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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: Shri Joginder Singh & Shri G Manjunatha
Date of hearing 01-05-2018 Date of pronouncement 15-05-2018 O R D E R
Per G Manjunatha, AM :
This appeal filed by the assessee is directed against the order of the CIT(A)-14, Mumbai dated 26-09-2016 and it pertains to AY 2010-11.
The assessee has raised the following grounds of appeal:-
1. The Commissioner of Income tax (Appeals) -14 ("CIT(A)") has erred in law and on facts by dismissing the appeal of the Appellant filed against penalty order u/s 271(l)(c) dated 19th March, 2015.
2. The CIT(A) ought to have held that the penalty order passed by the Dy. Commissioner of Income Tax 8(3) (2) Mumbai ("the Assessing Officer") u/s.271(l)(c) of the Income Tax Act, 1961 dated 19th March, 2015 is bad in law and void ab initio on the following amongst other grounds which are without prejudice to one another:
2 ITA 7279/Mum/2016 a) The notice u/s.274 r.w.s. 271(l)(c) of the Act dated 5th November, 2012 issued for the purpose of initiating penalty proceedings u/s.271(l)(c) of the Act is incomplete and ambiguous. b) The said notice does not depict whether the assessee has concealed the particulars of its income or furnished inaccurate particulars of such income or the said notice has been issued for failure to furnish the return of income or for failure to comply with the notice/s under the Act. c) In the Assessment Order, the Assessing Officer has initiated penalty proceedings for concealing the income and also for furnishing inaccurate particulars of income, whereas in the penalty order the Assessing Officer has levied penalty on the ground that the assessee is deemed to have furnished inaccurate particulars / concealed income.
3. The CIT(A) has erred in law and on facts by confirming the order of the x Assessing Officer levying penalty of Rs.29,41,796/- for A.Y. 2010-11 u/s.271(l)(c) of the Income Tax Act, 1961.
4. The CIT(A) ought to have held that penalty cannot be levied merely because the explanation furnished by the assessee during the course of assessment proceedings for allowing the claim of expenditure is not accepted.
The brief facts of the case are that the assessee company filed its return of income for AY 2010-11 on 22-04-2011 declaring total income at Rs.1,10,28,470. The assessment has been completed u/s 143(3) of the Act, on 05-12-2012 determining total income at Rs.1,96,83,360, interalia making addition towards disallowance of bad debts claimed on account of advances given to M/s Orkay Industries Ltd. Thereafter penalty proceedings u/s 271(1)(c) of the Act were initiated for furnishing inaccurate particulars of income and after considering relevant submissions of the assessee, the AO levied penalty of Rs.29,41,796 which is 100% of the tax sought to be evaded.
Aggrieved by the penalty order, assessee preferred appeal before before the CIT(A). Before the CIT(A), the assessee has filed elaborate written submissions which has been reproduced in para 3 of CIT(A)’s
3 ITA 7279/Mum/2016 order on pages 2 & 3. The Ld.CIT(A), for the detailed reasons recorded in his order confirmed penalty levied by the AO u/s 271(1)(c) and dismissed appeal filed by the assessee. The relevant portion of the order of the CIT(A) is extracted below:-
4. 1 have gone through the facts of the case and submission made. The appellant has firstly contended that the penalty notice suffers from defects. However apparently no such plea was raised before the A.O challenging the notice on these grounds. The appellant has also duly participated in the proceedings and the penalty order was passed accordingly. Therefore it can not be said that the appellant was not aware of the tent or intention of the notice issued by the A.O. Further the reasons for penalty proceeding are very much discernible from the order itself. In my opinion therefore such issue can not be raised now and is also not acceptable as the appellant was fully aware of the nature of proceedings and duly participated in the proceedings.. The appellant has also enclosed the order of Id CIT(A) in appeal number CIT(A)-13/Rg- 7930/Apl-80/2012-13 dated 29/4/2013 in the appellant's own case for this year. In this case the appellant has written off the advance given to M/s Orkay Industries Ltd. There is no dispute about the nature of the transaction which is actually an advance given for purchase of property. The Ld C1T(A) has held that the transaction is not a trading receipt and not included in the income of the appellant for earlier years and therefore the bad debt claim is not allowable u/s 36{l)(vii) of the Act. Thus the facts of the case is that the appellant has made a specific claim of bad debt which is found to be not allowable as the requisite conditions in this regard are not satisfied. This is established in the course of scrutiny of the case . There is no case of difference of opinion on this issue and further the relevant facts for considering the allowability of the claim of bad debt was not apparent from the record. The case laws cited by the appellant are therefore distinguishable and considering the facts of the case, the penalty imposed by the A.O u/s 271(l)(c) of the Act is hereby confirmed. CIT VS Zoom Communications Pvt Ltd 327 ITR 510 (Del) is relied upon.”
The Ld.AR for the assessee, at the time of hearing submitted that penalty levied by the AO u/s 271(1)(c) cannot be sustained as the addition on which penalty has been levied by the AO is finally deleted by the ITAT in quantum proceedings in dated 08- 11-2011, wherein the ITAT has deleted total addition made by the AO towards disallowance of bad debts by holding that the bad debt claimed by the assessee is a trading loss and thus is allowable as deduction. Therefore, the penalty levied by the AO on such addition has no leg to 4 ITA 7279/Mum/2016