TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 441
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....s. 1.18 crore to Rs. 26 lakhs. As there was a huge variation in the original income admitted and the revised income, a survey operation was conducted on 21.01.2013 to examine the genuineness of the income admitted in the revised return. During the course of survey proceedings, it was found that the difference in the incomes admitted in the original return and the revised return is due to increase in the claim of bad debts written off. In the original return the claim of bad debts was made at Rs. 38,94,962/- whereas in the revised return the bad debt claim was increased to Rs. 1,30,44,170/-. It was also noticed that even before registrar of companies the financial statement was filed with a bad debt claim of Rs. 38,94,962/-. When the assessee was confronted with these facts during survey proceedings the company admitted that it would re-revise the return and reduce the claim of bad debts to the original figure of Rs. 38,94,962/-, though the claim of bad debts at Rs. 1,30,44,170/- is genuine and is based on the board resolution dated 30.08.2012. The assessee subsequently re-revised its income to Rs. 1,18,07,690/- admitting the bad debts at Rs. 38,94,962/- and paid the resultant taxes....
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....g the bad debts at Rs. Rs. 1,30,44,170/- were found. It was further submitted that it is not the case of the Assessing Officer that the revised claim of bad debts is either incorrect or that the said bad debts have not been written off in the books of account. It was also submitted by the assessee that to avoid further litigation on this issue the assessee company filed another revised return on 22.01.2013 admitting the total income at Rs. 1,18,07,690/- as was disclosed originally. The company therefore deferred the claim of bad debts to the extent of Rs. 91,49,208/- to the subsequent year. In view of the above, it was pleaded that the assessee company, though the debts have become bad and written off in the books of account, though it is entitled to a bad debt write off of Rs. 1,30,44,170/-, has restricted its claim of bad debts to Rs. 38,94,962/- only with an intention to stick to its original returned income and to avoid further litigation with the department. Relying on the Allahabad High Court decision in case of Dhampur Sugar Mills (90 ITR 236) it is contended by the assessee that once a revised return is filed the original return must be taken to have been withdrawn and subs....
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....imed a bad debt at a lower amount though there is a board resolution resolving to claim bad debts at a higher amount. This resolution was not obviously taken into consideration at the time of the filing of the return. Therefore, the assessee filed a revised return adopting the bad debts as per the board resolution. However, when confronted during the survey proceedings, to avoid any further litigation and to buy peace with the department, the assessee agreed to re-revise the return of income and reduce the bad debt claimed as per the original return of income. It is not the case of the Assessing Officer that the difference of Rs. 91,49,208/- which is the additional bad debts written off as per the board resolution, have neither become bad nor have been written off by the assessee in the books of account. Once the assessee has written off these debts in books of accounts as bad debts assessee is eligible to claim them under section 36(1)(vii). Only because the assessee did not claim these bad debts in the original return does not mean that they have not been written off or they are not eligible to be claimed as bad debts. The assessee realizing its mistake filed a revised return cla....
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....Aggrieved by the order of CIT(A), the revenue is in appeal before us raising the following grounds of appeal: "1. The Ld. CIT(A) erred both on facts and law. . . 2. In the facts and circumstances of the case, whether the Ld. CIT (A) is correct in Law in deleting the penalty levied without appreciating the fact that the assessee has been maintaining two sets of audited financial statements with varying claims of bad debts, only to reduce the tax liability by fraudulently revising the ROIs. 3. Any other ground that may be urged at the time of hearing." 7. Ld. DR submitted that the CIT(A) is wrong in deleting the penalty levied by the AO u/s 271(1)(c) of the Act and supported the order of AO. 8. On the other hand, ld. Counsel for the assessee filed written submissions, in which, it was stated that the assessee claimed expenditure towards bad debts and the claim is allowable u/s 36(1)(vii). However, the claim was disallowed consequent to the survey. As per the assessment order, there is no concealment of income or filing of inaccurate particulars of income and hence, levy of penalty u/s 271(1)(c) is not correct as per law. It was further stated that in the assessment order and ....