2014 (10) TMI 579

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....Tribunal has given their own findings why the penalty proceedings under the said provision should not have been invoked and levided by the Assessing Officer. 2. The respondent-assessee for the Assessment Year 2008-09 had filed return of income on 29th September, 2008 declaring loss of Rs. 7,87,54,197/- and the income was assessed at loss of Rs. 7,04,07,020/-. In other words, the loss was reduced. The additions made by the Assessing Officer were under the four heads:- "i) Addition on account of disproportionate Expenses; : Rs. 5,00,000 ii) Addition on account of bad debts : Rs. 64,06,692 iii) Addition on account of recruitment and training expenses. : Rs. 12,55,295 iv) Addition on account of excess claim of depreciation on computer peri....

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....uation, even without there being anything to indicate so, statutory deeming fiction for concealment of income comes into play. This deeming fiction, by way of Explanation I to section 271(1)(c) postulates two situations; (a) first whether in respect of any facts material to the computation of the total income under the provisions of the Act, the assessee fails to offer an explanation or the explanation offered by the assessee is found to be false by the Assessing Officer or Learned CIT(Appeals); and, (b) where in respect of any fact, material to the computation of total income under the provisions of the Act, the assessee is not able to substantiate the explanation and the assessee fails to prove that such explanation is bona fide and that ....

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....This disallowance has been made by the Assessing Officer on the ground that in the immediately preceding year, the ratio of the expenses qua the total receipts is on the lower side in terms of percentage. This year, it has been increased and assessee failed to show the reasons for such an increase. In our opinion, it is an ad hoc disallowance. Assessing Officer has not pointed out that which particular submitted by the assessee is inaccurate. Therefore, no penalty can be imposed for this addition. The next item relates to disallowance of bad debts. The reasons for making the disallowance is that assessee failed to furnish the basis of identifying the debt as bad and from which date it has become bad. W.e.f. 01.04.1989, the assessee is not s....