M/s Future Creations Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 6755/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3973 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: misc
• Appeal Filed On: 23-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANCHIT MATHUR CS
• Keywords: Wrong claim; Bad and doubtful debts; Difference of opinion
• Section: 143(3); 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SH. G.D.AGRAWAL, HONBLE PRESIDENT AND SH.K.N.CHARRY, JUDICIAL MEMBER ITA NO. 6755 & 6756/DEL/2015 (ASSESSMENT YEAR: 2008-09 & 2010-11) APPELLANT BY SH. SANCHIT MATHUR, CS RESPONDENT BY SH. ARUN KUMAR YADAV, SR.DR DATE OF HEARING 20 .0 9 .2017 DATE OF PRONOUNCEMENT 0 9 . 1 0 .2017 ORDER PER BENCH THESE TWO APPEALS ARE PREFERRED BY THE ASSESSEE CHA LLENGING THE ORDERS DATED 31.07.2015 IN APPEALS NOS. 266 & 267/14-15 PA SSING BY THE COMMISSIONER OF INCOME TAX (APPEAL) [IN SHORT CIT(A)]-2, NEW DELHI FOR 2008-09 & 2010-11 ASSESSMENT YEARS RESPECTIVELY. 2. FACTS ARE IDENTICAL IN BOTH THE APPEALS AS SUCH WE FIND IT JUST AND CONVENIENT TO DISPOSE OFF THESE TWO APPEALS BY WAY OF A COMMON ORDER. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A PRIVATE LIM ITED COMPANY AND FOR THE RELEVANT ASSESSMENT YEAR IS UNDER CONSIDERATION. THE ASSESS MENT WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) BUT SUBSEQUENTLY THE AO RE- FUTURE CREATIONS PVT. LTD., A-42, NARAIANA INDL. AREA, NEW DELHI-110028. PAN-AAACF4288N VS AC IT, CENT. CIRCLE-5, NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO. 6755 & 6756/DEL/2015 OPENED THE ASSESSMENT BY ISSUING A NOTICE U/S 148 O F THE ACT AND CONCLUDED THE RE-ASSESSMENT BY MAKING AN ADDITION ON ACCOUNT OF B AD DEBTS CLAIMED BY THE ASSESSEE. SIMULTANEOUSLY, THE AO INITIATED PROCEE DINGS U/S 271(1)(C) OF THE ACT AND CONCLUDED THEM TO LEVYING THE PENALTY WHICH IS EQUIVALENT TO 100% OF THE TAX TRIED TO BE EVADED BY THE ASSESSEE, APPEALS PREFERR ED BY THE ASSESSEE ARE DISMISSED BY THE LD.CIT(A) BY WAY OF THE IMPUGNED O RDER. HENCE, THE ASSESSEE IS BEFORE US IN THESE APPEALS CHALLENGING THE LEVY OF PENALTY ON ACCOUNT OF THE BAD DEBTS. 3. IT IS THE ARGUMENTS OF THE LD.AR THAT IN RESPECT OF THE AY 200809, THE ASSESSEE COMPANY DEPOSITED AN FDR AS A SECURITY WIT H THE HARYANA URBAN DEVELOPMENT AUTHORITY WHICH WAS FORFEITED AND ENCAS HED BY THE AUTHORITY, AS SUCH IT WAS TREATED AS BAD DEBTS, SO ALSO FOR THE A Y 2010-11, THE ASSESSEE HAD SHOWN RENT RECEIVABLE BUT NOT BE RECEIVED ULTIMATEL Y, AS BAD DEBTS. LD.AR SUBMITTED THAT THE ASSESSEE FURNISHED ALL THESE PAR TICULARS FULLY AND TRULY IN THE RETURN OF INCOME BUT MERELY BECAUSE THE AO HAD TAKE N DIFFERENT VIEW TO DISALLOW THESE TWO AMOUNTS TREATED AS BAD DEBTS BY THE ASSES SEE, THE AO INVOKED SECTION 271(1)(C) OF THE ACT WHICH IS PERMISSIBLE UNDER LAW IN THE ABSENCE OF ANY CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS THEREOF. PER CONTRA, LD. DR SUBMITTED THAT A FALSE CLAIM AMOUNTS TO FURNISHING ALL INACCURATE PARTICULARS AS SUCH THE AUTHORITIES BELOW ARE JUSTI FIED IN LEVYING THE PENALTY. 4. WE HAVE CAREFULLY GONE THROUGH THE RECORD. ABSO LUTELY THERE IS NO DISPUTE AS TO WHETHER THE ASSESSEE FURNISHED THE PARTICULAR S OF THE SO-CALLED BAD DEBTS TRULY AND FULLY IN THE RETURN OF INCOME. HOWEVER, THERE IS A DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE AO AS TO WHETHER SUCH BAD DEBTS ARE ALLOWABLE AS ITA NO. 6755 & 6756/DEL/2015 DEDUCTION UNDER LAW. THERE IS A DIFFERENCE BETWEEN FALSE CLAIM AND WRONG CLAIM. HERE IN THIS CASE MERELY BECAUSE THE AO TH OUGHT IT FIT TO DISALLOW THE CLAIM OF DEDUCTION, PER SE , IT DOES NOT BECOME A FALSE CLAIM OR AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING ALL INACCURATE PARTICULARS THEREOF. SO LONG AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS RELATING TO THE CLAIM OF DEDUCTION IN THE RETURN OF INCOME, IN THE ABSENCE OF ANY ALLEGATION AS TO THE FALSE CLAIM, INVOKING TO THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT IS B AD UNDER LAW. IF THE ASSESSEE PREFERS A CLAIM PATENTLY WITHOUT INCURRING ANY LIAB ILITY TO SUCH EXPENDITURE, IT BECOMES FALSE CLAIM BUT PREFERRING CLAIM HAVING IN CURRED LIABILITY, EVEN IF NOT PERMISSIBLE TO BE ALLOWED AS DEDUCTION, CANNOT BE A FALSE CLAIM AND AT THE BEST, IT COULD BE A WRONG CLAIM. WITH THIS VIEW OF THE MATT ER, WHILE RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE APEX COURT IN THE DECIS ION OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158 [SC], WE HOLD THAT EVERY DISALLOWANCE OF ANY CLAIM FOR DEDUCTION WILL NOT AUTOMATICALLY LEAD TO THE LEVYING OF THE PENALTY AND WE, THEREFORE, FIND IT DIFFICULT TO SUSTAIN THE LEVY OF PENALTY IN THIS MATTER. WE, THEREFORE, DIRECT THE AO TO DELETE THE PENALTY FOR BOTH THE YEARS. 5. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09 TH OCTOBER, 2017. SD/- SD/- (G.D.AGRAWAL) (K.N.CHARRY) PRESIDENT JUDICIAL MEMBER *AMIT KUMAR* DATE:- 09.10.2017 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI