VANDANA PROPERTIES, MUMBAI V. THE DCIT RG , WARD 25(2), MUMBAI

ITA 7289/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7652 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 25-02-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 26-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA OJHA
• Keywords: Wrong claim; Bad and doubtful debts
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI. BEFORE SHRI R.V.EASWAR, SR.VP AND SHRI B.RAMAKOT AIAH, AM I.T.A. NO.7289/MUM/2009 (ASSESSMENT YEAR : 2005-06) M/S. VANDANA PROPERTIES, B-602, PREM NAGAR, BUILDING NO.6, M.C.F. UDYAN MARG, BORIVALI EAST, MUMBAI-400 092. PAN: AAAFV3003F VS. THE DEPUTY COMMISSIONER OF INCOME TAX, RANGE-25(2), BANDRA KURLA COMPLEX, BANDRA(E), MUMBAI-400 092. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. HARIOM TULSYAN RESPONDENT BY : MR. VIRENDRA OJHA, DR O R D E R PER R.V.EASWAR, SENIOR VICE PRESIDENT: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE LEVY OF PENALTY O F RS.58,145/- UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 2. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN TH E BUSINESS OF BUILDERS AND DEVELOPERS. IN THE YEAR 20 02-03, IT STARTED A PROJECT AT DEV NAGAR. IN CONNECTION WITH THE SAID PROJECT, THE ASSESSEE HAD MADE ADVANCES AGGREGATING TO RS.1,58,900/- TO VARIOUS AUTHORITIES OF MUNICIPAL CORPORATION OF GREATER MUMBAI. IN THE RETURN FILED FOR THE YEAR UNDER APPEAL, WHICH IS THE ASSESSMENT YEAR 2005-06, THE ASSESSEE CLAIMED DEDUCTION OF RS.1,58,900/- ON THE GROUND THAT IT HA D WRITTEN OFF THE DEPOSITS AND THAT THE WRITE OFF SHOULD BE ALLOW ED AS A BUSINESS LOSS. THE ASSESSING OFFICER REJECTED THE C LAIM WHICH ACTION WAS UPHELD BY THE CIT(A). ON FURTHER APPEAL, THE TRIBUNAL UPHELD THE DISALLOWANCE BY ORDER DATED 29. 04.2009 IN ITA NO.1253/MUM/2007. THE TRIBUNAL OBSERVED THAT TH E ASSESSEE HAD CLAIMED THE WRITE OFF AS LOSS INCIDENT AL TO THE BUSINESS, BUT SINCE THERE WAS NO EVIDENCE OR MATERI AL TO ITA NO.7289/MUM/08 2 SUPPORT THE CLAIM IN THE FORM OF DOCUMENTS OR CORRE SPONDENCE, THE TRIBUNAL UPHELD THE DISALLOWANCE. THE ASSESSIN G OFFICER THEREAFTER INITIATED PENALTY PROCEEDINGS FOR CONCEA LMENT OF INCOME AND HELD THAT THE ASSESSEE HAD MADE A WRONG CLAIM OF THE EXPENSES IN THE RETURN AND IT COULD NOT SUBSTAN TIATE AS TO WHY THEY SHOULD BE ALLOWED AS A DEDUCTION. HE ACCOR DINGLY HELD THAT THE ASSESSEE INTENDED TO INFLATE ITS EXPENSES AND REDUCE THE TAXABLE INCOME. ACCORDINGLY PENALTY WAS LEVIED ON T HE ASSESSEE FOR CONCEALMENT OF INCOME. THE SAME HAVING BEEN UPH ELD BY THE CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US . 3. WE HAVE CONSIDERED THE FACTS. IT IS SEEN THAT TH E ASSESSEE CLAIMED DEDUCTION OF RS.1,58,900/- ON THE GROUND TH AT IT REPRESENTED BAD DEBT. HOWEVER, THE SAME WAS NOT OFF ERED AS INCOME IN ANY OF THE EARLIER YEARS AND THEREFORE IT CANNOT POSSIBLY BE ALLOWED AS BAD DEBTS. IN THE ASSESSMENT ORDER, HOWEVER, NOTHING IS MENTIONED ABOUT THE BAD DEBTS A ND THE CLAIM IS SEEN TO HAVE BEEN DISALLOWED ONLY ON THE G ROUND THAT IT REPRESENTED CAPITAL LOSS. THERE IS NO DISPUTE THAT THE ASSESSEE DID ADVANCE THE AMOUNT TO MUNICIPAL CORPORATION OF GREATER MUMBAI AND THAT IT BECAME IRRECOVERABLE LEADING TO THE WRITE OFF. THERE IS ALSO NO DISPUTE THAT THE ADVANCE WAS MADE IN RELATION TO THE BUILDING PROJECT STARTED IN DEV NAG AR WHICH IS PART OF THE ASSESSEES BUSINESS. THE ASSESSEE ALL ALONG APPEARS TO HAVE CONTENDED THAT THE WRITE OFF SHOULD BE ALLO WED AS LOSS INCIDENTAL TO THE BUSINESS AND THIS ALSO EMERGES FR OM PARAGRAPH 17 OF THE ORDER OF THE TRIBUNAL(SUPRA). THE MERE F ACT THAT THE ASSESSING OFFICER TOOK THE VIEW THAT THE CLAIM REPR ESENTED CAPITAL LOSS CANNOT AUTOMATICALLY LEAD TO THE CONCL USION, WITHOUT ANYTHING MORE, THAT THE ASSESSEE CONCEALED ITS INCO ME BY INFLATING THE EXPENSES. AT BEST, IT WAS AN ARGUABLE POINT WHETHER THE CLAIM WAS ALLOWABLE AS BUSINESS LOSS OR IT REPR ESENTED CAPITAL LOSS. ALL THE FACTS HAVE BEEN PLACED BEFOR E THE INCOME- ITA NO.7289/MUM/08 3 TAX AUTHORITIES BY THE ASSESSEE AND MERELY BECAUSE THEY TOOK A DIFFERENT VIEW IT IS NOT POSSIBLE TO HOLD THAT THE ASSESSEE CONCEALED ITS INCOME INVITING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. WE THEREFORE HOLD THAT THERE IS NO JUSTIFI CATION FOR THE IMPUGNED PENALTY WHICH IS HEREBY CANCELLED. THE AP PEAL IS ALLOWED WITH NO ORDER AS TO COSTS. ORDER PRONOUNCED ON THIS 1 1 TH DAY OF MARCH, 2010. SD/- (B. RAMAKOTAIAH) SD/- ( R.V.EASWAR ) ACCOUNTANT MEMBER SENIOR VICE PRESIDENT MUMBAI, DATED 11 TH MARCH , 2010. SOMU COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-25 MUMBAI. 4. THE CIT(A)-XXV, MUMBAI 5. THE DR F BENCH /TRUE COPY/ BY ORDE R ASSTT. REGISTRAR, I.T.A.T, MUMBAI