TMI Blog2005 (4) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 2. The identical ground of appeal taken by the revenue is as under:- On the facts and in the circumstances of the case, the ld. CIT (Appeals) has erred in deleting the penalty of ₹ 3,248 and 1,49,481 imposed by the Assessing Officer under section 271(1)(c ) of the Income-tax Act, 1961 for the assessment years 1997-98 and 1998-99 respectively, particularly when the claim of the declaration made in the return of income regarding doubtful recovery of interest was incorrect. 3. The relevant and material facts for the disposal of this ground of appeal are that in both the cases the assessments were completed under section 143(3) /147 of the Income-tax Act, 1961 [hereinafter referred to as the Act] at enhanced income of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loans on certain guarantee and as the assessee was following the mercantile system of accounting, he should have declared the interest income on accrual basis. 4. Aggrieved with the orders of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income-tax (Appeals) and the CIT (Appeals) deleted the impugned additions by passing a detailed order, but mainly observing that in this case the assessee as per the mercantile system of accounting the interest income was required to be declared by the assessee on accrual basis, but in view of the fact that there were reasonable factors to doubt the recovery of the amount and in view of the accounting standard of the ICAI and declaration of the fact in the audited account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the year in which it was actually recognized/received by the assessee-company. The assessee in his written submissions before the Assessing Officer had brought this fact to the notice of the Assessing Officer. It is also not disputed that the assessee-company had been giving a note in balance sheet to this effect that interest expenses and income had not been accounted for on accrual basis and will be booked on cash basis. It means that the assessee-company had not concealed any facts/income and made a proper disclosure in the books of account as well as before the Assessing Officer. The learned Departmental Representative for the revenue, referring to the decision of the Apex Court in case of Tuticorin Akali Chemicals Fertilizers L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as offered an explanation as to why he has not shown the interest income on accrual basis and the same is found supported by the material placed on record, because according to the assessee, the borrower companies were incurred losses during the years under consideration and so the assessee was of the opinion that the recovery of the amount from the borrowers were doubtful, so keeping in view the accounting standard laid down by the ICAI, the assessee declared this fact in the audited accounts filed with the return. It further means that from these facts, it cannot be said that the assessee has deliberately and consciously concealed the particulars of his income or has furnished inaccurate particulars of his income, but on the contrary we f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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