TaxTMI 
TaxTMI 
2015 (8) TMI 846
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....at that point of time, the assessee could have revised its return of income because the time available with the assessee for revising the return of income was up to 31/03/2012. 4. Learned A. R. of the assessee supported the order of learned CIT(A). 5. We have considered the rival submissions. We find that the issue in dispute was decided by learned CIT(A) as per para 4.1 to 4.4 of his order, which are reproduced below for the sake of ready reference:- "4.1 I have also perused the documents and judgments relied upon by the appellant. It is noted that the provision for NPAs of Rs. 12.23 crore was made as per the RBI guidelines in respect of debts which had become bad and doubtful. The provision for NPAs was checked and verified by the auditors before finalizing the profit and loss account and the balance sheet. It is also noted that the loss returned by the appellant has remained a loss even after making addition on account of the provision for NPAs. Hence there was no deliberate or conscious attempt on part of the appellant to evade the payment of taxes. The appellant has made the claim inadvertently in accordance with the guidelines issued by the RBI. Subsequently, it came....
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....e came to notice of the appellant it revised all the returns voluntarily and withdrew the deduction claimed by it on account of the provision for NPAs made in various assessment years. 4.3 It is noted that a wrong claim of deduction or allowance does not entitle the AO to levy the penalty. In my considered opinion, disallowance of deduction claimed under bona-fide belief, though disallowed in the assessment proceedings will not attract any penalty u/s 271(1)(c) of the Act. Mere making of a claim which is not sustainable in law, by itself will not amount to furnishing inaccurate particulars of income. The argument of the appellant that there was no loss to the revenue as the assessed income remained a loss even after disallowance of deduction is also reasonable. It is also noted that the explanation offered by the appellant is bona-fide and all the facts relating to the deduction claimed were duly disclosed in the return as well as before the AO. Since the explanation offered by the appellant regarding claim of the deduction was substantiated and can be considered bona-fide and , acceptable penalty u/s 271(1)(c) cannot be imposed by the AO. Reliance is placed on the following dec....
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....alse. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars. .................................................................................. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor would be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under section 271(1)(c). If we accept the contention of the Revenue then in case of every return where the claim made is not accepted by the Assessing Officer for any reason, the assessee will invite penalty under section 271(1)(c). That is clearly not the in....
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....ome in line with this judgment because the time available with the assessee for revising the return of income was up to 31/03/2012. Regarding this argument of Learned D. R. of the Revenue, we are of the considered opinion that when the judgment was delivered by Hon'ble Apex Court on 17/02/2012, the total time available with the assessee for revising the return was only 1 month and a few days and in our considered opinion, this much time is not sufficient to hold that the failure of the assessee to file revised return of income during this short period should be viewed adversely. It should be accepted in the facts of the present case that the allowability of deduction u/s 36(1)(vii) and 36(1)(viia) of the Act in respect of provision for bad and doubtful debts as per RBI Guidelines was debatable issue when the return of income was filed by the assessee and therefore, the disallowance is all right but it cannot be considered as concealment of income or furnishing of inaccurate particulars of income and therefore, penalty is not justified in view of the various judgments of Hon'ble Apex Court and Hon'ble Allahabad High Court and other High Courts taken note of by learned CI....