Appeal Granted: Penalty Set Aside for Incorrect Deduction

The Tribunal allowed the appeal, setting aside the penalty under section 271(1)(c) for the deduction claimed under section 36(1)(viia) for the assessment year 2009-10. This decision was based on the precedent set in the assessee's own case for the assessment year 2010-11, where a similar penalty was deleted due to the absence of concealment or inaccurate particulars.

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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 Rs. 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.

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