ACIT, Faridabad V. M/s Nuchem Ltd, Faridabad

ITA 2783/DEL/2010

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3494 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 18-05-2017
• Assessment Year: 1994-1995
• Appeal Filed On: 04-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief; Difference of opinion; Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI. AMIT SHUKLA, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.2783/DEL/2010 ASSESSMENT YEAR:1994-95 ACIT CIRCLE I, FARIDABAD V. NUCHEM LTD. 20/6, MATHURA ROAD FARIDABAD TAN/PAN:AACCN4332P (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ATIQ AHMAD, D.R. RESPONDENT BY: NONE DATE OF HEARING: 31 10 2017 DATE OF PRONOUNCEMENT: 07 11 2017 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE IMPUGNED ORDER DATED 3/3/2010 PASSED BY THE LD. CIT(APPEALS), FARIDABAD IN RELATION TO THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 1994-95. 2. THE PENALTY HAS BEEN LEVIED ON THE FOLLOWING ADDITIONS, WHICH HAVE BEEN UPHELD IN THE QUANTUM PROCEEDINGS:- (I) REIMBURSEMENT OF EXPENSES PAID TO AGENT FOR COLLECTING FDRS AT RS.6,80,490/- (II) DISALLOWANCE OUT OF ADVERTISEMENT AND PUBLICITY EXPENSES AT RS.13,970/- (III) DISALLOWANCE OF AMOUNT WRITTEN OFF AT RS.27,88,311/- OUTSTANDING AGAINST M/S SOUTHERN SYNTHETIC LIMITED. I.T.A. NO.2783/DEL/2010 2 3. THE BRIEF FACTS QUA THE LEVY OF PENALTY ON THE AFORESAID EXPENDITURES ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE- COMPANY WAS REIMBURSING EXPENSES BESIDES COMMISSION GIVEN TO THE AGENTS FOR COLLECTION/ RENEWAL OF FDRS ON BEHALF OF THE ASSESSEE-COMPANY. IN THE ABSENCE OF REGULAR BILLS, THE ASSESSING OFFICER HELD THAT THE DOCUMENTS FURNISHED DO NOT PROVE THAT THE EXPENSES HAVE ACTUALLY BEEN INCURRED AND NONE OF THE AGENTS HAD FILED ANY DOCUMENTARY EVIDENCE TO SHOW THAT THE EXPENSES WERE ACTUALLY INCURRED. ACCORDINGLY, HE PROCEEDED TO MAKE DISALLOWANCE OF RS.13,60,980/- OUT OF THE TOTAL EXPENSES CLAIMED AT RS.67,46,413/- PAID TO THE SISTER CONCERNS/AGENTS OF THE ASSESSEE-COMPANY NAMELY, M/S PRECISION INDUSTRIAL MOULDERS AND M/S KRAFT FOIL PRINTERS. 4. THE LD. CIT (A) IN THE QUANTUM PROCEEDINGS CONFIRMED ONLY 50% OF SUCH DISALLOWANCE, WHICH HAS BEEN UPHELD BY THE TRIBUNAL. 5. SO FAR AS DISALLOWANCE OF ADVERTISEMENT AND PUBLICITY EXPENSES ARE CONCERNED, THE ASSESSING OFFICER HAS DISALLOWED A SUM OF RS.13,970/- ON THE GROUND THAT THE SAME PERTAINS TO ASSESSMENT YEAR 1993-94, AS IT WAS INCURRED IN EARLIER YEAR AND THE SAME CANNOT BE ALLOWED IN THIS YEAR AND THIS ADDITION TOO HAS CONFIRMED FROM THE STAGE OF THE TRIBUNAL. 