2016 (6) TMI 29 - AT - Income Tax

Penalty u/s 271(1)(c) - provision for bad and doubtful debts claimed - Held that - The impugned order passed by the CIT (A) confirming the penalty order is not sustainable in the eyes of law as the assessee has claimed provision for bad and doubtful debts due to inadvertent and bonafide mistake and voluntarily revised the income by offering the said amount of ₹ 4,59,714/- for taxation. Consequently, the impugned order passed by CIT (A) is hereby set aside. - Decided in favour of assessee

Summary

Issues:
Penalty under section 271(1)(c) for alleged concealment of income.

Analysis:
The appellant sought to set aside the penalty order under section 271(1)(c) imposed by the Assessing Officer for alleged concealment of income. The appellant contended that the omission was inadvertent and bonafide, and the penalty was unjust. The assessment was completed disallowing the provision for doubtful debts, leading to the initiation of penalty proceedings. The Assessing Officer concluded that the appellant concealed income and furnished inaccurate particulars during scrutiny proceedings. The appellant revised the income by adding the provision for bad debts, admitting the mistake was inadvertent. The appellant claimed the deduction for bad debts was not claimed in subsequent years, indicating no intention of double benefit. The Tribunal considered whether the appellant furnished inaccurate particulars of income and concealed income during the assessment year.

The Tribunal noted that the appellant claimed deduction for doubtful debts, which was written off in the books of account in the previous year. The appellant's consistent stand was that the claim was due to a bonafide mistake, which was not accepted by the Assessing Officer and the CIT (A). The Tribunal analyzed the balance sheet and income tax return, concluding that the claim was inadvertent and bonafide. The Tribunal referred to a Supreme Court judgment where a similar mistake was considered unintentional, leading to the imposition of penalty being unjustified. Following this precedent and considering the facts of the case, the Tribunal held that the penalty order was not sustainable in law. The impugned order confirming the penalty was set aside, and the appeal was allowed.

In conclusion, the Tribunal found that the appellant's claim for deduction was a result of inadvertent and bonafide mistake, not amounting to furnishing inaccurate particulars of income or concealing income. The penalty imposed under section 271(1)(c) was deemed unjustified, and the appeal was allowed, setting aside the penalty order.