DCIT, Ludhiana V. Sh. Bharati Bhushan Jindal, Ludhiana

ITA 72/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73499 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-03-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 24-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 72/CHD/2013 ASSESSMENT YEAR: 2004-05 THE DCIT, VS. SH. BHARTI BHUSHAN JINDAL CIRCLE I, PROP. M/S JINDAL ELECTRIC & LUDHIANA MACHINERY CORPORATION LUDHIANA PAN NO. ACVPJ3724B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.S. NAGAR RESPONDENT BY : SHRI TEJ MOHAN SINGH DATE OF HEARING : 05/03/2014 DATE OF PRONOUNCEMENT : 11/03/2014 ORDER PER T.R.SOOD, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 15.11.2012 OF CIT (APPEALS)-II, LUDHIANA. 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS:- 1. THAT THE CIT(A) HAS ERRED IN LAW IN DELETING THE PE NALTY LEVIED BY THE A.O. ON ADDITION ON ACCOUNT OF BAD DE BTS CLAIMED OF RS. 10,50,000/-. THE A.O. DISALLOWED THE CLAIM OF BAD DEBTS FULLY JUSTIFY THAT THE CONDITIONS AS MENT IONED IN SECTION 36(2) OF I.T. ACT, 1961 WERE NOT FULFILLED. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW IN DELETING TH E PENALTY OF RS. 5,18,254/- IMPOSED BY THE A.O. U/S 271(1)(C) OF THE I.T. ACT 1961. 3. THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND T HAT OF A.O. BE RESTORED. 2 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT ASSE SSEE HAD SHOWN INCOME FROM INTEREST UNDER THE HEAD INCOME FROM OTHER SOU RCES. AGAINST THIS INCOME A SUM OF RS. 10,50,000/- WAS WRITTEN OFF AS UNREALI SABLE. THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS NOT FULFILLED THE CONDITI ONS LAID DOWN IN SUB-SECTION (2) TO SECTION 36, THEREFORE, THIS AMOUNT WAS DISA LLOWED AND PENALTY PROCEEDINGS U/S 271(1) (C) WERE INITIATED. IN RESP ONSE TO THE SHOW CAUSE NOTICE THE ASSESSEE FAILED TO GIVE ANY EXPLANATION, THEREF ORE, PENALTY @ 150% AMOUNTING TO RS. 5,18,254/- WAS LEVIED. 4. ON APPEAL, IT WAS MAINLY SUBMITTED THAT SIMILAR CLAIM FOR WRITING OFF OF UNREALISABLE AMOUNT WAS ALLOWED IN THE CASE OF ASSE SSEE IN EARLIER YEARS AND SUCH CLAIM HAS BEEN ALLOWED IN CASE OF ASSESSEES H UF AS WELL AS IN CASE OF HIS WIFE SMT. MANJU JINDAL HAS BEEN ALLOWED. IT WAS FUR THER SUBMITTED THAT MERE DISALLOWANCE OF AN AMOUNT WOULD NOT CALL FOR PENAL ACTION. CERTAIN CASES WERE ALSO RELIED ON. THE LD. CIT(A) FOUND FORCE IN THESE SUBMISSIONS AND DELETED THE PENALTY. 5. BEFORE US, LD. DR STRONGLY SUPPORTED THE ORDER O F ASSESSING OFFICER. 6. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE CIT(A). HE AGAIN EMPHASIZE D THAT SIMILAR CLAIM WERE HELD ALLOWABLE IN EARLIER YEARS I.E. WHY ASSESSEE H AD MADE THIS CLAIM AND MERE DISALLOWANCE OF CLAIM WOULD NOT AMOUNT TO CONCEALME NT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THIS REGARD, HE STRONGLY RELIED IN THE CASE OF HON'BLE SUPREME COURT IN THE CASE OF CIT V RELIANCE PETROPRODUCTS PVT LTD [2010] 322 ITR 158 (SC) . 