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2019 (9) TMI 441 - AT - Income TaxPenalty u/s 271(1)(c) - expenditure towards bad debts allowable u/s 36(1)(vii) - claim was disallowed consequent to the survey - HELD THAT:- Assessee has prepared two financial statements by writing off two different amounts as bad debts. The company has approved the amount as bad debts in the AGM. Since the Board of Directors proposed to disallow two different amounts as bad debts, the company prepared two sets of financial statements. Assessee, as claimed in the submission, supposed to file return of income with the approved balance sheet with the higher bad debts, but ended up filing the return of income as bad debts, resulted in declaring higher profit. The assessee filed revised return of income in order to rectify the mistake. Subsequently, because of survey, the AO found that the assessee has declared less income because of preparing two financial statements. AO could not establish that the bad debts claimed by the assessee in revised return of income was bogus or that the claim is not as per law. Assessee can declare the bad debts as approved by the shareholder in AGM. Since, there was a mistake, the assessee can revise the return. As the return of income was again revised after survey and due to these circumstances, the AO came to the conclusion that assessee revised the return of income in order to declare less income to avoid tax, which is not supported by any evidence. The conclusion reached by CIT(A) is proper and we are inclined to accept the findings of the CIT(A). Accordingly, ground raised by the revenue is dismissed.
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