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2016 (7) TMI 577 - AT - Income TaxLevy of penalty u/s 271(1) (c) - provision for bad debts and loss on sale of fixed assets - Held that:- Merely submitting an incorrect claim in law for the expenditure would not amount to furnishing inaccurate particulars of income. It is undisputed that the impugned amounts were part of the schedules of the audited accounts and the AO noticed the omission from these accounts only. It is again undisputed that these accounts form a part and parcel of the return of income. The fact that the assessee immediately offered to rectify the mistake on detection is also undisputed. It is only that the claim of the bona fide of the assessee was not accepted by the department. It is also important to note that Explanation 1 to section 271(1)(c) cannot be applied where charge against the assessee is furnishing of inaccurate particulars of income since it provides a deeming fiction qua concealment of particulars of income only and consequently cannot be extended to a case where charge against the assessee is furnishing of inaccurate particulars of income. Hence in light of the judicial precedents as aforesaid discussed we are unable to agree with the findings of the authorities below on the imposition of penalty on the issue of provision for bad debts and loss sale of fixed assets not added back to the computation of income by the assessee. For allowability of the Write off of Bad Debts the assessee’s case gets a stronger footing from the decision of the Hon’ble Delhi High Court in its own case for AY 2002-03 wherein the Hon’ble Delhi High Court has upheld the assessee company’s policy of write offs thus supporting the assessee’s plea that the write off of bad debts has been in dispute in different assessment years and therefore, to term it as furnishing of inaccurate particulars of income for the purpose of levy of penalty will be inappropriate. Hence, we are unable to agree with the findings of the lower authorities on this issue also. Penalty deleted - Decided in favour of assessee.
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