TaxTMI 
TaxTMI 
2016 (9) TMI 543
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..../s 271(1)(c) of the IT Act, 1961. 2. The brief facts of the case are that the appellant had advanced interest being loan to Shri Rajeev Khattar during the course of his money lending activities/business. The present whereabouts of Shri Rajeev Khattar were not known. Therefore, the amount was written off as bad debt. The AO in the assessment order disallowed the claim of bad debts amounting to Rs. 5,15,000/- and penalty proceedings u/s 271(1)(c) of the Income Tax Act 1961 were initiated against the assessee on this issue. It was found by AO that the assessee has deliberately claimed the bad debts on the pretext that he is doing money lending business whereas no such business activities was done by the assessee during the year or even in e....
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....appellant has concealed its income and thus is liable to penalty u/s 271(1)(c) of the Act and thus the AO was justified in imposing penalty of Rs. 1,73,350/- u/s 271(1)(c) of the Act." 2.2 The ld.AR submitted that the appellant is an individual deriving income from business, rent, share in partnership firm, capital gain and income from other sources. The income from business is derived from two proprietary concerns viz. (i) M/s Gopal Das & Co. Which is engaged in business of gems and stones and (ii) M/s Gopaldas Sonkia which is engaged in share trading, future & option and lending of money on interest. The appellant filed return of income declaring income of Rs. 8,59,950/-. In P&L account assessee claimed bad debts of Rs. 5,15,000/- in r....
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....nary course of business of banking or money lending which is carried on by the assesee. The holding of money lending licence is neither requirement of provision nor such licence is required for money lent out in ordinary course of business of lending money. The legal view is supported from the decision in case of Penisular Plantation Ltd. vs. ACIT(2014) 263 Taxman 258 (Ker)(Mag.) The order of CIT(A) rejecting quantum appeal of assessee was not by fully appreciating the above contention and said judgement of ITAT. In further appeal against the said order of CIT(A) the Hon'ble ITAT while dismissing the appeal held that condition of section 36(2)(i) not complied by the assessee as there was no evidence on record to show that such debt or part ....
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.... Court in the case of Reliance Petro Products Ltd. 322 ITR 158. 2.5 The ld AR further submitted that there are plethora of decisions of judicial courts/Tribunals that in absence of any finding that explanation offered by assessee for making wrong claim is not bonafide, imposition of penalty u/s 271(1)(c) is not lawful (CIT vs. Sardar Manganese and Ore(2014) 362 ITR160. In such case no penalty u/s 271(10(c) is leviable. Further it is also submitted that in case of CIT vs. Bacardi Martini India Ltd. (2007) 288 ITR 585 it is held that merely because there is difference of opinion for allowing certain expenditure between assessee and assessing officer, it cannot be said that assessee had intention to conceal income. Similarly was held in cas....
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....consists of bad debt written off in books of accounts pertaining to amount advanced by way of loan to Shri Rajeev Khattar amounting to Rs. 5,00,000/- and interest thereon charged by assessee amounting to Rs. 15,000/-. In the balance sheet prepared for M/s Gopal Das Sonkia for immediately preceding financial year 2005-06 (AY 2006-07), an amount of Rs. 5,15,000 has been shown outstanding under the head "loans" totalling to Rs. 47,929,540. Similar is the position in the balance sheet prepared for the financial year 2004-05 (AY 2005- 06). The assessments have also been completed for both of these years u/s 143(3) where the above balance sheets were placed on record. The ld AR has further submitted a statement of account of Shri Rajeev Khattar r....
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..... if it represent money lent in the ordinary course of business of banking or money lending which is carried by the assessee. 2.10 As we have noted above, the ld AR submitted the figures of advances /loan given and interest income earned in last three years. Apparently such interest income has been assessed to tax as well, a fact which remains uncontroverted. Therefore, the contention of the appellant that he was engaged in business of money lending besides other business activities cannot be negated ignoring the above facts which are apparent from record. Further, the appellant has demonstrated that the loan amount was outstanding since year 2000 and the same has been adequately and consistently reflected in its balance sheet for all th....