF UOI VS. DHARMENDRA TEXTILE PROCESSORS & OTHERS, 306 ITR 277 (SC). THE FACTS OF THIS CASE ARE ALTOGETHER DIFFER ENT THAN THE FACTS IN APPEAL BEFORE US. MOREOVER, THE DECISION OF THE HONBLE A PEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) IS SUBSEQU ENT TO THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF DHARMENDRA TEXTIL E PROCESSORS (SUPRA). THE FACTS OF THE ASSESSEES CASE ARE SIMILAR TO THE CASE IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA). THEREFORE, IN OUR OPINION, THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRO DUCTS (SUPRA) WOULD BE SQUARELY APPLICABLE TO THE ASSESSEES CASE. WE THE REFORE RESPECTFULLY FOLLOWING THE SAME, UPHOLD THE ORDER OF THE CIT(A) AND DISMIS S THE APPEAL FILED BY THE REVENUE. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT THE DATE MENTIONED O N THE FIRST PAGE OF THIS ORDER. SD/- SD/- ( %% % & %% % & %% % & %% % & /MUKUL KR. SHRAWAT ) ' ' ' ' /JUDICIAL MEMBER ( . .. . . .. . G.D. AGARWAL) !'# !'# !'# !'# /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD