9911796707
TMI Blog2014 (5) TMI 962X X X X Extracts X X X X X X X X Extracts X X X X ..... OURT] - The explanation is stated to be bonafide as assessee on facts had no motive to make a wrong claim as the income over the years has remained at Nil- Full particulars were filed and no inaccurate particulars were provided - penalty proceedings and quantum proceedings are separate and distinct - explanation offered in the penalty proceedings has to be considered by the authorities independently in the matrix of the requirements of Section 271(1)(c) - even on merits the bad debt claim could have been allowed as a trading loss – the advances to the creditors have not been held to be sham transactions as they are coming from the earlier years - explanation offered by the assessee in the penalty proceedings is bonafide and deserves to be accepted as it is neither a case of filing of inaccurate particulars and nor is it a case of concealment - Relying upon Reliance Petro Products Ltd. [2010 (3) TMI 80 - SUPREME COURT] - the explanation being bonafide deserves to be accepted and the order is set aside – Decided in favour of Assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed by the assessee, it is found that the claim of bad debts in respect of the amounts mentioned above is not correct as the condition required under the provisions of section 36(i)(vii) read with section 36(2) of the I.T. Act are not fulfilled. Therefore the claim of bad debts amounting to Rs.10,98,944/- is disallowed and added to the income of the assessee. Penalty u/s 271(1)(c) is also initiated as the assessee has filed inaccurate particulars of income." 2.1. The record shows that in the penalty proceedings, the assessee requested the AO to keep the penalty proceedings in abeyance as the issues were under challenge before the CIT(A). Thereafter another opportunity was granted by the AO in response to which no one appeared accordingly penalty of Rs.3,94,200/- was imposed vide para 4 of the penalty order holding that the assessee had furnished inaccurate particulars of his income. 3. Aggrieved by this the assessee went in appeal before the First Appellate Authority who not convinced with the explanation offered confirmed the action of the AO. Aggrieved by this the assessee is in appeal before the Tribunal. 4. Ld. AR inviting attention to the material available on reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d any particulars of income nor has the assessee furnished inaccurate particulars of income. Specific attention was invited to judgement of the Jurisdictional High Court in the case of CIT vs Sumangal Overseas Ltd. in ITA No. 174 of 2011 (Del.) (HC) reserved on 30.10.2011 copy filed in the Court delivered on 18.11.2011, so as to contend that paras 7, 8 & 9 of the said judgment are fully applicable to the facts of the assessee's in case. The same are reproduced hereunder for ready-reference:- 7. "It is trite law that during the penalty proceedings, it is to the Tribunal to look into the transaction to see as to whether the claim was bona fide or it was bogus and result of falsehood. From that angle, when the Tribunal examined the matter, it found that on the facts of this case when advances given to the suppliers were not written off as irrecoverable, the same was allowable under Section 28 of the Act. A trading loss has a wider connotation than a bad debt. A bad debt may also be a trading loss, but a trading loss need not necessarily be a bad debt. There may be a bad debt which may not fall within the purview of Section 36(1)(vii) of the Act, but may well be regarded as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO and the explanation has been offered only before the CIT(A) which has not been accepted. It was also his submission that the assessee has not demonstrated by way of any evidence to show that any suit has been initiated against the party for recovery of the amounts as the amount was not a small amount as was an amount of Rs.10 lakh odd. Accordingly it was argued that the penalty has rightly been levied and deserves to be confirmed. 6. We have heard the rival submissions and perused the material available on record. It is seen that the address given by the AO in the penalty proceedings is per "M/s Va Tech Escher Wyss Flovel Ltd., 13/1, Mathura Road, Faridabad" and the address as mentioned in the impugned order at column No-4 is "Va Tech Hydra India Pvt. Ltd, 49/5, Mathura Road, Vill-Prithla, Dis.-Palwal, Haryana" accordingly the address having been changed is evident from the record. 6.1. A perusal of the impugned order shows that arguments advanced before us remain largely identical to what has been canvassed before the CIT(A) relevant portion thereof is extracted from the impugned order hereunder:- 4.2. "During the course of appellate proceedings, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arguments that even on facts the assessee's claim was allowable, reliance was placed on the following decisions:- (i) CIT Vs. Mahavir Irrigation P. Ltd. 61 DTR 218 (Del.); (ii) CIT Vs. Escorts Finance Ltd. (2010) 328 ITR 44 (Del); (iii) Asst. CIT Vs. T. R. B. Exports (P) Ltd. 134 TTJ 49 (Chd. 'B') (UO); (iv) Rajendran & Ors Vs. Asstt. CIT 47 DTR 178 (Cehnnai 'B'); (v) Asstt. CIT Vs. Malu Electrodes (P) Ltd. 127 TTJ 599 (Nag) 6.4. Considering the material available on record and the arguments of the parties before the Bench it is seen that consistently the assessee has claimed that the amounts which were claimed as written off were actually advances made to its suppliers whose names and particulars numbering -20 in total were provided to the AO. However, since the claim put forth was for bad debts for which the assessee failed to provide any justification the addition was made, it is a fact that the addition was not challenged in the quantum proceedings. The argument advanced for the said decision is that firstly it had no impact on assessee's income as it remained at NIL over the years as such the issue was not challenged and secondly the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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