2018 (3) TMI 1603 - AT - Income Tax

Penalty u/s. 271(1)(c) - assessee has claimed deduction u/s. 36(1)(viia) through computation of income without corresponding debit being made to P & L account - Held that - As decided in assessee s own assessee 2017 (3) TMI 1672 - ITAT MUMBAI assessee has merely failed to provide the provision in bad debt and doubtful debt though the provision is made as per RBI guidelines in the earlier was excess. Assessee has directly claimed the deduction in computation of income instead of providing same in the books for debting in the P & L account as per the provisions of the Act. Therefore the assessee had neither concealed nor filed any inaccurate particulars of income. the assessee has duly disclosed the facts of income in its return of income filed before the department - Decided in favour of assessee.

Summary

Issues:
Penalty under section 271(1)(c) for deduction u/s. 36(1)(viia) - Disallowance of claim without corresponding debit in P & L account - Similar penalty deleted in A.Y. 2010-11.

Analysis:

Issue 1: Penalty under section 271(1)(c) for deduction u/s. 36(1)(viia)

The appeal was against the order of the Commissioner of Income Tax (Appeals) regarding the levy of a penalty of ?22,42,719 for the claim of deduction under section 36(1)(viia). The penalty was imposed as the assessee claimed the deduction without making a corresponding debit to the Profit and Loss (P & L) account. The Tribunal noted that a similar penalty in the assessee's own case for the assessment year 2010-11 was deleted by the ITAT in a previous order. The Tribunal referred to the decision of the Hon’ble Supreme Court in the case of CIT vs. Reliance Petroproducts (P.) Ltd., emphasizing that a mere unsustainable claim in the return of income does not amount to furnishing inaccurate particulars. The Tribunal, based on the earlier decision and facts of the case, concluded that the penalty could not be imposed in the current situation.

Issue 2: Disallowance of claim without corresponding debit in P & L account

The penalty under section 271(1)(c) was confirmed due to the disallowance of the claim for deduction under section 36(1)(viia) without a corresponding debit in the P & L account. The assessee argued that the provision for bad debt and doubtful debt was not provided in the P & L account as per RBI guidelines, leading to the direct claim of deduction in the income computation. The Tribunal found that the assessee had disclosed all relevant facts in the return of income and had not concealed any information. Relying on the decision in the assessee's own case for the assessment year 2010-11, where the penalty was deleted, the Tribunal held that in the absence of concealment or inaccurate particulars, the penalty could not be sustained.

Issue 3: Similar penalty deleted in A.Y. 2010-11

The Tribunal highlighted that in a previous order for the assessment year 2010-11, the ITAT had deleted a similar penalty imposed on the assessee. The Tribunal noted that in that case, the penalty was removed based on the fact that the claim made by the assessee, though not sustainable in law, did not amount to furnishing inaccurate particulars regarding income. Considering the consistency in the decisions and the absence of concealment or inaccurate particulars, the Tribunal set aside the penalty imposed for the current assessment year.

In conclusion, the Tribunal allowed the appeal by the assessee, setting aside the penalty under section 271(1)(c) for the deduction claimed under section 36(1)(viia) for the assessment year 2009-10, based on the precedent set in the assessee's own case for the assessment year 2010-11.