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TMI Blog2020 (10) TMI 1045X X X X Extracts X X X X X X X X Extracts X X X X ..... thern Technologies [ 2002 (1) TMI 61 - MADRAS HIGH COURT] but the assessee of that case filed SLP before the Hon'ble Supreme Court [ 2010 (1) TMI 5 - SUPREME COURT] . Thus, the issue could not attain finality at that point of time while the assessee filed first appeal making same claim before the Tribunal for A.Y 2002-03 and the issue was also debatable. - Decided in favour of assessee. - I.T.A. No.2412/DEL/2011 (Assessment Year: 2002-2003) - - - Dated:- 31-8-2020 - SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER Appellant by: Shri Sachit Jolly, Adv. Shri Siddharth Joshi, Adv. Respondent by: Shri Sunit Singh, CIT-DR ORDER PER AMIT SHUKLA, JUDICIAL MEMBER: The aforesaid appeal has been filed by the assessee against the impugned order dated 24.12.2010, passed by Ld. Commissioner of Income Tax (Appeals)-IX, New Delhi in relation to the penalty proceedings u/s. 271(1)(c) for the Assessment Year 2002-03. In the grounds of appeal, the assessee has mainly challenged the levy of penalty u/s. 271(1)(c). Firstly, on the ground of disallowance towards cost of raising of loan, amounting to ₹ 9,34,93,091/- treated a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of the Hon ble Madras Tribunal In the case of Overseas Sanmar Financial Ltd. ITA No. 280 1522 \ Mds. \ 1999, wherein it has been held that provision against bad and doubtful debts by an NBFC as per the norms of the RBI is deductible against the income of the company. The Hon ble Tribunal has further held that, Provision for doubtful advances made following the directive of RBI which according to RBI would give a near true picture of the assets end liabilities of NBFC has to be made by NBFC if it has continuously got the patronage of RBI and remain in business by avoiding unscrupulous methods . RBI's directive to account for the income on cash basis is an appreciation of the fact that it does not make any sense to account the income on accrual basis giving no credence to actual recovery and later allowing deduction for irrecoverable debts including debts that could not be recovered in full from the security provided because of erosion in the value of the security , notwithstanding the fact that section 38 of the Act does not contain any specific sub-section or sub-clause covering the contingency as in the case of NBC, It could be allowed as write off becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,091/- was made. The above issue reached before the learned CIT (Appeals) who vide para No. 3 upheld the order of the Assessing Officer. Therefore, assessee is in appeal. 2. The learned Authorized Representative submitted that the above issue is squarely covered in favour of the assessee by the order of the co-ordinate bench for Assessment Year 2000-01 dated 21.05.2015. The learned Departmental Representative supported the orders of the lower authorities. 3. We have carefully considered the rival contentions. We found that identical issue arose in case of the assessee for Assessment Year 2000-01 wherein vide para Nos. 15 V18 the order of co-ordinate bench it has deleted the above addition. No contrary decision was produced before us. The co-ordinate bench after discussion of the facts in para Nos. 15 V16 has discussed the facts of the case in para No. 17 and then relying upon the decided in the case of group company , decided the issue in favour of the assessee. Further, in para No. 18 the co-ordinate bench also discussed the decision relied upon by the Assessing Officer. In view of this fact, respectfully following the decision of the co-ordinate bench we allow ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d supportive of the main Ground No. 1 which reads as under: 1. On the facts and circumstances of the case and in law, the order passed by the Hon'ble CIT(A) is erroneous and bad in law and the Hon'ble CIT(A) has erred in conf irming the penal ty of ₹ 5,22,61,554/- levied u/s 271(1)(c) of the Act. 9. The ld. Sr. Counsel of the assessee submitted that the CIT(A) has erred in upholding the levy of penalty u/s 271(1) (c) of the Act on the disallowance of provision for NPA made as per Reserve Bank of India [RBI] norms. The ld. AR further pointed out that the first appellate authority has grossly erred in ignoring the fact that complete disclosure in respect of the above claim was made by the assessee in the return of income and also during the course of assessment proceedings for A.Y 2001-02 and that the claim of the assessee in respect of liability of provision for NPA was based on bonafide belief and favourable judicial precedent in favour of the assessee in this regard available at the time of furnishing of return of income on 31.10.2001. 