Agrasen Urban Co-Op Bank Ltd, Pune V. ACIT,CIR-I,[1] Pune, Pune

ITA 355/PUN/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76176 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 22-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Depreciation; Bonafide belief; Wrong claim; Bad and doubtful debts; Difference of opinion; Agreed addition; Revised return; Bonafide mistake; Revenue expenditure
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI R.K. PANDA, ACCOUNTANT MEMBER. ITA.NO.355/PN/2012 (ASSESSMENT YEAR 2007-08) AGRASEN URBAN C-OP. BANK LTD., THE MAHANAGAR CO-OP. BANK LTD., 52, P.S. PLAZA, YERWADA, PUNE-411006 PAN NO.AABTA2487N .. APPELLANT VS. ACIT, CIRCLE-1(1), PUNE .. RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK & SHRI SUHAS BORA REVENUE BY : SHRI P.L. PATHADE DATE OF HEARING : 13-02-2014 DATE OF PRONOUNCEMENT : 19 -02-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 15-06-2011 OF THE CIT(A)-I, PUNE RELATING TO ASSESS MENT YEAR 2007-08. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE : 1. THE LD.CIT(A) HAS ERRED IN CONFIRMING LEVY OF PE NALTY U/S.271(1)(C) BY THE A.O. IN RESPECT OF ADDITION OF R S.95,00,000/- MADE ON ACCOUNT OF PROVISION FOR BAD & DOUBTFUL DEBTS. 2. THE LD.CIT(A) HAS ERRED IN HOLDING THAT THE APPE LLANT HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND THEREF ORE LEVY OF PENALTY IS CORRECT. 3. THE LD.CIT(A) HAS FAILED TO APPRECIATE THE CONTEN TION OF THE APPELLANT THAT THE EXPLANATION OFFERED BY THE APPEL LANT IS BONAFIDE AND CONFIRMING THE ACTION OF THE A.O. FOR LEVY OF THE P ENALTY WITHOUT APPRECIATING THE CONTENTION OF THE APPELLANT. 4. THE LD.CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT NO PENALTY IS LEVIABLE IN CASE OF APPELLANT SINCE BOTH T HE SITUATION ENUMERATED IN THE FIRST PART OF EXPLANATION-1 TO SECT ION 271(1)(C) ARE NOT COMPLIED WITH. 2 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS ENGAGED IN THE BUSINESS OF BANKING. IT FILED ITS RETURN OF INCOME ON 30-10-2007 DISCLOSING LOSS OF RS.2,39,74,191/-. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT MADE ADDITION OF RS.1,06, 64,220/-, THE DETAILS OF WHICH ARE AS UNDER : A. LOSS ON SALE OF ASSETS : RS.5,39,235/- B. AMORTIZATION OF PREMIUM : RS.6,24,985/- C. PROVISION FOR BAD & DOUBTFUL DEBTS : RS.95,00,000/- ---------------------------------------- TOTAL: RS.1,06,64,220/- --------- -------------------------------- THE ASSESSEE DID NOT FILE ANY APPEAL BEFORE THE CIT (A) ON ACCOUNT OF THE ABOVE ADDITIONS. THE ASSESSING OFFICER THEREAFTER INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I.T. ACT AND LEVIE D PENALTY OF RS.35,89,576/- ON ACCOUNT OF THE ABOVE 3 ADDITIONS. IN APPEAL THE LD.CIT(A) DELETED THE PENALTY LEVIED ON THE FIRST 2 ADDITIONS AND THE REVENUE IS NOT IN APPEAL BEFORE US. THEREFORE, WE ARE NOT CONCERNED WITH THE ABOVE 2 ADDITIONS. HE HOWEVER SUSTAINED THE PE NALTY LEVIED ON ADDITION OF RS.95,00,000/- ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBTS. 3.1 AS REGARDS THE ADDITION OF RS.95 LAKHS ON ACCOU NT OF PROVISION FOR BAD AND DOUBTFUL DEBTS IS CONCERNED, THE FACTS IN B RIEF ARE THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.95 LAKHS AS PR OVISION FOR BAD AND DOUBTFUL DEBTS. SINCE THE ASSESSEE DID NOT SATISFY THE CONDITIONS AS PER THE PROVISIONS OF SECTION 36(1)(VIIA) THE ASSESSING OFFICER DISALLOWED THE SAME. ACCORDING TO THE ASSESSING OFFICER SINCE THE ASSESSEE BANK HAD A LOSS INCOME, THEREFORE, IT WAS NOT ELIGIBLE FOR DED UCTION OF 7.5% OF THE TOTAL INCOME COMPUTED BEFORE MAKING ANY DEDUCTION U /S.36(1)(VIIA) AND 3 CHAPTER VIA. FURTHER, THE ASSESSEE BANK IS AN URBA N BASED BANK AND IT HAS NO RURAL BRANCHES. THE ASSESSEE HAD NOT MADE A NY RURAL ADVANCES. HENCE, IT WAS NOT ELIGIBLE FOR ANY DEDUCTION WHICH WAS AVAILABLE AS PER PROVISIONS OF SECTION 36(1)(VIIA) OF THE I.T. ACT. THE ASSESSING OFFICER, THEREFORE, DISALLOWED THE AMOUNT ON THE GROUND THAT THE ASSESSEE BANK DID NOT QUALIFY FOR DEDUCTION OF THE SAME. THE ASSESSE E DID NOT PREFER ANY APPEAL FOR THE ADDITIONS MADE. THE ASSESSING OFFIC ER, THEREAFTER INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I.T. ACT. ON BEING QUESTIONED BY THE ASSESSING OFFICER DURING PENALTY PROCEEDINGS , IT WAS SUBMITTED THAT THE CLAIM FOR PROVISION FOR BAD AND DOUBTFUL D EBTS WAS MADE UNDER BONAFIDE BELIEF AND AS PER GUIDELINES AND NORMS OF RBI. IT WAS SUBMITTED THAT THE DEDUCTION CLAIMED IS SO OBVIOUS AND GLARI NG THAT IT CAN BE IDENTIFIED FROM A MERE LOOK AT THE PROFIT AND LOSS ACCOUNT AND THEREFORE IT CANNOT BE SAID THAT IT HAS SUBMITTED INACCURATE PAR TICULARS. IT WAS ARGUED THAT IT WAS AN OMISSION ON THE PART OF THE ASSESSEE IN NOT FOLLOWING THE CORRECT PROVISION AS REGARDS TO THE CLAIM OF BAD DE BT AND THIS WAS ALSO NOT REALISED BY THE TAX AUDITOR OF THE BANK. 3.2 HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIE D WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE OBSERVED THA T THE LANGUAGE OF THE SECTION 36(1)(VIIA) CLEARLY LISTS THE ELIGIBILITY C RITERIA FOR DEDUCTION. THERE IS NO CONFUSION, DIFFERENCE OF OPINION OR INT ERPRETATIONS REGARDING THE ELIGIBILITY OF THE DEDUCTION. THE PROVISIONS O F SECTION 36(1)(VIIA) DOES NOT ALLOW THE ASSESSEE FOR MAKING PROVISION FO R BAD AND DOUBTFUL DEBTS AND THE DEDUCTION CLAIMED WAS NOT BONAFIED. T HE ASSESSING OFFICER FURTHER HELD THAT ALTHOUGH THE ASSESSEE MIGHT HAVE CLAIMED DEDUCTION AS PER THE GUIDELINES OF RBI BUT THE PROVISIONS AND GU IDELINES OF RBI DO NOT 4 SUPERSEDE THE PROVISION OF I.T. ACT ON COMMERCIAL A CCOUNTING. HE FURTHER NOTED THAT THE ASSESSEE BANK IS ADVISED AND ASSISTED BY AUDITORS AND CONSULTANTS AND THEREFORE THEY SHOULD HAVE ADVI SED THE BANK TO FOLLOW THE PROVISIONS OF I.T. ACT FOR COMMERCIAL AC COUNTING. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE THE ASSESSING OFFICER LEVIED PENALTY @100% OF THE TAX SOUGHT TO BE EVADED ON ACCOUNT OF THE ADDITION OF RS.95 LAKHS. 