TMI Blog2014 (10) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... posed for this addition. Disallowance of bad debts – Held that:- The reasons for making the disallowance is that assessee failed to furnish the basis of identifying the debt as bad and from which date it has become bad. W.e.f. 01.04.1989, the assessee is not supposed to demonstrate the fact that debt has become bad - Its allowance can be made only on the ground that such debt has been written off in the books - there is nothing in the assessment order which can justify the imposition of penalty - AO has not pointed out which particular pertaining to bad debt is incorrect. Ad hoc disallowance out of training and recruitment expenses - disallowance out of claim of depreciation – Held that:- The assessee has claimed the depreciation on c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r own findings why the penalty proceedings under the said provision should not have been invoked and levided by the Assessing Officer. 2. The respondent-assessee for the Assessment Year 2008-09 had filed return of income on 29th September, 2008 declaring loss of ₹ 7,87,54,197/- and the income was assessed at loss of ₹ 7,04,07,020/-. In other words, the loss was reduced. The additions made by the Assessing Officer were under the four heads:- i) Addition on account of disproportionate Expenses; : ₹ 5,00,000 ii) Addition on account of bad debts : ₹ 64,06,692 iii) Addition on account of recruitment and training expenses. : ₹ 12,55,295 iv) Addition on account of excess claim of depreciation on comput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulars, in certain situation, even without there being anything to indicate so, statutory deeming fiction for concealment of income comes into play. This deeming fiction, by way of Explanation I to section 271(1)(c) postulates two situations; (a) first whether in respect of any facts material to the computation of the total income under the provisions of the Act, the assessee fails to offer an explanation or the explanation offered by the assessee is found to be false by the Assessing Officer or Learned CIT(Appeals); and, (b) where in respect of any fact, material to the computation of total income under the provisions of the Act, the assessee is not able to substantiate the explanation and the assessee fails to prove that such explanation i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the P and L account. This disallowance has been made by the Assessing Officer on the ground that in the immediately preceding year, the ratio of the expenses qua the total receipts is on the lower side in terms of percentage. This year, it has been increased and assessee failed to show the reasons for such an increase. In our opinion, it is an ad hoc disallowance. Assessing Officer has not pointed out that which particular submitted by the assessee is inaccurate. Therefore, no penalty can be imposed for this addition. The next item relates to disallowance of bad debts. The reasons for making the disallowance is that assessee failed to furnish the basis of identifying the debt as bad and from which date it has become bad. W.e.f. 01.04.1989 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent-assessee has been able to discharge the onus in respect of each addition. The claim of the assessee in the return was bona fide and it cannot be said that full and true particulars and details were not submitted before the Assessing Officer. We are in agreement with the aforesaid findings as counsel for the appellant-Revenue is unable to state and submit, why and for what reason the explanation of the respondent-assessee should not have been accepted. Ad-hoc additions without specific discrepancy and defect, were made on account of disproportionate expenses and recruitment and training expenses. These additions were not on account of the fact that the expenditure claimed were not made. With regard to bad debts and depreciation on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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