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND THAT LD. CIT(A) HAS DELETED THE PENALTY VIDE PARA 3.4, WHICH IS AS UNDE R:- 3.4 I HAVE CAREFULLY CONSIDERED THE APPELLANTS SUB MISSION. THE APPELLANT HAD SUBMITTED IN HIS REPLY DAT. 01.10 .2011 THAT 3 A SIMILAR CLAIM HAD BEEN ALLOWED DURING THE A/Y 200 3-04 IN THE CASE OF THE APPELLANT U/S 143(3) OF THE INCOME TAX ACT. THE APPELLANT HAD FURTHER SUBMITTED THAT THE CLAIM ON SIMILAR GROUNDS MADE IN THE CASE OF APPELLANTS HUF AND APP ELLANTS WIFE FOR A/Y 2004-05 HAD BEEN ALLOWED U/S 143(3) OF THE INCOME TAX ACT. THE AO IN HIS REPORT DATED 23.10.20 12 HAS NOT CONTROVERTED THIS CONTENTION. IT EMERGES THAT I N SIMILAR CIRCUMSTANCES CLAIM MADE ON THE SAME GROUNDS HAD BE EN ALLOWED DURING THE IMMEDIATELY PRECEDING YEAR IN TH E CASE OF THE APPELLANT AND IN THE SAME ASSESSMENT YEAR (2004 -05) IN THE CASE OF APPELLANTS WIFE AND HUF. IT IS ALSO A MATTER OF FACT THAT THE APPELLANT HAD FILED AN APPEAL BEFORE THE HONBLE ITAT ON THIS ISSUE WHICH APPEAL HAS BEEN DISMISSED AFTER EXAMINING THE APPELLANTS SUBMISSION AND THE PROVIS IONS OF THE LAW. FROM THESE FACTS IT EMERGES THAT WHETHER T HE CLAIM MADE BY THE APPELLANT REGARDING ALLOWANCE OF BAD DE BTS OF RS. 10.50 LACS IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE WAS AN ALLOWABLE EXPENDITURE OR NOT IS A DEBAT ABLE ISSUE. NO DOUBT THAT THIS ADDITION HAD BEEN CONFIRM ED BY THE HONBLE ITAT BUT THAT BY ITSELF IS NO GROUND FOR IM POSITION OF PENALTY U/S 271(1)(C). IT IS TRITE LAW THAT PENALTY PROCEEDINGS AND ASSESSMENT PROCEEDINGS ARE TWO DIFFERENCE PROCE EDINGS AND EVIDENCE WHICH IS SUFFICIENT FOR MAKING AN ADDI TION IN ASSESSMENT PROCEEDINGS MAY NOT ALWAYS BE SUFFICIENT FOR LEVYING OF PENALTY U/S 271(1)(C). IN THE INSTANT CA SE THE CLAIM OF LOSS WAS DULY REFLECTED IN THE RETURN OF INCOME THEREFORE THERE WAS NO CONCEALMENT OF PARTICULARS OF INCOME. FURTHER MERELY BECAUSE THIS CLAIM HAD BEEN DISALLOWED DOES NOT ESTABLISH THAT THERE WAS ANY FURNISHING OF INACCURA TE PARTICULARS. THE CASE OF RELIANCE PETROPRODUCTS PVT . LTD. REPORTED IN 322 ITR 158 IS SQUARELY APPLICABLE TO T HE FACTS AND CIRCUMSTANCES OF THE CASE. 8. WE FIND THAT LD. CIT(A) HAS CORRECTLY ADJUDICATE D THE ISSUE. MERELY DISALLOWANCE OF A CLAIM WHICH WAS ALLOWED IN AN EAR LIER YEAR WOULD NOT TANTAMOUNT TO CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THIS REGARD THE HON'BLE SUPREME COURT IN THE CASE OF CIT V RELIANCE PETROPRODUCTS PVT LTD (SUPRA) OBSERV ED AS UNDER:- 4 A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INF ORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INA CCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCU RATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PEN ALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGI NATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THA T EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY EH ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSE E CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PA RTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARI SE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TH E TRUTH OR ERRONEOUS. IN VIEW OF THE ABOVE, WE FIND NOTHING WRONG WITH TH E ORDER OF CIT(A) AND WE CONFIRM THE SAME. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 11/03/2014 SD/- SD/- (SUSHMA CHOWLA) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 11 TH MARCH, 2014 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR