The ITO, Ward-2(3), Ahmedabad V. M/s. Sagar Industries, Ahmedabad

ITA 2224/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9040 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 16-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOVIND SINGHAL
• Assessee Lawyers: M J SHAH
• Keywords: Bad and doubtful debts
• Section: 271(1)(c); 264

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI D.C. AGRAWAL, A.M.) I.T.A. NO. 2224/AHD./2009 ASSESSMENT YEAR : 2003-2004 INCOME TAX OFFICER, WARD-2(3), -VS.- M/S. SAGAR INDUSTRIES, AHMEDABAD AHMEDABAD (P.A. NO. AADFS 3154 Q) (APPELLANT) (R ESPONDENT) APPELLANT BY : SHRI GOVIND SINGHAL, D.R. RESPONDENT BY : SHRI M.J. SHAH O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THE REVENUE HAS FILED THIS APPEAL FOR THE ASSESSME NT YEAR 2003-04 AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-VII, AHMEDABAD DATED 22.05.2009 CANCELLING THE PENALTY OF RS.3,67,500/- LEVIED BY THE A.O. UNDER S ECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E A.O. MADE THE ADDITION OF RS.10,00,000/- ON ACCOUNT OF BAD DEBTS. THE ASSESSEES APPEAL AGAI NST THE SAID ADDITION WAS DISMISSED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) VIDE OR DER DATED 01.11.2006 HOLDING THAT SINCE THE TRANSACTIONS TOOK PLACE DURING THE ASSESSMENT Y EAR 2000-01, THE ASSESSEE SHOULD HAVE WRITTEN OFF THE AMOUNT IN THAT YEAR ITSELF OR AT WORST IT S HOULD HAVE BEEN DONE IN ASSESSMENT YEAR 2001- 02. IN RESPECT OF THIS ADDITION, THE A.O. LEVIED PE NALTY UNDER SECTION 271(1)(C) AMOUNTING TO RS.3,67,500/-. 3. IN APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS) AGAINST THE PENALTY ORDER, THE LD. COUNSEL OF THE ASSESSEE CONTENDED TH AT THE ASSESSEE HAS PREFERRED A REVISION PETITION UNDER SECTION 264 BEFORE THE CIT-1, AHMEDABAD REQUE STING HIM TO GIVE DIRECTION TO ALLOW THE SUM OF R.10,00,000/- IN THE ASSESSMENT YEAR 2000-01 CLAIMED AS TRADE LOSS IN THE ASSESSMENT YEAR 2003-04. THE LD. CIT ACCORDINGLY GAVE DIRECTION TO A.O. TO ALLOW THE SAID LOSS IN THE ASSESSMENT YEAR 2000-01. IN VIEW OF THIS FACT, BEFORE THE LEAR NED COMMISSIONER OF INCOME TAX(APPEALS) IT 2 WAS SUBMITTED THAT THE QUESTION OF FURNISHING FALSE PARTICULARS DID NOT ARISE. IN SUPPORT OF THIS CONTENTION, RELIANCE WAS PLACED ON THE FOLLOWING DE CISIONS :- (I) CIT VS.- MANILAL TARACHAND [254 ITR 630 (GUJ.) ]; (II) CIT VS.- NAGRI MILLS LTD. [33 ITR 684 (BOM. )] 4. AFTER CONSIDERING THE AFORESAID SUBMISSIONS, IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HELD THAT THIS IS NOT A FIT CASE FOR LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. HE A CCORDINGLY CANCELLED THE SAME. AGGRIEVED BY THIS ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), THE REVENUE IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING, SHRI GOVIND SINGHAL, DEP ARTMENTAL REPRESENTATIVE APPEARED AND RELIED ON THE REASONING GIVEN BY THE A.O. IN THE AS SESSMENT ORDER AS WELL AS PENALTY ORDER AND CONTENDED THAT BAD DEBTS CLAIMED IN THE ASSESSMENT YEAR UNDER APPEAL WAS NOT ALLOWABLE. THIS WAS RIGHTLY DISALLOWED BY THE A.O. AND ON THIS AMOU NT PENALTY UNDER SECTION 271(1)(C) WAS ALSO RIGHTLY LEVIED BECAUSE THE ASSESSEE HAS CONCEALED T HE PARTICULARS OF INCOME TO THE EXTENT OF RS.10,00,000/-. 6. ON THE OTHER HAND, SHRI M,.J. SHAH APPEARING ON BEHALF OF THE ASSESSEE CONTENDED THAT THREE IS NO CONCEALMENT OF INCOME WITHIN THE MEANIN G OF SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. THE CLAIM OF RS.10,00,000/- WAS BONA FIDE , WHICH IS EVIDENT FROM THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AS WELL AS THE CONCERNED LD. COMMISSIONER OF INCOME TAX UNDER SECTION 264. IN VIEW OF THIS, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) RIGHTLY CANCELLED THE PENALTY. 7. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE R IVAL SUBMISSIONS MADE BEFORE US AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT IT IS NOT A FIT CASE FOR LEVYING PENALTY UNDER SECTION 271(1)(C) WHEREIN BAD DEBTS IS NOT ALLOWABLE. THE DIFFERENCE IS ONLY THE YEAR OF ALLOWABILITY. THE CONCERNED LD. CO MMISSIONER OF INCOME TAX IN HIS ORDER UNDER SECTION 264 DIRECTED THE A.O. TO ALLOW THE CLAIM OF RS.10,00,000/- IN THE ASSESSMENT YEAR 2001- 02. THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME 3 WITHIN THE MEANING OF SECTION 271(1)(C) OF THE I.T. ACT. THEREFORE, THE LD. COMMISSIONER OF INCOME TAX RIGHTLY CANCELLED THE PENALTY. BY CONSID ERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DECLINE TO INTERFERE WITH THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND REJECT THE GROUND OF APPEAL TAKEN BY THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 18. 09.2009 SD/- SD/- (D.C. AGARWAL) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18 / 09 / 2009 COPY OF THE ORDER IS FORWARDED TO : 1) M/S. SAGAR INDUSTRIES, 803, SAHJANAD, SHAHIBAGH ROD A, SHAHIBAUG, AHMEDABAD (2) ITO, WARD-2(3), 208, INSURANCE BUILDING, ASHRAM ROAD, AHMEDABAD-380 014. 3) CIT(A)- ,AHMEDABAD, (4) CIT- ,AHMED ABAD.(5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER LAHA/SR.P.S. DEPUTY REGISTRAR, ITAT, AHMEDA BAD