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2019 (9) TMI 441

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..... he 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. - ITA No. 958/Hyd/2017 - - - Dated:- 5-9-2019 - Smt. P. Madhavi Devi, Judicial Member And Shri S. Rifaur Rahman, Accountant Member For the Assessee : Shri K. Hari Prasad For the Revenue : Shri Nilanjan Dey ORDER PER S. RIFAUR RAHMAN, A.M.: This appeal filed by the revenue is directed against the order of CIT(A) 9, Hyderabad, dated 27/01/2017 for AY 2012-13, whereby the ld. CIT(A) deleted the penalty levied by the AO u/s 271(1)(c) of the Income-tax Act, 1961 (in short the Act ). 2. Brief facts of the case are, assessee, engaged in the business of ma .....

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..... itted 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 levied as there is no concealment or furnishing of inaccurate particulars. Assessing Officer after considering the reply of the assessee held that the assessee with an intention to avoid the tax filed a revised return showing lower income. But for the survey action, the assessee would not have re-revised the return and admitted higher income. Therefore, it is held by the Assessing Officer that the malafide intentions of the assessee in evading the tax have been proven during the survey. Assessing Officer thus held that assessee furnished inaccurate particulars and concealed the particulars of income to the extent of ₹ 91,49,208/- bein .....

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..... nt 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 proposition that the declaration of income in the revised return and the explanation that he had done to buy peace with the department could be treated as bonafide and hence no penalty is leviable. Relying on the above decisions, it was argued by the assessee that consequent to survey a revised return is filed disclosing higher income by withdrawing bad debt claimed, though these debts are eligible to be written off basing on the board resolution. Therefore it was argued by the assessee that the withdrawal of claim of bad debts should be treated as an admission by the assessee to buy pe .....

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..... led 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 was sought to be revised by the assessee to a higher amounts in the revised return. However during survey the assessee, to avoid further litigation, reverted back to the lower amount of bad debts though in the books the entire amount of ₹ 1,30,44,170/- was written off during the year under consideration as per the board resolution. The assessee even though is eligible legally to claim the entire amount of bad debts admitted to restrict his bad debts claim to ₹ 38,94,962/- only with an intention to avoid further litigatio .....

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..... y 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 of survey, the AO found that the assessee has declared less income because of preparing two financial statements. But, 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. In our view, the assessee can declare the bad debts as approved by the shareholder in AGM. Since, there was a mistake, the assesse .....

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