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TMI Blog2019 (6) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... 86/- as deduction under s.36(1)(viia) of the Act being an amount to the extent of profits available during the year. The AO restricted the claim of deduction to Rs. 2,38,96,000/- as written off in the P&L account and rejected the remaining claim of deduction to the extent of Rs. 1,00,73,786/-. The AO also invoked the provision of Section 271(1)(c) of the Act on such partial denial of deduction and imposed penalty quantified at Rs. 31,59,030/- vide order dated 21.09.2015. 4. Aggrieved by the imposition of penalty, the assessee preferred appeal before the CIT(A). The assessee made detailed submission before the CIT(A) with which the CIT(A) concurred and granted relief from the levy of penalty to the assessee. The relevant paras of the order of the CIT(A) is reproduced hereunder: "5. During the course of appellate proceedings AR of the appellant filed a written submission, as under:- 1. Section 271(1)(c) as was operative during the relevant year read thus: "271. (1) If the Assessing Officer or the (***) (Commissioner (Appeals) in the course of any proceedings under this Act, is satisfied that any person, (a) (b) (c) has concealed the particulars of his income or (***) fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013 that no penalty imposed despite unsustainable/non debatable claim by the assesses if duly disclosed by the assessee. 5. The appellant would like to further submit that in our case we have show the figures in the Profit and Loss accounts as well as in the Return of income and there will be no inaccurate particulars of income and the same is disallowed due to the different Interpretation adopted only and moreover in the following cases interpretation as adopted by us is also accepted so the same will not amount to non discloser of information because the same is only the debatable issue for which the law required to be decided. 5. We would also like to rely on the following decisions of the Honorable Courts in which the interpretation adopted by us is accepted in the case of Syndicate Bank reported in 78 ITD 103 the Honourable Tribunal held that irrespective of the Debit to the profit and loss account on account of provision for bad and doubtful debts, an assessee is entitled to 10% of Average Advances as deduction u/s 36(1)(viia) of the Act, The relevant Observation of the aforesaid decision was as fallows : "20. The Ld. CIT has also acted under the misconception that dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in held that " merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that bty itself would not, in our opinion, attract the penalty under section 271(1)(c), if we accept the contention of the Revenue then in case of every return where the claim made is not accepted by the Assessing Officer for any reason, the assessee will invite penalty under section 271(1)(c). This is clearly not the intendment of Legislature." Respectfully following the Decision of the Honorable Apex Court in case of in case of CIT Vs. Reliance Petro products PVT. Ltd. (supra) and in the facts of the case, that the assessee has disclosed material facts on the issue of its claim of deduction at the time of filling of return itself, and conduct of the assesses being bonafide, and the issue of deduction being legal and highly debatable in nature, for which two view are possible, I hold that it is not a fit case for the issue of penalty levied under section 271(1)(c) is decided in favor of the assessee, against the revenue, and accordingly, I agree with the proposed order of the Ld. JM on the issue of cancellation of penalty under section 271(1)(c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dverse, action. Decision: 6. I have duly considered the submission of the appellant and also gone through the discussion made in the penalty order. I am of the considered view that the case is not fit for levy of penalty u/s.271(1)(c) because the appellant has neither concealed its income nor has furnished any inaccurate particulars of income. Hence, penalty levied is hereby cancelled." 5. Aggrieved by the deletion of penalty by the CIT(A), the Revenue is in appeal before the Tribunal. 6. The learned DR for the Revenue supported the penalty action of the AO and contended that the claim of deduction at larger amount under s.36(1)(viia) of the Act was made in contradiction to the statutory provisions of the Act. The learned DR submitted that the claim of Rs. 3,39,69,786/- has no statutory basis whereas the figure of Rs. 2,38,96,000/- as bad and doubtful debts and reserve accepted by the AO under s.36(1)(viia) of the Act is based on statutory tax audit report furnished by the assessee. The learned DR thus submitted that the excess claim made by the assessee in defiance of law would necessarily invite civil liability in the form of penalty under s. 271(1)(c) of the Act 7. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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