TaxTMI 
TaxTMI 
2010 (9) TMI 768
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....ations made by the learned CIT(A) with regard to this amount are untenable and 276 ITR 645 (sic) as relied upon by the learned CIT(A) was distinguishable on facts. (iv) The appellant was wholly dependent on its counsel for filing the return of Income and if the amount of Rs. 84,78,057 as debited in P&L a/c on account of loss on sale of assets, was not shown under the head 'Short-term capital loss', the same could not be made the subject-matter of penalty. (v) Various observations made by the authorities below in their respective orders are either incorrect or are legally untenable. (2) That without prejudice ground No. 1 above, the penalty as levied is very excessive." 2. The brief facts of the case are that the return of income was filed by the assessee on 29th Oct., 2004 declaring a loss of Rs. 1,04,25,550. Return was processed under s. 143(1) on 27th Jan., 2005 and subsequently the case was taken up in scrutiny. In scrutiny assessment order, it was stated by the AO that the assessee has debited an amount of Rs. 46,76,680 towards bad debts in P&L a/c. It is also noted by the AO that this amount had been recovered by the assessee in the subsequent year. The a....
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....in the present year and for this reason, this amount was not added in the income of that year. It is submitted that the return of income for the asst. year 2006-07 was filed by the assessee in Nov., 2006 whereas surrender of bad debt in the present year was made by the assessee before the AO on 1st Sept., 2006 as per the letter of the assessee to the AO available on pp. 28-29 of the paper book. It is submitted that under these facts, no penalty can be imposed with regard to this addition. 4. With regard to the addition made by the AO on account of loss on sale of assets, it is submitted that this claim was on account of inadvertent mistake of tax consultant with no benefit to the assessee because the assessee is eligible for carry forward of such loss although not as business loss but as a short-term capital loss and hence for this addition also, no penalty should be imposed. Reliance was placed on the following judgments : (i) CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322 (SC) (ii) Kanbay Software India (P.) Ltd. v. Dy. CIT [2009] 31 SOT 153 (Pune) (iii) Gem Granites (Karnataka) v. Dy. CIT [2009] 31 SOT 21 (Chennai) (U....
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....surrender by the assessee and hence with regard to this addition, we delete the penalty. 6. Regarding the penalty imposed by the AO on account of 2nd addition of Rs. 84,78,057 on account of wrong claim of assessee regarding loss on sale of assets, we are not satisfied with the various contentions raised by the learned Authorised Representative of the assessee. We find that this aspect was considered and decided by Hon'ble High Court of Delhi in the case of Zoom Communication (P.) Ltd. (supra). In this case, an amount of Rs. 121.49 1acs was debited to P&L a/c under the head "Equipment written off". In that case also, it was the claim of the assessee that due to oversight, this amount was not added back in computation of income. Hon'ble High Court of Delhi has duly considered the decision of Hon'ble Apex Court rendered in the case of Reliance Petroproducts (P.) Ltd. (supra) and even after that, the penalty was confirmed by the Hon'ble High Court of Delhi. The relevant paras of this judgment i.e., paras 17 to 22 are reproduced hereinbelow : "17. The assessee before us is a company which declared an income of Rs. 1,21,49,861 and accounts of which are mandatory subjected to audit. It ....
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....ere possible, the explanation offered by it could not be said to be false. This, however, is not the factual position in the case before us. The facts of the present case thus are clearly distinguishable. 19. It is true that mere submitting a claim which is incorrect in law would not amount to giving inaccurate particulars of the income of the assessee, but it cannot be disputed that the claim made by the assessee needs to be bona fide. If the claim besides being incorrect in law is mala fide, Expln. 1 to s. 271(1) would come into play and work to the disadvantage of the assessee. 20. The Court cannot overlook the fact that only a small percentage of the IT returns are picked up for scrutiny. If the assessee makes a claim which is not only incorrect in law but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bona fide, it would be difficult to say that he would still not be liable to penalty under s. 271(1)(c) of the Act. If we take the view that a claim which is wholly untenable in law and has absolutely no foundation on which it could be made, the assessee would not be liable to imposition of penalty, even if he wa....
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.... Ltd. (supra) was duly considered by Hon'ble High Court of Delhi in the case of Zoom Communication (P.) Ltd. (supra) and the reliance of learned Authorised Representative on the judgment of Hon'ble apex Court rendered in the case of Reliance Petroproducts (P) Ltd. (supra) is not required to be considered again by us. Other judgments relied upon by the learned Authorised Representative being the Tribunal decisions are also not required to be considered by us because we are following the judgment of Hon'ble High Court of Delhi. Regarding the judgment of Hon'ble High Court of Delhi rendered in the case of Nath Bros. Exim International (supra), we find that this judgment is not applicable in the present case because the facts are different. In that case, the Tribunal has come to the conclusion that the assessee has disclosed all the facts and, therefore, even though it had made erroneous claim, which cannot be justified in law, penalty is not justified. In the present case, the facts are different. Since the judgment of Hon'ble High Court of Delhi rendered in the case of Communication (P) Ltd. (supra) is squarely under identical facts, that judgment of Hon'ble High Court of Delhi is r....
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....njab & Haryana High Court rendered in the case of Rajiv Garg (supra). This judgment is also of no help to the assessee in the present case because the facts are different. In that case, it was recorded by the Tribunal that the Revenue had not placed on record any material or evidence to dislodge its burden of proving concealment. It is also held by the Tribunal that the additional income offered by the assessee in that case was done in good faith and it is believed proved. Since the facts are different in the present case, this judgment is also of no help to the assessee. Now, we consider another judgment of Hon'ble Punjab & Haryana High Court rendered in the case of Sidhartha Enterprises (supra). This judgment also is of no help to the assessee because the facts are different. In that case also, the assessee incurred loss on sale of machinery and adjusted the same against the profits of business but when the AO pointed out to the assessee and confronted him about this, the assessee on relying of mistake committed by the counsel, accepted the decision of the AO in disallowing the loss. But in the present case, the assessee has not accepted the decision of the AO and it had carried....