6. LASTLY, WITH REGARD TO THE DISALLOWANCE OF AMOUNT WRITTEN OFF OF RS.27,88,311/- OUTSTANDING AGAINST ONE PARTY NAMELY, M/S SOUTHERN SYNTHETIC LTD., THE ASSESSEES CASE BEFORE THE ASSESSING OFFICER WAS THAT THE COMPANY HAS GIVEN ADVANCE GIVEN TO M/S I.T.A. NO.2783/DEL/2010 3 SOUTHERN SYNTHETIC LTD. OUT OF THEIR OWN FUNDS IN THE FORM OF SHARE CAPITAL, RESERVE AND SURPLUS AS SHOWN IN THE BALANCE SHEET AS ON 31/3/1994, AMOUNTING TO RS.51.40 CRORES IN BUSINESS INTEREST, WHICH COULD NOT BE RECOVERED DUE TO VARIOUS REASONS. THIS AMOUNT WAS ADVANCED FROM TIME TO TIME AND COUNTER GUARANTEE WAS ALSO GIVEN BY THE ASSESSEE COMPANY AGAINST VARIOUS ADVANCES PROVIDED TO THE BANK TO ITS SUBSIDIARY. IT WAS SUBMITTED THAT THE ADVANCES WERE GIVEN ONLY AT THE TIME OF EXTREME EMERGENCIES, HOWEVER, LATER ON THE SUBSIDIARY COMPANY GOT MERGED WITH M/S KOTHARI PLANTATION AND INDUSTRIES LTD. W.E.F. 31/3/1994. THE ORDER OF BIFR WAS CONVEYED TO THE ASSESSEE VIDE LETTER DATED 10/2/1994 AND ACCORDINGLY, ASSESSEE COMPANY TOOK A DECISION TO WRITE-OFF THIS AMOUNT IN ITS BOOK AS UNRECOVERABLE. ASSESSEES SUBMISSION IN THIS REGARD HAS BEEN INCORPORATED IN THE ASSESSMENT ORDER AT PAGE 3. IN THE QUANTUM PROCEEDINGS THE LD. CIT (A) HAS DELETED THE SAID DISALLOWANCE, HOWEVER, IN THE SECOND APPEAL FILED BY THE REVENUE, TRIBUNAL DIRECTED THE ASSESSING OFFICER TO GRANT ASSESSEE BENEFIT OF WRITE OFF OF THE INTEREST PORTION ONLY OUT OF THE AMOUNT WRITTEN OFF AND REGARDING THE PRINCIPAL AMOUNT, IT WAS HELD BY THE TRIBUNAL THAT IT IS NOT IN THE NATURE OF BAD DEBT WHICH COULD BE WRITTEN OFF AND RESULTANTLY, THE BALANCE AMOUNT DISALLOWED WAS AT RS.22,89,115/-. 7. IN THE PENALTY PROCEEDINGS, THE ASSESSING OFFICER MAINLY RELYING UPON THE FINDING GIVEN IN THE QUANTUM PROCEEDINGS, HAS LEVIED PENALTY ON THE CHARGE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF RS. 29,83,575/-. ACCORDINGLY, PENALTY OF RS.15.44 LAKHS HAS BEEN LEVIED. I.T.A. NO.2783/DEL/2010 4 8. ASSESSEES SUBMISSION BEFORE THE LD. CIT (A) IN THE IMPUGNED PENALTY PROCEEDINGS WITH REGARD TO ALL THE ADDITIONS HAS BEEN DEALT AND INCORPORATED FROM PAGES 5 TO 7 OF THE APPELLATE ORDER. THE LD. CIT (A), AFTER CONSIDERING ASSESSEES SUBMISSION AND MATERIAL PLACED ON RECORD, DELETED THE SAID PENALTY NOT ONLY ON MERITS BUT ALSO ON VARIOUS LEGAL GROUNDS. SO FAR AS THE DELETION OF PENALTY ON MERITS ARE CONCERNED, THE LD. CIT(A), FIRSTLY, ON THE ADDITION OF RS.6,80,490/- IN RESPECT OF EXPENSES RELATING TO AGENTS FOR COLLECTING OF FDRS, HELD THAT, SINCE THERE WAS A DIFFERENCE OF OPINION OR TWO VIEWS FOR MAKING THE DISALLOWANCE AND LOOKING TO THE FACT THAT DISALLOWANCE HAS BEEN RESTRICTED TO 50%, IT CANNOT BE HELD THAT THERE WAS ANY CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. SECONDLY, ON THE ISSUE OF DISALLOWANCE OF EXPENDITURE OF RS.13,978/- ON ADVERTISEMENT AND PUBLICITY EXPENSES, HE NOTED THAT ASSESSEE ADMITTED THAT IT WAS A BONA-FIDE MISTAKE IN RESPECT OF CLAIMING EXPENDITURE IN THIS ASSESSMENT YEAR BUT THE GENUINENESS OF THE SAME CANNOT BE DOUBTED. THUS, IT CANNOT BE HELD THAT IT AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS. LASTLY, WITH REGARD TO THE AMOUNT WRITTEN OFF, HE HELD THAT THE TRIBUNAL ITSELF HAS NOTED THAT ALL THE PARTICULARS HAVE BEEN FURNISHED BY THE ASSESSEE AND THE AMOUNT WAS CONFIRMED ONLY ON THE GROUND THAT IT CANNOT BE TREATED AS BAD DEBT. 9. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE. AFTER HEARING THE LD. DR AND ON A PERUSAL OF THE IMPUGNED ORDER, WE FIND THAT FIRST OF ALL, SO FAR AS THE ADDITION OF RS.6,80,490/- IS CONCERNED, ADDITION MADE BY THE ASSESSING OFFICER HAS BEEN REDUCED TO HALF, AS THE SAME WERE BASED ON AD- HOC DISALLOWANCE ONLY. ASSESSEES CONTENTION BEFORE THE AUTHORITIES BELOW HAS BEEN THAT IT HAS GIVEN FULL DETAILS OF ALL THE I.T.A. NO.2783/DEL/2010 5 PAYMENTS WHICH WERE DULY REFLECTED IN THE BOOKS OF ACCOUNT AND HAS BEEN MADE THROUGH ACCOUNT PAYEE CHEQUES AND SUCH A PAYMENT HAS BEEN MADE IN THE PAST AND ACCEPTED BY THE DEPARTMENT. THEREFORE, IN SUCH A SITUATION, IT CANNOT BE HELD THAT ASSESSEE HAS FURNISHED ANY INACCURATE PARTICULARS OF INCOME BECAUSE AS A MATTER OF PAST PRACTICE, ASSESSEE HAS BEEN REIMBURSING THE EXPENSES INCURRED BY THE AGENTS FOR COLLECTING FDRS AND THE FINDINGS GIVEN IN THE QUANTUM SIDE GOES TO SHOW THAT DISALLOWANCE HAS BEEN MADE PURELY ON AD-HOC BASIS WHICH DEFINITELY CANNOT WARRANT LEVY OF PENALTY FOR CONCEALMENT ON THE CHARGE OF FURNISHING OF INACCURATE PARTICULARS. THERE IS NO MATERIAL REFERRED IN THE ASSESSMENT ORDER THAT THESE ARE BOGUS OR NON-GENUINE PAYMENTS. THEREFORE, THE LD. CIT (A) HAS RIGHTLY DELETED THE PENALTY ON THIS ADDITION. 10. SIMILARLY, WITH REGARD TO THE ADVERTISEMENT AND PUBLICITY EXPENSES, THE EXPENSES HAVE BEEN INCURRED BUT SINCE THEY PERTAIN TO THE EARLIER YEARS, THEREFORE, DISALLOWANCE HAS BEEN MADE IN THIS YEAR. HOWEVER, THERE IS NO FINDING THAT BILLS FOR INCURRING SUCH EXPENDITURE TOO WERE RECEIVED IN EARLIER YEARS OR EXPENDITURE HAD NOT BEEN CRYSTALLIZED IN THIS YEAR. MERE DISALLOWANCE OF EXPENSE IN QUANTUM PROCEEDINGS DOES NOT IPSO- FACTO LEAD TO AN INFERENCE OF CHARGING ASSESSEE FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND LEVY PENALTY THEREON IN ABSENCE OF ANY MATERIAL BROUGHT ON RECORD THAT ASSESSEES CLAIM IN THIS YEAR LACKS BONAFIDE. IN ANY CASE, SUCH CLAIM OF EXPENDITURE WHICH OTHERWISE IS RELATED TO BUSINESS NOT CLAIMED IN THE EARLIER YEAR ALBEIT IN THIS YEAR CANNOT FALL IN THE CATEGORY OF FURNISHING OF INACCURATE PARTICULARS AS HELD BY THE LD. CIT(A) AND, THEREFORE, WE UPHOLD THE DELETION OF PENALTY ON THIS SCORE. I.T.A. NO.2783/DEL/2010 6 11. LASTLY, ON THE ISSUE OF DISALLOWANCE OF AMOUNT WRITTEN OFF, WE FIND THAT THE ASSESSEE HAS MADE ADVANCE TO ITS SUBSIDIARY COMPANY, M/S SOUTHERN SYNTHETIC LTD. FROM TIME TO TIME FOR URGENT REQUIREMENT OF THE SAID SUBSIDIARY COMPANY AND ALSO ON ACCOUNT OF ITS BUSINESS NEEDS, AS THE SAID COMPANY WAS MANUFACTURING CERTAIN CHEMICALS WHICH WERE RAW MATERIALS FOR THE ASSESSEE-COMPANYS PRODUCT. THE AMOUNTS WERE ADVANCED TO THE SUBSIDIARY COMPANY WITH A VIEW TO HELP IN PRODUCTION OF RAW MATERIAL AND MANUFACTURING LINE OF BUSINESS OF THE COMPANY. IN LIGHT OF SUCH BUSINESS REQUIREMENT AND COMMERCIAL EXPEDIENCY; ADVANCES WERE GIVEN TO THE SUBSIDIARY COMPANY FROM TIME TO TIME. SINCE THE SUBSIDIARY COMPANY GOT MERGED WITH ANOTHER COMPANY AND BIFR WROTE A LETTER TO THIS EFFECT AND IN VIEW OF SUCH AN EVENT ASSESSEE COMPANY TOOK A BUSINESS DECISION THAT THE AMOUNT HAS BECOME IRRECOVERABLE IN THE WAKE OF BIFR ORDER; AND THEREFORE, ASSESSEE HAS WRITTEN OFF THE SAID ADVANCE FROM ITS BOOKS. SINCE THE ADVANCES GIVEN BY THE ASSESSEE-COMPANY WERE FOR THE PURPOSE OF BUSINESS AND WRITING OFF OF SUCH ADVANCE HAS BEEN CLAIMED, THEN IT CANNOT BE HELD THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS. ASSESSEES EXPLANATIONS QUA THIS ADDITION BEFORE THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) ARE REPRODUCED HEREUNDER:- THE LEARNED ASSESSING AUTHORITY HAS DISALLOWED THE CLAIM OF ASSESSEE FOR WRITING OFF RS.27,88,311/- BEING AMOUNT DUE FROM SOUTHERN SYNTHETICS LTD. A SUBSIDIARY COMPANY THAT LATER ON MERGED WITH M/S. KOTHARI PLANTATION INDUSTRIES LTD., IN PURSUANCE OF BIFR ORDER. THE ASSESSEE COMPANY HAS BEEN ADVANCING SOME AMOUNTS FROM YEAR TO YEAR TO THE SUBSIDIARY COMPANY M/S. SOUTHERN SYNTHETICS LTD. ON ACCOUNT OF BUSINESS NEEDS. M/S. SOUTHERN SYNTHETICS LTD. WAS MANUFACTURING FORMALDEHYDE AND HEXAMINE BOTH OF I.T.A. NO.2783/DEL/2010 7 WHICH ARE THE RAW-MATERIALS OF COMPANY'S PRODUCTS NAMELY UREA FORMALDEHYDE, MELAMINE FORMALDEHYDE, U.F. & M.F. MOULDING POWDERS & RESINS. THE COMPANY ADVANCED THESE AMOUNTS TO SUBSIDIARY COMPANY WITH A VIEW TO HELP IN PRODUCTION OF RAW- MATERIALS AND THE MANUFACTURING LINE OF BUSINESS OF THE COMPANY. TAKING INTO CONSIDERATION AND ALSO ON THE BASIS THAT THE AMOUNTS WERE ADVANCED TO THE SUBSIDIARY COMPANY TO MEET ITS EMERGENT NEEDS. IT MAY ALSO BE POINTED OUT THAT THE AMOUNT HAD BECOME IRRECOVERABLE ON ACCOUNT OF BIFR ORDER. SINCE, THE AMOUNT HAS BEEN SURRENDERED AT A LATER STAGE, INTEREST THEREOF WHICH WAS ADDED BACK TO THE INCOME OF ASSESSEE WAS ALLOWED TO THE ASSESSEE BY CIT(A),FARIDABAD. THE ASSESSEE HAS ALSO POINTED OUT THAT THE AMOUNTS WHICH WERE ADVANCED TO THE SUBSIDIARY COMPANY WERE FROM ASSESSEE'S OWN FUNDS I.E. SHARE CAPITAL AND RESERVES AND SURPLUS AND NOT OUT OF THE BORROWED FUNDS. THE FACT THAT THE ADVANCES MADE TO THE SUBSIDIARY COMPANY WERE FOR THE PURPOSES OF THE BUSINESS OF THIS COMPANY AS EXPLAINED ABOVE, THE PLEA OF THE ASSESSEE