Shri Mukeshkumar Ratilal Modi, Mehsana V. The Income Tax Officer, Patan Ward-5, Mehsana

ITA 2648/AHD/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1055 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 16-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APOORVA BHARDWAJA
• Assessee Lawyers: ANIL KSHTRIYA
• Section: 27; 271(1)(c); 143(3)

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO. 2648/AHD/2015 / ASSESSMENT YEAR: 2009-10 MUKESH KUMAR RATILAL MODI C/O. RATILAL & CO. BAZAR, KUKARWADA TAL. VIJAPUR 384 002. DIST. MEHSANA. PAN : ABWPM 1623 J VS ITO, PATAN WARD-5 MEHSANA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI ANIL KSHTRIYA REVENUE BY : SHRI APOORVA BHARDWAJA, SR.DR / DATE OF HEARING : 20/03/2019 /DATE OF PRONOUNCEMENT : 22/ 03/2019 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST ORDER OF THE LD.CIT(A), GANDHINAGAR DATED 13.7.2015 PASSED FOR THE ASSTT.YEAR 2009-10. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS.13,29,742/- WHICH WAS IMPOSED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 . 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME DECLARING TOTAL LOSS OF RS.(-)8,45,004/-. A N ASSESSMENT WAS ITA NO.2648/AHD/2015 - 2 - COMPLETED UNDER SECTION 143(3) ON 30.12.2011 DETERM INING TOTAL INCOME AT RS.42,85,610/-. THE AO HAS DISALLOWED THE CLAIM OF BAD DEBT AMOUNTING TO RS.50,06,147/-. THIS AMOUNT HAS BEEN CONSIDERED BY THE AO FOR VISITING THE ASSESSEE WITH PENALTY. 4. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTS ET SUBMITTED THAT THIS DISALLOWANCE HAS BEEN DELETED BY THE TRIBUNAL VIDE ORDER DATED 20.6.2017 PASSED IN ITA NO.1057/AHD/2014. HE PLACE D ON RECORD COPY OF THE TRIBUNALS ORDER. HE TOOK US THROUGH PARA-4 .7 OF THIS ORDER, WHICH READS AS UNDER: 4.7 IN VIEW OF THE ABOVE STATED PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT IT IS A BUSINESS LOSS AND TH EREFORE, OTHERWISE ALSO ADMISSIBLE U/S.28 OF THE ACT WHICH IS ADJUSTAB LE WHILE COMPUTING INCOME UNDER THE HEAD 'INCOME FROM BUSINE SS' ESSENTIALLY BEING INCIDENTAL TO BUSINESS OF THE APP ELLANT. WHEN THE DEPARTMENT AUTHORITIES HOLD A DIFFERENT VIEW AND DO NOT ALLOW THE BAD DEBT AS CLAIMED BY THE APPELLANT, IN THE ALTERN ATIVE, THE SAID AMOUNT OF RS.50,06,147/- DESERVE TO BE ALLOWED AND ADJUSTED AS BUSINESS LOSS. 5. ON THE OTHER HAND, THE LD.DR WAS UNABLE CONTROVE RT THE CONTENTIONS OF THE LD.COUNSEL FOR THE ASSESSEE. 6. AFTER HEARING BOTH SIDES AND CONSIDERING MATERIA L AVAILABLE ON RECORD, WE FIND THAT SUB-CLAUSE (III) OF SECTION 27 1(1)(C) PROVIDES MECHANISM FOR QUANTIFICATION OF PENALTY. IT CONTEM PLATES THAT THE ASSESSEE WOULD BE DIRECTED TO PAY A SUM IN ADDITION TO TAXES, IF ANY, PAYABLE HIM, WHICH SHALL NOT BE LESS THAN BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SOUGHT TO BE EVADED B Y REASON OF CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN OTHER WORDS, THE QUANTIFICATION OF THE PENALTY IS DEPENDED ITA NO.2648/AHD/2015 - 3 - UPON THE ADDITION MADE TO THE INCOME OF THE ASSESSE E. SINCE IN THE PRESENT CASE, BASIS FOR VISITING THE ASSESSEE WITH PENALTY HAS BEEN DELETED BY THE TRIBUNAL VIDE ORDER DATED 20.6.2017 (SUPRA), THE IMPUGNED PENALTY DOES NOT SURVIVE. IN OTHER WORDS, THERE IS NO ROOM FOR THE REVENUE TO IMPOSE PENALTY UNDER SECTION 271(1)(C) I N THIS CASE. THEREFORE, WE CANCEL THE IMPUGNED PENALTY AND SET A SIDE BOTH ORDERS OF THE REVENUE AUTHORITIES PASSED UNDER SECTION 271(1) (C) OF THE ACT. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 22 ND MARCH, 2019. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED, 22 /03/2019