TMI Blog2017 (5) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and therefore the finding of the Ld. CIT(A) that the assessee has filed inaccurate particulars to the extent of the claim, cannot be accepted. In our opinion, once the principle debt has already been written off in the books of accounts, the interest due on said loans also was eligible for written off and therefore we do not find any incorrectness in making this alternative claim by the assessee. Accordingly, the penalty sustained by the Ld. CIT(A) is directed to be deleted and the grounds of the appeal are accordingly allowed. - ITA Nos. 4135 & 4136/Del/2014 - - - Dated:- 19-5-2017 - Sh. I.C. Sudhir, Judicial Member And Sh. O. P. Kant, Accountant Member Appellant by : Sh. Sachit Jolly, Adv. Respondent by : Sh. A.K. Saroha, CIT(DR) Sh. Amrit Lal, Sr. DR ORDER Per O. P. Kant, A. M. These two appeals by the assessee are directed against two separate orders of the Ld. Commissioner of Income-tax (Appeals) [in short the CIT(A) ] dated 29/05/2014 for assessment year 2003-04 and 2004-05 respectively, wherein the Ld. CIT(A) has confirmed the penalty levied by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 (in short the Act ). Sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,56,53,378/- after making various additions including the addition for bad debts written off of ₹ 1,41,77,018/-. The Assessing Officer also levied penalty under section 271(1)(c) of the Act for filing inaccurate particulars of income amounting to ₹ 7,64,14,855/- vide order dated 31/07/2013. On appeal, the Ld. CIT(A) sustained the penalty in respect of the disallowance of bad debts written off of ₹ 1.41 crores. Aggrieved, the assessee is in appeal before the Tribunal, raising the grounds as reproduced above. 4. In the grounds raised, the assessee is aggrieved with the penalty of ₹ 52,10,054/-sustained by the Ld. CIT(A) in respect of the disallowance of bad debts written off. 5. At the outset, the Ld. counsel of the assessee submitted before us that in quantum appeal, the Tribunal in ITA No. 4235/Del/2011, has restored the issue to the file of the Assessing Officer for verification of the claim of the assessee in the light of the observation of the Tribunal in assessment year 2001-02, and therefore, penalty does not survive now. 6. The Ld. CIT(DR), on the other hand, relied on the order of the lower authorities, however, could not controvert the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional claim made by the Assessee on account of interest of sticky loans is incorrect qua the conditions of Section 36(l)(vii) of the Act when the conditions of the Section are fulfilled as the same interest has been recognized as income in earlier assessment years by the tax authorities. 3. That on the facts and circumstances of the case and in law, the CIT(A) has erred in upholding the levy of penalty when the Assessee has not furnished inaccurate particulars of such income and has made true and bona fide disclosures. 4. That on facts and circumstances of the case and in law, the learned CIT(A) has failed to appreciate that the principle amount relating such interest was already written off as bad and since the interest amount on such debt was never realized by the assessee and tax authorities had recognized the interest as income in the earlier years, interest amount qualifies as a bad debt within the meaning and understanding of Section 36(I)(vii) of the Act. The Appellant craves leave to alter, amend and/or withdraw the grounds of appeal herein or add any further grounds as may be considered necessary and to submit such statements, documents and papers as m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections, 1998 of RBI, however the Ld. AO in the assessment of those Assessment years starting from 1998-99, 2000-01 and 2001-02, made addition by recognizing the interest on NPAs as revenue. The said additions are in appeal before the appellate authorities. Subsequently, the appellant, in the current year, wrote off of the principal amount in respect of such loans. Since, the principal amount itself was written off, the appellant filed a claim for treating interest on such principal amount, which was brought to tax in the earlier years as an allowable 'bed debts', as the interest itself was never realized. 6.5.2 On careful consideration, I find that the decision taken by the AO in the earlier year's assessment starting from 1998-99, is itself debatable, keeping in view the RBI guidelines in the issue. Nevertheless, since the appellant has not made entries in its books in respect of the interest income (in terms of Prudential Norms of RBI), it could not have written off the same by holding it as 'bad debt' u/s 36(l)(vii). In case, the appellant s appeal for not recognizing interest as Income (Income in earlier year) is allowed, corresponding appeal effect w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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