WAS ACCEPTED BY THE LEARNED CIT(A),FARIDABAD WHILE DECIDING THE AFORESAID CASE AND THE ADDITION MADE WAS DELETED. THE LEARNED ASSESSING AUTHORITY HAS DISALLOWED THE CLAIM OF ASSESSEE'S WRITING- OFF RS.27,88,311/- ON ACCOUNT OF TWO REASONS:- (I) ACCORDING TO THE LEARNED ASSESSING AUTHORITY NO RESOLUTION HAS BEEN PASSED FOR WRITING OFF THIS AMOUNT AND (II) THE AMOUNT COULD NOT BE ALLOWED IN VIEW OF CASE OF PHALTAN SUGAR WORKS LTD. V/S CWT (1994) 208 ITR 989 (BOM.). IT MAY BE POINTED OUT THAT THE ASSESSEE HAS NOWHERE SAID THAT NO RESOLUTION WAS PASSED FOR WRITING OFF THIS AMOUNT. I.T.A. NO.2783/DEL/2010 8 THE FACT IS THAT THE MATTER HAS BEEN CONSIDERED BY THE BOARD OF DIRECTORS OF THE ASSESSEE COMPANY ON THE BASIS OF NOTE OF SH. ARUN BARAR, JT. MANAGING DIRECTOR, WHO REPORTED THAT THE BIFR IN ITS ORDER HAD ALLOWED THE REPAYMENT OF UNSECURED LOANS TO THE EXTENT OF RS. 17.81 LACS WITHIN 3 YEARS FROM 1996-97 AGAINST THE INTEREST FREE DEPOSITS OF RS.27.73 LACS GIVEN BY NUCHEM LIMITED TO SSL. SINCE, THE SUBSIDIARY COMPANY HAVING HUGE LOSSES OF MORE THAN RS.2.00 CRORES, KPIL WAS EXPECTING RELIEF TO THAT EXTENT FOR CARRY FORWARD LOSSES U/S 72A OF THE INCOME-TAX ACT. HOWEVER, BFIR ALLOWED LOSSES ONLY TO THE EXTENT OF RS.52.00 LACS. KPIL WAS NOT INTERESTED FOR MERGER UNLESS NUCHEM LIMITED AGREED TO FOREGO THE AMOUNT OF RS.27.88 LACS. SINCE, THE COMPANY WAS UNDER OBLIGATION HAVING GIVEN CORPORATE GUARANTEE OF RS.277 LACS. THE ASSESSEE COMPANY HAD NO CHOICE BUT TO FOREGO THE AMOUNT TO SAVE SELF FROM INVOCATION OF GUARANTEES OF RS.277 LACS. THEREFORE, IT IS CONTENTED THAT (1) WRITING OFF OF THE AMOUNT WAS DULY CONSIDERED BY THE BOARD OF DIRECTORS AND NOTED IN ITS MEETING HELD ON 30.4.94. (2) THE AMOUNTS WERE PAID OUT OF COMPANY'S FUNDS. (3) WRITING OFF HAD BECOME ESSENTIAL TO SAVE THE ASSESSEE FROM THE OBLIGATION OF INVOCATION OF GUARANTEE TO THE EXTENT OF RS.277 LACS. THE ASSESSEE'S PLEA FOR DELETING THE DISALLOWANCES OF INTEREST IN EARLIER YEARS HAVING BEEN ACCEPTED BY THE CIT(A),FARIDABAD. THE AMOUNT WHICH WAS ADVANCED ON ACCOUNT OF BUSINESS NEEDS OF THE COMPANY AND HAS BEEN WRITTEN OFF TO SAVE THE COMPANY FROM INVOCATION OF THE CORPORATE GUARANTEES, THE WRITING OFF THIS AMOUNT IS ALLOWABLE TO THE COMPANY. IN CASE OF MANUBHAI BIKHABHAI V/S CIT (1994) 205 ITR 505 (GUJ.) THE LOSSES SUFFERED ON I.T.A. NO.2783/DEL/2010 9 ACCOUNT OF SALE OF SHARES, WHERE THE ASSESSEE WAS GUARANTOR WAS ALLOWED TO THE ASSESSEE, SINCE, THE COURT COME TO THE CONCLUSION THAT THE AGREEMENT OF TRANSFER WAS A COMPOSITE AGREEMENT, WHEREBY THE ASSESSEE WAS RELEASED FROM THEIR ERRONEOUS OBLIGATION AS GUARANTORS. IN THIS CASE ALSO THE ASSESSEE COMPANY BEING A GUARANTOR TO THE EXTENT OF RS.277 LACS AND THEREFORE THE AGREEMENT WITH KPIL TO FOREGO THE AMOUNT OF RS.27.88 LACS WAS PART OF COMPOSITE AGREEMENT UNDER BIFR SCHEME AND AS SUCH WERE ALLOWABLE. THE ADDITION MADE IN RESPECT WAS DELETED BY CIT(A)/FBD. IN APPEAL NO.08/97-98 VIDE ORDER DT.8.6.2000. MOREOVER, THE ITAT, BENCH 'I', NEW DELHI HAS NOT AGREED TO THE ASSESSEE'S CONTENTION THAT AMOUNT HAS BEEN SURRENDERED AND WRITTEN OFF FOR COMMERCIAL EXPEDIENCY. ONLY INTEREST COMPONENT OUTSTANDING FROM M/S SOUTHERN SYNTHETICS LTD. WHICH IS ALREADY BEEN OFFERED AS INCOME IS LIABLE TO BE ALLOWED. THE ASSESSING OFFICER HAS BEEN DIRECTED TO ALLOW THE SAME. THE PHOTO-COPY OF ITAT ORDER IN ITA NO.3756/DEL/2000 FOR A.Y. 1994-95 IS ENCLOSED AS ANNEXURE NO.6. IT MEANS THAT THE ALLOWABILITY HAS TO BE DECIDED AFRESH. EVEN OTHERWISE THE ASSESSEE HAS CLAIMED THE AMOUNT OF WRITE OFF AFTER GIVING FULL DETAILS AND HAVING BONAFIDE BELIEF THAT THE AMOUNT IS WRITTEN OFF FOR COMMERCIAL EXPEDIENCY IN ORDER TO SAVE ITSELF FROM INVOCATION OF GUARANTEES GIVEN TO BANKS AND FINANCIAL INSTITUTIONS. THE ASSESSEE HAS GIVEN PROPER EXPLANATION FOR CLAIMING THE AMOUNT AND, THEREFORE, PENALTY IS NOT LEVIABLE IN THIS CASE. IN FACT, THIS AMOUNT SHOULD HAVE BEEN ALLOWED IN VIEW OF S.A. BUILDERS LTD. V/S. CIT (A)(2007) 288 ITR 1 (SC). THE CLAIM OF ASSESSEE IS BONAFIDE BASED ON VARIOUS JUDGEMENTS. SINCE, THE ASSESSEE HAD BONAFIDE BELIEF THAT THE AMOUNT IS ALLOWABLE, THE ASSESSEE CLAIMED ON THE BASIS OF VARIOUS JUDGEMENTS. IN ANY CASE, THE ASSESSEE COULD NOT HAVE FORESEEN THAT THIS AMOUNT WILL BE DISALLOWED. MERELY BECAUSE THE AMOUNT IS DISALLOWED BY THE ITAT, WHEN THE ASSESSEE I.T.A. NO.2783/DEL/2010 10 HAS MANY CASES IN FAVOUR AND HAD CLAIMED THE AMOUNT ON BONAFIDE BELIEF. THE ASSESSEE HAS FURNISHED FULL EXPLANATION AS SUCH IS NO CASE FOR LEVY OF PENALTY. 12. SUCH AN EXPLANATION OF THE ASSESSEE HAS NOT BEEN REBUTTED AND FOUND TO BE FALSE BY THE ASSESSING OFFICER, THEREFORE, IT CANNOT BE HELD THAT SUCH WRITING OFF OF THE SUM AS BAD DEBT AMOUNTS EITHER FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. IN ANY CASE THIS AT BEST CAN BE RECKONED AS BUSINESS LOSS INCURRED DURING THE COURSE OF BUSINESS AND WAS RESULT OF COMMERCIAL EXPEDIENCY WHICH HAS A VERY WIDE CONNOTATION. THUS, WE HOLD THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE PENALTY ON THIS ADDITION AND THE APPEAL OF THE REVENUE IS DISMISSED. 13. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH NOVEMBER, 2017. SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7 TH NOVEMBER, 2017 JJ:0111 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR I.T.A. NO.2783/DEL/2010 11 DATE 1. DRAFT DICTATED ON 2. DRAFT PLACED BEFORE AUTHOR 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE COMES BACK TO PS/SR. PS 8. UPLOADED ON 9. FILE SENT TO THE BENCH CLERK 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER.