2014 (1) TMI 656

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....d in deleting the penalty of Rs. 8,00,000/- levied u/s 271(1)(c) of the Act without appreciating that the additions/disallowances were made on the basis of wrong claims made in the return and confirmed by CIT(A) and the assessee had failed to explain and substantiate with evidence such claims by it in the return of the income in terms of the provisions of Explanation 1 of Section 271(1)(c) of the Act." 3. We have heard the Ld. D.R as well as Ld. A.R and considered the relevant material on record. The Ld. D.R has relied upon the impugned penalty order passed u/s 271(1)(c). On the other hand, the Ld. A.R has submitted that the disallowance confirmed by the CIT(A) in the quantum appeal against which the A.O has levied the penalty relates to c....

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....he CIT(A) found that the bad debts claims of the assessee comprising of three categories of debts. Out of total amount of Rs. 23,72,876/- a sum of Rs. 7,55,636/- was the amount outstanding against the debters on sale and accordingly the CIT(A) deleted the addition made by the A.O on this account. The second category of bad debts is the advance of Rs. 6,84,450/- given to the supplier for purchase of material, whereas a sum of Rs. 9,32,790/- relates to the advance given for purchase of cars and premises (assets). The CIT(A) confirmed the disallowance with respect to the bad debts claims of the balance amount of Rs. 16,17,240/- comprising second and third category of the bad debts. As regards, the disallowance of expenses claimed under repair ....

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....mount to concealment of income or furnishing inaccurate particulars of income. As regards, the bad debts pertains to the advance given for purchase of car and premises it is to be noted that when the claim of the assessee was not found as bogus then the non-recovery of the said amount constitutes a bonafide claim of business loss. Though the said amount was not allowable as per the provisions of Act in the opinion of the A.O however when the assessee has furnished the complete detail and explanation about the claim and advance given then it cannot be said that the assessee has concealed the income or furnished inaccurate particulars of income. This issue is also a debatable issue and therefore does not fall in the category of a bogus or abs....