M/s Disa India Limited, Bangalore V. ACIT, Bangalore

ITA 969/BANG/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5367 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-04-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 15-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Wrong claim; Bad and doubtful debts

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE DR. O.K NARAYANAN, VICE PRESIDENT AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO.9 69/BANG/2009 (ASST. Y EAR -2004-05) M/S DISA INDIA LIMITED, 5 TH FLOOR, KUSHAL GARDEN ARCADE, 1A PEENYA INDUSTRIAL AREA, PEENYA 2 ND PHASE, BANGALORE-560 058 . . APPELLANT VS. THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL 11(1), BANGALORE. . RESPONDENT APPELLANT BY : SHRI K.R PRADEEP, CHARTERED ACCOU NTANT RESPONDENT BY : SMT. V.S SREELEKHA, ADDL. COMMISSI ONER OF INCOME-TAX O R D E R PER DR. O.K NARAYANAN, VICE PRESIDENT THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVAN T ASSESSMENT YEAR IS 2004-05. THE APPEAL IS DIRECTED AGAINST TH E ORDER PASSED BY THE CIT(A) I AT BANGALORE DATED 10/8/2009. THE A PPEAL IS ARISING ITA NO.969/B/09 2 OUT OF THE PENALTY ORDER PASSED U/S 271(1C) OF THE INCOME-TAX ACT 1961. 2. THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR 2004-05 FOR RS.2,40,16,694/-. THE ASSESSMENT WAS COMPLETED ON A TOTAL INCOME OF RS.2,99,02,747/-. T HE ADDITIONAL INCOME WAS CREATED BY THE DISALLOWANCE OF CLAIM OF BAD DEBTS MADE BY THE ASSESSEE BY WAY OF DEDUCTION TO THE EXTENT O F RS.53,32,100/-. 3. THE QUANTUM OF ADDITION MADE BY THE ASSESSING OF FICER WAS CARRIED IN FIRST APPEAL WHERE THE ADDITIONS WERE CO NFIRMED. THE ISSUE OF ADDITION ENDED THERE. THE ISSUE WAS NOT FURTHER AGITATED BY THE ASSESSEE. 4. THE ASSESSING OFFICER HELD THAT THE ASSESSEE COM PANY HAS MADE AN INCORRECT CLAIM IN RESPECT OF BAD DEBTS, WHICH H AS RESULTED IN FURNISHING OF INACCURATE PARTICULARS AND, THEREFORE , THE ASSESSEE WAS LIABLE FOR PENALTY U/S 271(1)(C). PENALTY WAS ACCO RDINGLY LEVIED. THIS HAS BEEN CONFIRMED IN FIRST APPEAL. THAT IS WHY SEC OND APPEAL BEFORE US. ITA NO.969/B/09 3 5. THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL R EAD AS BELOW: (I) THAT THE PENALTY PROCEEDINGS AND THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IS HEREBY DISPUTED . (II) THAT THE NOTICE ISSUED U/S 271(1)(C), THE SUBSEQUENT PROCEEDINGS AND THE PENALTY ORDER IS BAD IN LAW AND NOT AS PER LAW. (III) THE AUTHORITIES BELOW ERRED IN LEVYING PENALT Y U/S 271(1)(C) OF THE ACT OF RS.19,09,818/- (IV) THAT THE AUTHORITIES BELOW FAILED TO DISCHARGE THE BURDEN CAST ON HIM TO PROVE THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS BEFORE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 6. WE HEARD BOTH THE SIDES IN DETAIL AND CONSIDERED THE ISSUE. PARTICULARS OF DETAILS REGARDING THE DEBTS WRITTEN OFF BY THE ASSESSEE AS BAD DEBTS ARE VERY MUCH AVAILABLE IN THE BOOKS OF A CCOUNTS AND STATEMENTS FILED BY THE ASSESSEE. THEREFORE, AS A MATTER OF FACT, THERE IS NO DISPUTE REGARDING THE FACT THAT THE RELEVANT PARTICULARS WERE CORRECTLY AVAILABLE BEFORE THE ASSESSING OFFICER. THERE IS NO MIS- STATEMENT OF THE FACT. THE TRANSACTIONS LEADING TO DEBTS WERE GENUINE, BONAFIDE AND THE DEBTS WERE NOT COLLECTED PROVED B Y THE ASSESSEE IN ITA NO.969/B/09 4 THE RELEVANT ASSESSMENT PREVIOUS YEAR IN SPITE OF T HE ASSESSEE HAS MADE ATTEMPTS TO REALIZE THOSE AMOUNTS. THEREFORE, THE FACTS LEADING TO THE ISSUE ARE VERY MUCH AVAILABLE IN THE RECORDS WITHOUT ANY TAINT OF SUSPICION. WHETHER THE BAD DEBTS AS A DEDUCTION SH OULD BE ALLOWED OR NOT IS A DIFFERENT MATTER. THE FACT THAT THE ASSES SEE MIGHT HAVE MADE A WRONG CLAIM, PER SE IS NOT A CASE OF FURNISHING OF ANY INACCURATE PARTICULARS. FOR THE SAME REASON, WE HAVE TO HOLD THAT A WRONG CLAIM WILL NOT AMOUNT TO CONCEALMENT OF INCOME. 7. ANOTHER IMPORTANT FACT IN THE PRESENT CASE IS TH AT SIMILAR CLAIMS WERE MADE BY THE ASSESSEE IN EARLIER ASSESSMENT YEA RS AND THOSE CLAIMS WERE TO A CERTAIN EXTENT DISALLOWED AND ADDE D TO THE INCOME OF THE ASSESSEE AND IN THOSE YEARS, THERE WAS NO LEVY OF PENALTY ON THIS GROUND. THEREFORE, IN A WAY IT COULD BE SEEN THAT THE ASSESSEE MIGHT BE MAKING ATTEMPTS TO MAKE THIS ISSUE ALIVE SO THAT THIS CONTENTIOUS ISSUE COULD BE TAKEN BEFORE THE HIGHER APPELLATE AU THORITIES. 8. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT I S VERY DIFFICULT TO HOLD THAT THE CLAIM MADE BY THE ASSESSEE WHICH HAS BEEN DISALLOWED BY THE ASSESSING OFFICER, IS SUFFICIENT TO MAKE OUT A CASE OF EITHER FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME OR BOTH. ITA NO.969/B/09 5 9. AN EXACTLY SIMILAR CASE HAS BEEN RECENTLY CONSID ERED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIAN CE PETRO PRODUCTS PVT. LTD. 230 CTR (SC) 320. WHILE DECIDIN G THE ISSUE IN FAVOUR OF THE ASSESSEE, THEIR LORDSHIPS HAVE HELD T HAT MAKING AN INACCURATE CLAIM IN LAW CANNOT TANTAMOUNT TO FURNIS HING OF INACCURATE PARTICULARS. THE HONBLE APEX COURT HELD THAT MERE LY BECAUSE THE ASSESSEE CLAIMED DEDUCTION WHICH HAS NOT BEEN ACCEP TED BY THE REVENUE, PENALTY U/S 271(1)(C) IS NOT ATTRACTED. THE COURT FURTHER OBSERVED THAT IF THE CONTENTION OF THE REVENUE IS A CCEPTED, THE ASSESSEE WOULD BE LIABLE FOR PENALTY U/S 271(1)(C) IN EVERY CASE WHERE THE CLAIM MADE BY THE ASSESSEE IS NOT ACCEPTED BY T HE ASSESSING OFFICER. THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE 10. THE ABOVE JUDGMENT OF THE HONBLE SUPREME COURT SQUARELY APPLIES TO THE PRESENT CASE IN APPEAL. 11. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DELETE THE PENALTY LEVIED U/S 271(1)(C) AND ALLOW THE APPEAL FILED BY THE ASSESSEE. ITA NO.969/B/09 6 12. IN RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON MONDAY , THE 26TH DAY OF APRIL, 2010, AT BANGALORE. SD/- SD/- (GEORGE GEORGE K) (DR. O.K NARAYANAN ) JUDICIAL MEMBER V ICE PRESIDENT VMS. COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF 7..GF, ITAT, NEW DELHI. BY ORDER ASST. REGISTRAR, ITAT, BANGALOR E.