TaxTMI 
TaxTMI 
2019 (2) TMI 1199
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....e assessee has furnished inaccurate particulars of income to the extent of Rs. 23,53,154/-. 2. Ground No. 2 states that the Ld. CIT(A) has erred not passing speaking order in respect of the decision of the Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro products Pvt. Ltd., Civil Appeal No. 2463 of 2010 dated 17.03.2010 reported in (2010) (3 taxmann.com 47) (SC). 3. Ground No. 3 stated that the Ld. CIT(A) failed to appreciate that full details were furnished in respect of following items: - a. Provision for doubtful debts for Rs. 8,97,677/-. b. Duty (Electricity Duty) disallowed u/s 43B for Rs. 10,80,654/-. c. 10% of sales tax set off not offered for tax for Rs. 3,74,823/-. 2 The above grounds No. 1 to 3 of appeals are relate single issue of confirming the levy of penalty of Rs. 8,64,784/- u/s 271(1)(c) of the Act, hence, same are being considered together for the sake of brevity and convenience. 3. Briefly stated the facts of the case are that the assessment was completed u/s 143(3) of the Act on 22.03.2006 by making additions of Rs. 8,97,677/- being provision for doubtful debts, Rs. 10,80,654/-being Electricity Duty di....
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....lacing reliance in the case of Union of India and others Vs. Dharmendra Textile Processors Ltd. (2008)(306 ITR 277) (SC) the AO levied the penalty of Rs. 8,64,784/- being 100% of the tax sought to be evaded on the amount of Rs. 23,53,154/-. 4. Being, aggrieved, the assessee has carried the matter before the CIT(A) wherein it was claimed that the assessee company had furnished full particulars of all the material facts before the AO and hence the has concealed particulars of income nor furnished inaccurate particulars of income. It was further, argued that the penalty cannot be imposed in this case. Merely because certain disallowances have been made by AO and confirmed by CIT(A) in this case of the appellant. However, the CIT(A) has observed that the AO has correctly levied the penalty u/s 271(1)(c) of the Act in the case of Appellant company because it has furnished inaccurate particulars of income inspite of being assisted by professional chartered accountant firm. If this case was not selected for scrutiny, the appellant company would have walked away by not paying tax on its correct total income. The appellant company was assisted by a team and chartered accountants an....
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....ks and it would suffice if amount had been reduced from debtors balance shown on asset side of balance-sheet at close of year (AY 1999-2000) 6. With regard to the disallowance of Rs. 10,80,654/- u/s 43B of the Act on account of electricity duty. The Ld. Counsel submitted that the electricity duty of Rs. 10,80,654/- was reduced from energy sales of Rs. 1,13,51,080/-. However, the figure of electricity duty was specifically disclosed in the profit and loss account (Pg.4) and thus there was no intention to conceal. It was further contended that provisions of Section 43B of the Act was not applicable to electricity duty and hence claimed the same on accrual basis as gross sales of electricity was creditors to the P&L Account. It was further submitted that the said amount is offered the taxed in A.Y. 2004-05 electricity duty was not paid due the dispute and this fact has been aggrieved by CIT(A) that the same was allowable in A.Y. 2004-05. The Ld. counsel further placing reliance in the case of CESC Ltd. Vs. CIT (2015) (235 Taxman 6 (Cal) (High Court) (Paper Book No.II)(Pg. No. 90-96) submitted that the Section 43B is not applicable to the electricity duty has held that the Hon'ble H....
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....ing are separate and distinct and penalty is not automatic. In view of the aforesaid submissions/argument, the Ld. Counsel prayed that the appeal of the assessee may be allowed and penalty may be deleted. 8. The learned Senior DR for the revenue submitted that the AO has made aforesaid disallowances as reflected in the assessment order and same were sustained by CIT(A) in the quantum proceeding (P.B. 36). The Ld. Senior DR submitted that the CIT(A) has sustained the additions on the ground on account of that provisions for doubtful debt and not on account of bad debts written off. The assessee further there is no provision of retaining of sales tax. There are no provisions of law to written off similarly disallowance of electricity was rightly made u/s 43B of the Act. The Ld. DR further submitted that had the was not picked up for scrutiny and could not deduct the furnishing of inaccurate particulars of income, therefore, the CIT(A) has correctly upheld the action of the AO in levy penalty u/s 271(1)(c) of the Act. 9. Replying to above the Ld. counsel submitted that the CIT(A) has passed the order in 2008 when the decision of the case of Hon'ble Supreme Court in the case o....
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.... of its debtors in its books or a mere reduction in the Loans and Advances or Debtors on the asset side of its balance sheet to the extent of the provision for bad debt would the sufficient to constitute a write off is the question which we are required to answer in these civil appeals? "However, as stated by the Tribunal, in the present case, besides debiting the profit and loss account and creating a provision for bad and doubtful debt, the assessee-bank had correspondingly / simultaneously obliterated the said provision from its accounts by reducing the corresponding amount from Loans and Advances/debtors on the asset side of the balance sheet and, consequently, at the end of the year, the figure in the loans and advances or the debtors on the asset side of the balance sheet was shown as net of the provision "for impugned bad debt". After the Explanation, the assessee(s) is now required not only to debit the profit and loss account but simultaneously also reduce loans and advances or the debtors from the asset side of the balance sheet to the extent of the corresponding amount so that, at the end of the year. the amount of loans and advances/debtors is shown as net of p....
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.... offered to be tax when the sales tax assessment order are passed. Further, this system of accounting was regularly followed by assessee. Therefore, the system of accounting followed by assessee has been upheld in DCIT Vs. Maharashtra Scooters (supra). Thus, this issue becomes debatable which does not entail the penalty u/s 271(1)(c) of the Act. Thus, the assessee has offered and Explanation and said Explanation offered was not found to be false and accordingly is not covered by clause A of Explanation 1 to Section 271(1) (c) of the Act. Further, clause (B) of Explanation-1 to Section 271(1)(c) of the Act provides that where the assessee is not able to substantiate its Explanation to prove that such Explanation is bona-fide and all the facts relating to the same have been disclosed, penalty is leviable. As the claim of aforesaid expenses is discernible from the return of income profit and loss account balance-sheet hence the same it is not amount to concealment of income or furnishing inaccurate particulars of income. This is a factual position, therefore, the penalty u/s 271(1)(c) of the Act is not leviable. We are, therefore, of the considered view that the penalty is not sustain....