4. BEFORE THE CIT(A) THE ASSESSEE REITERATED THE SA ME ARGUMENTS AS MADE BEFORE THE ASSESSING OFFICER. IT WAS FURTHER SUBMITTED THAT DEDUCTION WAS CLAIMED UNDER A BONAFIDE BELIEF AND C AN BE CONSIDERED AS A MERE OMISSION WHICH COULD HAVE BEEN RECTIFIED U/S .154 OF THE I.T. ACT. THEREFORE, THERE IS NO QUESTION OF LEVY OF PENALTY. EVEN THE TAX AUDITORS WHO HAVE AUDITED THE BOOKS OF ACCOUNT HAVE NOT MENT IONED OR POINTED OUT THE MISTAKE COMMITTED BY THE ASSESSEE. RELYING ON VARIOUS DECISIONS IT WAS SUBMITTED THAT THE PENALTY LEVIED BY THE ASS ESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF PROVISION FOR BAD AND DO UBTFUL DEBTS OF RS.95 LAKHS IS NOT SUSTAINABLE IN LAW AND THE SAME SHOULD BE DELETED. 5. HOWEVER, THE LD.CIT(A) WAS ALSO NOT SATISFIED WI TH THE EXPLANATION GIVEN BY THE ASSESSEE AND UPHELD THE PE NALTY LEVIED BY THE ASSESSING OFFICER ON ACCOUNT OF ADDITION OF RS.95 L AKHS TOWARDS PROVISION FOR BAD AND DOUBTFUL DEBTS. WHILE DOING SO, HE OBSERVED THAT THE CLAIM OF PROVISION FOR BAD AND DOUBTFUL DEBT AM OUNTING TO RS.95 LAKHS WAS FALSE SINCE THE ASSESSEE KNEW THAT THE CL AIM WAS INCORRECT. THE ARGUMENT OF THE ASSESSEE THAT THERE WAS NO INTENTIO N TO DEFRAUD WAS REJECTED BY THE CIT(A) ON THE GROUND THAT THE SAME CANNOT ESCAPE THE 5 ASSESSEE FROM THE MISCHIEF OF SECTION 271(1)(C). A CCORDING TO THE LD.CIT(A) THE DECISION OF THE HONBLE SUPREME COUR T IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS REPORTED IN 166 TAXMA NN 65 (SC) WILL BE SQUARELY APPLICABLE AND THE ASSESSEE CANNOT TAKE AD VANTAGE OF THE RATIO OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF RELIANCE PETRO PRODUCTS PVT. LTD. REPORTED IN 322 ITR 158. HE OBS ERVED THAT THE CLAIM WAS MADE IN THE RETURN. THERE WAS NO NOTE ANNEXED OR ENCLOSED TO SHOW THAT THIS CLAIM WAS MADE EVEN THOUGH IT IS NOT ALLO WABLE IN LAW. ACCORDING TO HIM, BAD DEBTS ARE ALLOWABLE ON FULFIL MENT OF CERTAIN CONDITIONS. THEREFORE, FROM THE CLAIM ITSELF, THE ASSESSING OFFICER WAS NOT IN A POSITION TO INFER THAT THE CLAIM IS ALLOWA BLE OR NOT. HENCE, THIS CLAIM MADE KNOWINGLY WITHOUT FULFILMENT OF STIPULAT ED CONDITIONS AND WITHOUT DISCLOSURE OF SUCH FACTS AS TO WHY SUCH A C LAIM HAS BEEN MADE EVEN WITHOUT FULFILMENT OF SUCH CONDITIONS BRING TH IS CLAIM IN THE CATEGORY OF FALSE CLAIM. THE ASSESSEE WAS NOT ABLE TO SATISFY THE ASSESSING OFFICER EITHER DURING THE COURSE OF ASSES SMENT PROCEEDINGS OR PENALTY PROCEEDINGS OR BEFORE THE CIT(A) DURING THE APPELLATE PROCEEDINGS AS TO HOW THERE WAS BONAFIDE BELIEF FOR MAKING THIS CLAIM. THE ASSESSEE HAS ALSO NOT DEMONSTRATED HIS INTENTIO N AT ANY STAGE EVEN AFTER THE FILING OF THE RETURN BY FILING REVISED RE TURN OR WITHDRAWING THIS DEDUCTION. MERELY SAYING THAT THE MISTAKE WAS SUCH WHICH WAS RECTIFIABLE OR AMENDABLE AS PER OLD PROVISIONS OF S ECTION 143(1) AND STATING THAT THE TAX AUDITORS FAILED TO POINT OUT T HE LAPSE CANNOT SAVE THE ASSESSEE FROM OPERATION OF EXPLANATION (1) TO SECTI ON 271(1)(C) OF THE I.T. ACT. THE LD.CIT(A) ACCORDINGLY UPHELD THE PENALTY LEVIED BY THE ASSESSING OFFICER ON ACCOUNT OF THE AFOREMENTIONED ADDITION. 6 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPEAL BEFORE US 7. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SAME ARGUMENTS AS MADE BEFORE THE ASSESSING OFFICER AND THE CIT(A). HE SUBMITTED THAT THE ASSESSEE IS A CO-OP. SOCIETY AND AS PER THE GUI DELINES OF RBI THE ASSESSEE HAS TO MAKE PROVISION FOR BAD AND DOUBTFUL DEBTS. HE SUBMITTED THAT THE INCOME OF THE ASSESSEE WAS EXEMPT U/S.80P UPTO A.Y. 2006-07 AND FROM A.Y. 2007-08 THE INCOME OF THE ASSESSEE IS TAXABLE. HE SUBMITTED THAT THE CLAIM OF PROVISION FOR BAD AND D OUBTFUL DEBTS AMOUNTING TO RS.95 LAKHS IS NOT ALLOWABLE TO THE AS SESSEE SINCE IT HAS INCURRED HUGE LOSSES IN THE PRECEDING YEARS. HOWEV ER, THIS ESCAPED THE NOTICE OF THE TAX CONSULTANTS AS WELL AS TAX AUDITO RS OF THE ASSESSEE FOR WHICH THE AMOUNT REMAINED TO BE DISALLOWED. HE SUB MITTED THAT THE ASSESSING OFFICER AND THE CIT(A) ARE OF THE OPINION THAT THE CLAIM IS FALSE AND NOT BONAFIDE. HOWEVER, THE SAME IS NOT A FALSE CLAIM AND IT CAN BE CALLED AN INADVERTENT MISTAKE. 7.1 REFERRING TO THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE (A COPY OF WHICH IS PLACED AT PAGE 11 OF THE PAPER BOOK) HE SU BMITTED THAT THE ASSESSEE HAD DEBITED AN AMOUNT OF RS.95 LAKHS TOWAR DS PROVISION FOR BAD AND DOUBTFUL DEBTS RESERVE. REFERRING TO THE SAID PAGE, HE SUBMITTED THAT THE NET LOSS HAS BEEN SHOWN AT RS.2,39,74,193/- FOR THE IMPUGNED ASSESSMENT YEAR. THUS, THE PROVISION FOR BAD AND D OUBTFUL DEBT IS ALREADY THERE IN THE PROFIT AND LOSS ACCOUNT AND SINCE THER E IS HUGE LOSS IT CAN BE EASILY BE SEEN THAT IT IS NOT AN ALLOWABLE PROVISI ON. SINCE THE ASSESSEE DID NOT HAVE ANY TAXABLE INCOME AND EVEN AFTER THE ADDITION OF THE SAME 7 THERE WAS NO TAXABLE INCOME, THEREFORE, THE SAME ES CAPED THE NOTICE OF THE ASSESSEE INCLUDING THE TAX AUDITORS AND THE TA X CONSULTANTS. 7.2 REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SOMANY EVERGREEN KNITS LTD. VIDE IT A NO.1332 OF 2011 ORDER DATED 21-03-2012 HE SUBMITTED THAT UNDER SOME WHAT SIMILAR CIRCUMSTANCES THE HONBLE BOMBAY HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL DELETING THE PENALTY LEVIED BY THE ASSESSI NG OFFICER AND UPHELD BY THE CIT(A). REFERRING TO THE DECISION OF THE CO ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. SHRI RAM BHAGATRAM SADHWANI VIDE ITA NO.380/PN/2008 ORDER DATED 29-01-2010 FOR A.Y. 2004-05 HE SUBMITTED THAT THE TRIBUNAL FOLLOWING THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S. SIDDARTHA EN TERPRISES VIDE ITA NO.908/PN/2008 UPHELD THE ORDER OF THE LD. CIT(A) I N DELETING THE PENALTY AND DISMISSED THE APPEAL FILED BY THE REVEN UE. WHILE DOING SO, THE TRIBUNAL HELD THAT WHERE THE INCOME WAS DECLARE D IN THE BOOKS OF ACCOUNTS BUT THE SUM WAS TAKEN WRONGLY INTO THE BAL ANCE SHEET WITHOUT CREDITING THE SAME TO THE PROFIT AND LOSS ACCOUNT, THE MISTAKE HAS CREPT IN AT THE TIME OF MAKING ANNUAL ACCOUNT BY THE ACCOUNT ANT AND THE MISTAKE IS NOT ATTRIBUTABLE TO THE ASSESSEE. 7.3 REFERRING TO THE DECISION OF HONBLE SUPREME CO URT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) H E SUBMITTED THAT MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW B Y ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE SO AS TO ATTRACT LEVY OF PENALTY U/S.271(1 )(C) OF THE I.T. ACT. HE ACCORDINGLY SUBMITTED THAT THE PENALTY LEVIED BY TH E ASSESSING OFFICER 8 AND UPHELD BY THE CIT(A) ON ACCOUNT OF THE ADDITION OF RS.95 LAKHS TOWARDS PROVISION FOR BAD AND DOUBTFUL DEBTS SHOULD BE DELETED. 8. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED TH AT THE ASSESSEE HAS MADE A FALSE CLAIM BY NOT DEDUCTING THE PROVISION F OR BAD AND DOUBTFUL DEBTS FROM NET LOSS. HE HAS NOT FILED ANY REVISED RETURN OR REVISED COMPUTATION BEFORE COMPLETION OF ASSESSMENT. THER EFORE, EXPLANATION (1) TO SECTION 271(1)(C) OF THE I.T. ACT IS CLEARLY ATTRACTED. REFERRING TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE MAKDATA PVT. LTD. VS. CIT VIDE CIVIL APPEAL NO.9772 OF 2013 ORDER DAT ED 30-10-2013 HE SUBMITTED THAT ADMISSION OF ANY ADDITION OR AGREED ADDITION IN ASSESSMENT TO BUY PEACE WILL NOT ABSOLVE THE ASSESS EE FROM THE CLUTCHES OF LEVY OF PENALTY U/S.271(1)(C). 9. THE LD. COUNSEL FOR THE ASSESSEE IN HIS REJOINDE R SUBMITTED THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F MAKDATA PVT. LTD.(SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE P RESENT CASE. HE SUBMITTED THAT THE FACTS IN THAT CASE ARE QUITE DIF FERENT. IN THAT CASE CERTAIN SHARE APPLICATION FORMS, BANK STATEMENTS, M EMORANDUM OF ASSOCIATION OF COMPANIES, AFFIDAVITS, COPIES OF INC OME TAX RETURNS AND ASSESSMENT ORDERS AND BLANK SHARE TRANSFER DEEDS WE RE IMPOUNDED DURING THE COURSE OF SURVEY PROCEEDINGS U/S.133A. ON BEIN G QUESTIONED BY THE ASSESSING OFFICER THE ASSESSEE MADE AN OFFER TO SUR RENDER RS.40.74 LAKHS WITH A VIEW TO AVOID LITIGATION AND BUY PEACE AND T O MAKE AN AMICABLE SETTLEMENT TO DISPUTE. THEREAFTER, THE PENALTY LEV IED BY THE ASSESSING OFFICER AND UPHELD BY CIT(A) WAS DELETED BY THE TRI BUNAL. THE HONBLE 9 HIGH COURT REVERSED THE ORDER OF THE TRIBUNAL. ON FURTHER APPEAL THE HONBLE SUPREME COURT UPHELD THE ORDER OF THE HIGH COURT HOLDING THAT AGREED ADDITIONS TO BUY PEACE CANNOT ABSOLVE THE AS SESSEE FROM THE LEVY OF PENALTY U/S.271(1)(C). HOWEVER, FACTS IN THE IN STANT CASE ARE QUITE DIFFERENT. THE PROVISION FOR BAD AND DOUBTFUL DEBT S WAS VERY MUCH AVAILABLE IN THE AUDITED PROFIT AND LOSS ACCOUNT. O NLY IN THE COMPUTATION STATEMENT, THE TAX CONSULTANTS AS WELL AS THE TAX A UDITORS FAILED TO DISALLOW THE SAME. SINCE THERE IS A BONAFIDE REASO N FOR NOT DEDUCTING THE SAME FROM THE COMPUTATION, THEREFORE, THE ABOVE DEC ISION OF HONBLE SUPREME COURT IS NOT APPLICABLE TO FACTS OF THE PRE SENT CASE AND IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S.271(1)(C) OF THE I .T. ACT. 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE AS SESSING OFFICER, IN THE INSTANT CASE, LEVIED PENALTY ON THE ADDITION OF RS. 95 LAKHS TOWARDS PROVISION FOR BAD AND DOUBTFUL DEBTS ON THE GROUND THAT THE ASSESSEE HAD MADE A FALSE CLAIM AND THERE WAS NO BONAFIDE REASON FOR CLAIMING SUCH DEDUCTION. IN APPEAL THE LD.CIT(A) UPHELD THE ACTI ON OF THE ASSESSING OFFICER. IT IS THE SUBMISSION OF THE LD. COUNSEL F OR THE ASSESSEE THAT THOUGH THE AMOUNT IS AN INADMISSIBLE DEDUCTION/CLAI M, HOWEVER, THE SAME WAS NOT A FALSE CLAIM BUT WAS AN INADVERTENT M ISTAKE. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE CLAIM OF PROVISION FOR BAD & DOUBTFUL DEBT WAS VERY MUCH THE RE IN THE PROFIT AND LOSS ACCOUNT WHICH WERE AUDITED. NEITHER THE TAX C ONSULTANTS NOR THE TAX AUDITORS COULD POINT OUT THE MISTAKE FOR WHICH THE SAME REMAINED TO 10 BE DEDUCTED FROM THE LOSS WHICH WAS ALSO APPEARING IN THE SAME PROFIT AND LOSS ACCOUNT. WE FIND MERIT IN THE ABOVE SUBMI SSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE CLAIM OF RS.95 LA KHS ALONG WITH LOSS OF RS.2.40 CRORES ARE AVAILABLE IN THE PROFIT AND LOSS ACCOUNT WHICH WERE AUDITED BY THE AUDITORS. EVEN THOUGH THE ASSESSEE IS NOT ENTITLED TO CLAIM THE PROVISION FOR BAD AND DOUBTFUL DEBTS RESERVE, H OWEVER, NEITHER THE TAX CONSULTANTS NOR THE TAX AUDITORS COULD POINT OU T THE ABOVE GLARING MISTAKE. UNDER THESE CIRCUMSTANCES THE PLEA OF THE ASSESSEE THAT THE CLAIM FOR DEDUCTION WAS MADE ON ACCOUNT OF BONAFIDE MISTAKE HAS TO BE ACCEPTED. IN OUR OPINION, WHEN ALL FACTS ARE AVAIL ABLE ON RECORD, IT CANNOT BE SAID THAT THE ASSESSEE ATTEMPTED TO FURNISH INA CCURATE PARTICULARS OF INCOME. IT IS A CASE OF MAKING AN INCORRECT CLAIM. FURTHER, IN OUR OPINION NON-FURNISHING OF A REVISED RETURN DOES NOT MEAN THAT THE BONAFIDE MISTAKE IN MAKING A WRONG CLAIM SHOULD BE VISITED WITH LEVY OF PENALTY U/S.271(1)(C) OF THE I.T. ACT. THIS VIEW O F OURS FINDS SUPPORT FROM THE DECISION OF HONBLE BOMBAY HIGH COURT IN T HE CASE OF SOMANY EVERGREEN KNITS LTD. (SUPRA). 10.1 WE FIND IN THE CASE OF SOMANY EVERGREEN LTD. ( SUPRA) THE ASSESSING OFFICER MADE ADDITION OF RS.32,51,161/- O N ACCOUNT OF WRONG CLAIM OF DEPRECIATION. AS AGAINST ALLOWABLE DEPREC IATION OF RS.1.38 CRORES THE ASSESSEE CLAIMED DEPRECIATION OF RS.1.71 CRORES. DURING PENALTY PROCEEDINGS, THE ASSESSEE EXPLAINED THAT IT WAS A BONAFIDE MISTAKE ON THE PART OF THE ASSESSEES CHARTERED ACC OUNTANT IN MAKING THE AFORESAID CLAIM IN THE RETURN OF INCOME. HOWEVER, THE ASSESSING OFFICER, REJECTING THE SUBMISSIONS OF THE ASSESSEE, HELD THA T THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME AND LEVIED PENALTY U/S.271(1)(C) OF THE 11 I.T. ACT. THE CIT(A) CONFIRMED THE LEVY OF PENALTY . ON FURTHER APPEAL, THE TRIBUNAL RELYING ON VARIOUS DECISIONS DELETED T HE PENALTY. WHEN THE REVENUE FILED AN APPEAL BEFORE THE HIGH COURT, THE HONBLE HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL BY OBSERVING AS UN DER : 3. REGARDING QUESTION B: (I) THE RESPONDENT-ASSESSEE HAD DURING THE ASSESSMENT YEAR SOLD ITS GARMENT MANUFACTURING MACHINE AND CLAIMED A LOSS OF R S.21.68 LAKHS THEREON AS A REVENUE EXPENDITURE IN ITS RETURN OF IN COME. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE RESPONDENT -ASSESSEE REALISED ITS MISTAKE AND WITHDREW THE ABOVE LOSS SHOWN AS REVENUE EXP ENDITURE IN ITS PROFIT AND LOSS ACCOUNT AND IN THE CONSEQUENT RETUR N OF INCOME. THE ASSESSING OFFICER ACCEPTED THE ABOVE WITHDRAWAL AND COM PLETED THE ASSESSMENT. HOWEVER, HE IMPOSED PENALTY UNDER SECTION 27 1(1)(C) OF THE ACT. (II) IN APPEAL, THE CIT(A) UPHELD THE ORDER OF THE ASSESSING OFFICER. ON FURTHER APPEAL, THE TRIBUNAL BY THE IMPUGNED ORDER RECORDS A FINDING THAT IN THE PROFIT AND LOSS ACCOUNT FILED ALONG WITH THE RETURN OF INCOME, THE RESPONDENT-ASSESSEE HAS CLEARLY DESCRIBED THE LOSS AS THE LOSS ON SALE OF ITS GARMENT UNIT ASSETS. THIS LOSS WAS ADDED TO THE NET LOS S IN THE COMPUTATION OF THE TOTAL INCOME. THUS, THERE WAS COMP LETE DISCLOSURE. THE TRIBUNAL FURTHER RECORDS THAT THE ABOVE LOSS WAS CL AIMED BY THE RESPONDENT-ASSESSEE AS A REVENUE EXPENDITURE AS THE CHARTE RED ACCOUNTANT DID NOT ADVICE THEM CORRECTLY AS TO THE L EGAL POSITION. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS, THE MISTAKE WAS NOTICED AND CORRECTED BY THE RESPONDENT-ASSESSEE. ON THE ABOVE F ACTS, THE TRIBUNAL CONCLUDED THE CLAIM FOR DEDUCTION MADE BY THE RESPONDENT- ASSESSEE WAS ON ACCOUNT OF A BONAFIDE MISTAKE AND IN SUCH CIRCUMSTANCES, THE LEVYING OF PENALTY WAS NOT JUSTIFIED. (III) THE GRIEVANCE OF THE REVENUE IS THAT PENALTY I S JUSTIFIED IN VIEW OF THE FACT THAT THE RESPONDENT-ASSESSEE HAD NOT FILED A REVISED RETURN OF INCOME. HOWEVER, THE TRIBUNAL NOTED THAT THE TIME T O FILE REVISED RETURN HAD EXPIRED. IN ANY EVENT, EVEN THE REVENUE DOES NOT DISPUTE THAT IT WAS A BONAFIDE MISTAKE ON THE PART OF THE RESPONDENT-ASSESSEE. IN THE ABOVE VIEW, IMPOSITION OF PENALTY UPON THE RESPONDENT-ASSESSEE IS NOT WARRANTED. 10.2 WE FIND THE HONBLE SUPREME COURT IN THE CASE RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) HAS OBSERVED AS UNDER (S HORT NOTES) : A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGAR DING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMO UNT TO THE INACCURATE PARTICULARS. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE , THAT BY ITSELF WOULD NOT, IN OUR OPINION ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTABLE BY AO FOR ANY REASON, THE 12 ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C). T HAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. 10.3 RESPECTFULLY FOLLOWING THE ABOVE DECISIONS AND IN VIEW OF OUR REASONS GIVEN IN THE PRECEDING PARAGRAPHS WE ARE OF THE CONSIDERED OPINION THAT THIS IS NOT A FIT CASE FOR LEVY OF PEN ALTY U/S.271(1)(C) OF THE I.T. ACT. THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MAKDATA PVT. LTD. (SUPRA) IS UNDER DIFFERENT SET OF FACTS A ND IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THIS VIEW OF TH E MATTER, WE SET-ASIDE THE ORDER OF THE LD.CIT(A) AND DIRECT THE ASSESSING OFF ICER TO CANCEL THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT. THE GROUN DS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 19-02-2014. SD/- SD/- (SHAILENDRA KUMAR YADAV ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE, DATED 19 TH FEBRUARY 2014 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-I, PUNE 4. THE CIT-I, PUNE 5. THE DR A BENCH, PUNE. 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE