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2011 (11) TMI 45 - DELHI HIGH COURTPenalty under Section 271(1)(c) of the Income Tax Act - AO took the view that the prerequisite conditions for writing off the amount as bad debts had not been satisfied, as it was included in the income of the previous year and therefore, there was no question of treating is as bad debts - amount has been disallowed not as business advance, which was the actual claim of assessee but the same has been disallowed as bad debt - Tribunal found that when advances given to the suppliers were not written off as irrecoverable, the same was allowable under Section 28 of the Act. A trading loss has a wider connotation than a bad debt - There may be a bad debt which may not fall within the purview of Section 36(1)(vii) of the Act, but may well be regarded as one eligible for deduction - Held that It was a bona fide claim preferred by the assessee, who had also disclosed all the facts relating to and material to the computation of his income - assessee fulfilled both the conditions to be outside the purview of Explanation (1) to Section 271(1)(c) of the Act - had the assessee pressed his claim in a proper manner during the assessment proceedings, he might have even succeeded in getting the said deduction allowed - cannot be fastened with penalty - Decided in favour of assessee
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