TMI Blog2010 (9) TMI 768X X X X Extracts X X X X X X X X Extracts X X X X ..... pra for the Appellant. Smt. Banita Devi Nareom for the Respondent. ORDER A.K. Garodia, Accountant Member. This is the assessee's appeal directed against the order of learned CIT(A). Meerut, dt. 26th March, 2010 for the year 2004-05. The grounds raised by the assessee read as under : "(1) The penalty of Rs. 37,40,165 as imposed under section 271(l)(c) of the IT Act by the AO and sustained by the learned CIT(A) is arbitrary, unjust and illegal on various factual and legal grounds including the following (i) The AO is wrong in saying that the 'intention of the assessee was to conceal the true particulars of income'. (ii) The appellant had neither furnished inaccurate particulars of its income nor had concealed any income. (iii) The authorities below are wrong in holding that the appellant had surrendered the bad debts of Rs. 46,76,680 after being confronted by the AO. The observations made by the learned CIT(A) with regard to this amount are untenable and 276 ITR 645 (sic) as relied upon by the learned CIT(A) was distinguishable on facts. (iv) The appellant was wholly dependent on its counsel for filing the return of Income and if the amount of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additions made by him and imposed a penalty of Rs. 37,40,165. The assessee carried the matter in appeal before CIT(A) regarding penalty also but without success and now, the assessee is in further appeal before us. 3. It is submitted by the learned Authorised Representative that regarding the addition made by the AO on account of bad debt claimed by the assessee which was recovered in the subsequent year, the penalty imposed by the AO is not justified because such addition is although surrendered by the assessee but it cannot be legally made because even after recovery of the bad debt in future years, deduction on account of bad debt is allowable in the year of write off itself although the same is taxable in the year of recovery. It has been submitted that the bad debt was recovered in the asst. year 2006-07 but the return of income was filed by the assessee after the completion of the assessment in the present year and for this reason, this amount was not added in the income of that year. It is submitted that the return of income for the asst. year 2006-07 was filed by the assessee in Nov., 2006 whereas surrender of bad debt in the present year was made by the assessee before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the bad debts are actually written off by the assessee in the books of account and if such bad debts are subsequently recovered then to the extent of such recovery, there will be taxable income in the year of recovery. In the present case, the assessee itself has surrendered this amount of bad debt recovered by him in the financial year 2005-06 for taxing in the present year i.e., in asst. year 2004-05 and the AO has also made addition on this account in the present year itself and we find that the issue regarding quantum addition has been settled and it is not open before us. But no penalty can be imposed on such addition made by the AO because it is not a case of concealment of income or of furnishing inaccurate particulars of income. In fact, the addition was wrongly made by the AO on a wrongful surrender by the assessee and hence with regard to this addition, we delete the penalty. 6. Regarding the penalty imposed by the AO on account of 2nd addition of Rs. 84,78,057 on account of wrong claim of assessee regarding loss on sale of assets, we are not satisfied with the various contentions raised by the learned Authorised Representative of the assessee. We find that this aspec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght that the amount of income-tax paid by the assessee as well as the amount claimed as deduction on account of certain equipment being written off could not be added back in the computation of income. 18. In the case of Reliance Petroproducts (P.) Ltd. (supra), the addition made by the AO in respect of the interest claimed as a deduction under s. 36(1)(iii) of the Act was deleted by the CIT(A) though it was later restored, by the Tribunal to the AO. The appeal filed by the assessee against the order of the Tribunal was admitted by the High Court. It was, in these circumstances, that the Tribunal came to the conclusion that the assessee had neither concealed the income nor filed inaccurate particulars thereof. In recording this finding, the Tribunal felt that if two views of the claim of the assessee were possible, the explanation offered by it could not be said to be false. This, however, is not the factual position in the case before us. The facts of the present case thus are clearly distinguishable. 19. It is true that mere submitting a claim which is incorrect in law would not amount to giving inaccurate particulars of the income of the assessee, but it cannot be disputed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion offered by the assessee company was not accepted either by the AO or by the CIT(A). The view of Tribunal regarding admissibility of the deduction on account of written off of certain assets, under s. 32(1)(iii) of the Act is wholly erroneous. The Tribunal has not recorded a finding that the explanation furnished by the assessee in respect of the deduction due to certain assets being written off was a bona fide explanation. The Tribunal has nowhere held that it was due to oversight that the amount of this deduction could not be added while computing the income of the assessee company." 7. Regarding various judgments cited by the learned Authorised Representative as noted by us in para 4 of this order, we observed that the judgment of Hon'ble apex Court rendered in the case of Reliance Petroproducts (P.) Ltd. (supra) was duly considered by Hon'ble High Court of Delhi in the case of Zoom Communication (P.) Ltd. (supra) and the reliance of learned Authorised Representative on the judgment of Hon'ble apex Court rendered in the case of Reliance Petroproducts (P) Ltd. (supra) is not required to be considered again by us. Other judgments relied upon by the learned Authorised Represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain business losses. The AO came to the conclusion that the loss cannot be treated as business loss. Such disallowance of loss by the AO was upheld by the learned CIT(A) and also by the Tribunal but the Tribunal has upheld this disallowance of loss on the basis that it is simply a book loss and not real loss. In view of these facts, in the course of penalty appeal, the Tribunal came to the conclusion that the transaction which resulted in the loss having looked into and it is found that the transactions were at market value, transfer of money was received and hence the Expln. (1) to s. 271(1)(c) was not accepted. In the present case, the facts are different and hence this judgment of Hon'ble High Court of Delhi is also of no help to the assessee in the present case. Now, we consider the judgment of Hon'ble Punjab Haryana High Court rendered in the case of Rajiv Garg (supra). This judgment is also of no help to the assessee in the present case because the facts are different. In that case, it was recorded by the Tribunal that the Revenue had not placed on record any material or evidence to dislodge its burden of proving concealment. It is also held by the Tribunal that the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermination of law or facts and hence this judgment is also of no help in the present case. Lastly, we consider the judgment of Hon'ble High Court of Delhi rendered in the case of Ms. Preeti Aggarwala (supra). This judgment is also of no help to the assessee in the present case because the facts are different. In that case, the Tribunal had deleted the penalty on the basis that the AO did not record satisfaction as warranted by the provisions of s. 27l(1)(c) of the IT Act. Against this Tribunal decision, Revenue was in the appeal before the Hon'ble High Court of Delhi and it was held by the Hon'ble High Court of Delhi that the assessee was not clear about the interpretation of the Accounting Standards issued by the ICAI and was under the bona fide belief that assessee was entitled to file return in the manner assessee did and nowhere in the assessment order, any satisfaction was even suggested by the AO for initiating penalty proceedings. Since the facts are different in the present case, this Judgment is also of no help in the present case. 8. As per above discussion, we find that none of the judgments cited by the learned Authorised Representative for the assessee is rendering ..... X X X X Extracts X X X X X X X X Extracts X X X X
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