2016 (8) TMI 912

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....36(1)(viia); (ii) Deleting the penalty u/s 271(1)(c) on addition of Rs. 5,38,300/- made by the AO on account of disallowance of contribution to the gratuity fund though the fund was not approved gratuity fund: 2. Briefly, the facts of the case are that the assessment was completed u/s 143(3) on 25.08.2009 by making various additions including provision for bad and doubtful debts of Rs. 277.93 lacs and contribution to gratuity fund of Rs. 5,38,000/-. The matter was carried in appeal and the Coordinate Bench vide its order dated 22.12.2011 has confirmed both the disallowances. The AO thereafter levied the penalty u/s 271(1)(c) holding that in view of the decision of Hon'ble ITAT, he was satisfied that assessee has furnished inaccurate p....

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....T Act. However, it has not been shown how by making the claim in respect of Provision for bad and doubtful debts in case of Co-operative Bank, assessee has concealed or furnished inaccurate particulars of income. The appellant has explained that the claim was made for liability determined as per the RBI guidelines and auditors have concurred with the said claim of liability of the bank. Further, as there was substantial loss, there was not tax benefit to the assessee. The said explanation has not shown to be false or malafide and all the relevant facts for computation of income have been disclosed by the appellant in the return of income. In view of above discussion the penalty levied by the AO u/s 271(1)(c) for the claim of deduction fo....

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....ct before Hon'ble Rajasthan High Court which is currently pending adjudication. 2.3 The ld AR further submitted that the assessee has furnished all the details regarding provisions for bad and doubtful debts in its return of income, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part or in accurate particulars of income. Merely because the assessee had claimed the provision for bad and doubtful debts which was not accepted, that by itself would not attract the penalty under section 271(1)(c). If this contention of the revenue was accepted then in case of every return where the claim made was not accepted by the AO for any reason, the assessee would invite penalty u/s ....