TMI Blog1983 (10) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... as it had failed to disallow payment of income-tax of Rs. 10,102 which stood debited to Vatav account. The ITO also disallowed a sum of Rs. 18,369 relating to claim of bad debt and took action u/s 271 (1)(c) of the Act for concealment of income in respect of the aforesaid items. 2. In the meantime the assessee took up the matter to the AAC and challenged the disallowance in regard to bad debt and the said claim stood allowed by the AAC. 3. In course of penalty proceedings the ITO observed that the assessee's explanation was that its failure to disallow income-tax at the time of filing the return was an omission due to oversight of the accountant inasmuch as the said amount of income-tax stood debited to vatav (discount) account instea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t have overlooked the said disallowance. It was trite to say that payment of the income tax is not an allowable business expenditure. The assessee had wrongly debited the said amount to vatav (discount) account and but for the care taken by the ITO the said disallowance would have escaped unnoticed. The ld. Counsel for the assessee on the other hand pointed out that the assessee had admitted the fact that the impunged payment was clearly a disallowance but had omitted to disallow the same in the return due to a mistake committed by the accountant who instead of debiting the account to the vatav account proper i.e., P L account had debited the amount to vatav (discount) account. The latter account was entirely claim as a deduction which wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht of while filing the return. The accountant on the other hand had also admitted the same position that he adjusted the income-tax amounts to vatav discount account instead of vatav account P L account. On balance consideration of the material facts before us it seems to us that the confusion was created due to maintenance of two accounts of the same name viz. Vatav account which has been responsible for the above mistake. The income-tax payment being an obvious disallowance could not have escaped the attention of the assessee but for the above mistake made by the accountant. The statements made in the affidavits are not challenged and therefore we are inclined to accept the assessee's explanation that the omission to disallow the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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