2016 (11) TMI 711

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....of net profit for concealment or furnishing inaccurate particulars of income. 3. The ld. DR relied on the order of Assessing Officer. 4. The Ld. Counsel for the assessee, on the other hand, contends that the assessee is a sick unit incurring huge losses year after year and was in the process of winding up. The assessee-company's plant and machineries, factory shed and electric fittings etc. were hypothecated to Gujarat Industrial Co-op. Bank Ltd. The addition in question was made by the AO with following observations:- "6.3 In view of non-payment of loan and closure of business, the bank sold the Fixed Assets for Rs. 17,25,000/-. This amount of Rs. 17,25,000/- was adjusted against the outstanding loan of Rs. 66,73,456/- and t....

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....articulars/concealment of income. 5. Aggrieved, the assessee preferred first appeal where the penalty was deleted by the ld. CIT(A) by following observations:- ".... i. It was a capital liability towards loan which was transferred to the 'Capital Reserve' account. Taxability of the same u/s 41 (1) is a highly debatable issue though, appellant choose not to file an appeal probably because the business was getting closed. ii. Secondly, it is a case where 'Short Term Capital Loss' which should have been shown by the appellant, but not show, in its return of income. 6.6 As mentioned earlier, the Bank only transferred the loan amount to NPA account and has not written it off. Moreover, there was....