10. The ld. AR further submitted that the CIT(A) has erred while confirming the penalty in alleging that the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of ITAT Chennai in the case of Overseas Sanmar Financial Ltd [supra] which was not reported on the date of filing of return i.e. 31.10.2001 and the assessee ignored the decision of the Hon'ble High Court of Madras in the case of Southern Technologies [supra] which was in favour of the Revenue on the same issue which shows malafide intention on the part of the assessee. Therefore, penalty was rightly levied on the assessee. The ld. DR further contended that even at the appellate stage on 22.4.2004, when the appeal was filed before the Tribunal , the assessee again agitated the claim and in the statement of facts before the Tribunal for A.Y 2002-03 and in Ground No. 7 of quantum appeal, for the same A.Y, the assessee again raised the same claim on same facts and circumstances which was not allowable as earlier decision of Madras High Court in the case of Southern Technologies [supra] which was rendered on 23.1.2002. 12. The ld. DR strenuously contended that the intention of the assessee is clear that it wanted to get the claim by hook or crook and in this situation, ratio of the decision in the case of Zoom Communication Pvt Ltd [2010-TIOL-361-High Court-DEL- IT] comes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim of the assessee on the decision of Southern Technologies [supra] rendered subsequently on 23.1.2002 by Hon'ble High Court and return had already been filed much prior on 31.10.2001, thus, the al legation of malafide intention of the assessee while making claim in the return on the issue, which was debatable at the time of filing of return, cannot validly levelled and sustained against the assessee. The ld. Sr. Counsel again placing reliance on the decision of Hon'ble Supreme Court in the case of Reliance Petro Products [supra] submitted that once the assessee offered an explanation, the onus would shift on the Revenue to prove that the explanation offered by the assessee was false, that bonafides of the assessee in submitting explanation is clearly established and proved and no material or evidence was brought on record or pointed out by the ld. DR substantiating that that the Revenue had discharged its onus for proving falseness of explanation of the assessee. While the assessee is making a claim of debatable issue in the return by adopting precedent rendered by Chennai ITAT which was not settled by any competent court at the time of filing of return would not attract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e omission or negligence would not constitute a deliberate act of either suppressio veri or suggestio falsy. By the mere reason of such concealment or of furnishing of inaccurate particulars alone, the assessee does not, ipso facto, become liable to a penalty u/s 271(1)(c) of the Act. Imposition of penalty is not at all automatic. Meaning thereby, any addition in quantum would not lead to automatic levy of penalty and this is also true in respect of furnishing of inaccurate particulars of income. Not only is the levy of penalty discretionary in nature but the discretion has to be exercised judiciously keeping the relevant factors in mind and the approach of the taxman must be fair and objective. This subject has been a matter of great controversy. Finally, after referring to the decisions in the case of Dilip N. Shroff vs JCIT Another, 291 ITR 519, Union of India vs. Dharmendra Textile Processors [2008] 13 SCC 369, as well as Union of India vs Rajasthan Spg. Wvg. Mills [2009] 13 SCC 448, the Hon'ble Supreme Court in the case of CIT vs Reliance Petroproducts Pvt. Ltd, 322 ITR 158, has recently held as under: A glance at the provisions of section 271(1)(c) of the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt of India, their Lordships held that a non-banking financial company while making provision for NPA which was debited to PLA and which was made under RBI norms can be treated as income and not expenditure u/s 36(viiia) of the Act. Their Lordships settling the issue in favour of the Revenue categorically held that the Reserve bank disclosure norms has nothing to do on the taxation of income under the provision of Income- tax Act, 1961 and the issue attained finality against this assessee by this decision. 19. In view of the above, it is clear that the assessee made claim of provision for NPA on 31.1.2001 in the return of income filed for 2001-02 and at that point of time, the issue was debatable and the assessee placing reliance on the decision of the ITAT Chennai in the case of Overseas Sanmar Financial Ltd [supra] made the said claim in the return of income. However, we may point out that subsequently, after filing return the Hon'ble Madras High Court rendered decision on 23.1.2002 against the assessee in the case of Southern Technologies [supra] but the assessee of that case filed SLP before the Hon'ble Supreme Court. Thus, the issue could not attain finality at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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