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Issues involved: Appeal against deletion of penalty u/s 271(1)(C) for A.Y. 03-04 & 04-05.
A.Y. 03-04: The appellant claimed bad debt of &8377; 34,09,456/- but the debt had not been written off. The AO added back the amount to the income. The penalty u/s 271(1)(C) was initiated for furnishing inaccurate particulars of income. The Co-ordinate Bench confirmed the addition based on the requirement that bad debt should be written off as irrecoverable. The High Court decision supported disallowing the claim. The AO imposed a penalty of &8377; 12,63,208. The Ld. CIT(A) deleted the penalty citing case laws where penalties were deleted for similar issues. A.Y. 04-05: Additions were made on various accounts including bad debt, software development expenses, and prior period expenses. The AO initiated penalty proceedings u/s 271(1)(C) for furnishing inaccurate particulars of income. The ITAT confirmed some additions but reduced the total amount. The AO imposed a penalty of &8377; 3,66,715. The Ld. CIT(A) deleted the penalties based on case laws where penalties were deleted for similar issues. The Revenue contended that the ITAT confirmed the additions and proved concealment of income by the appellant. The appellant argued that the additions were debatable and relied on case laws to support their claim. The ITAT confirmed the penalty on disallowance of 80IB deduction for A.Y. 04-05 but deleted penalties for other additions. The penalty for A.Y. 03-04 was deleted, and for 04-05, it was partly allowed. In conclusion, the penalty for A.Y. 03-04 was deleted, and for A.Y. 04-05, it was partly allowed based on the debatable nature of the additions and the accuracy of particulars furnished. The ITAT directed the AO to calculate the penalty amount for the confirmed deduction.
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