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2019 (9) TMI 441

..... ting 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 .....

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..... ssment was completed by accepting the total income as admitted in the original return re-revised return. 2.1 As the assessee has filed revised return of income without any basis and the payment of tax was sought to be evaded, penalty proceedings under section. 271(1)(c) were initiated. 2.2 During the course of penalty proceedings, it was submitted by the assessee that the revised return was filed on the basis of the board resolution dated 30.08.2012 recognising the bad debts at ₹ 1,30,44,170/- and therefore the revised return which is filed based on the board resolution should be treated as a bona-fide action of the assessee. Further, it was submitted that there is no intention to conceal the income or furnish inaccurate particulars. However, during the survey proceedings, when the assessee was confronted based on 2 sets of financial statements showing bad debt claim of two different figures, to avoid further litigation, the assessee decided to stick to the original returned income and accordingly, the assessee filed another revised return increasing the income returned to ₹ 1,30,44,170/-. 2.3 In view of the above it is requested by the assessee that no penalty be levie .....

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..... e been withdrawn and substituted by the revised return. Likewise in the case of the assessee it should be held that once a re-revised return is filed the revised return filed in between is withdrawn and is non-existing. Therefore, the re-revised income which is as per the original return of income should be held to be the only return filed and hence accordingly it should be treated that the return of income originally returned is the final income. Once it is considered that the assessment is completed as per the original return filed there should not be any conclusion that there is either any concealment or furnishing of inaccurate particulars. Therefore it was argued by the assessee that there is neither concealment nor furnishing of inaccurate particulars and hence no penalty under section. 271(1)(c) is leviable. Relying on the decisions of Hon'ble Supreme Court in the case of Reliance Petro Productions ltd (322 ITR 158) it is argued by the assessee that the claim of certain expenditure even if held to be not allowable will not lead to penalty under section 271(1)(c). Assessee also relied on the Supreme Court decision in the case of Suresh Chandra Mittal (251 ITR 9) for the p .....

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..... e filed a revised return claiming the bad debts at a higher amount including the debts which have not been claimed in the original return. However, the fact still remains that all the bad debts as per the revised return amounting to ₹ 1,30,44,170/- were written off in the books of account and are eligible to be claimed as bad debts. During survey when the assessee was confronted with two sets of audit report and the board resolution, to avoid further litigation, agreed to stick to the original return with regard to the claim of bad debts and filed re-revised return admitting income as per the original return. The Assessing Officer therefore completed the assessment as per the original returned income only. Even during the penalty proceedings the Assessing Officer did not state that the debts claimed as bad debts by the assessee in the revised return as per board resolution have not been written off in the books of accounts or have not actually become bad. Having admitted that the entire debts of ₹ 1,30,44,170/- are bad and have been written off in the books of accounts the only issue that remains is the claim of bad debts at a lower amount in the original return which w .....

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..... in the assessment order and the penalty order, a reference is made to the filing of financial statements before the Registrar of Companies by the assessee company. The observations made are not correct since the financial statements are filed much later on 15/04/2014 after the second revised return is filed consequent to the survey. He relied on the order of CIT(A) and prayed that the order of CIT(A) may be upheld. 9. Considered the rival submissions and perused the material on record. We notice that assessee has prepared two financial statements by writing off two different amounts as bad debts. The company has approved the amount of ₹ 130,44,170/- 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. However, 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 with ₹ 38,94,962/- as bad debts, resulted in declaring higher profit. Therefore, the assessee filed revised return of income in order to rectify the mistake. Subsequently, because o .....

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