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Income Tax Appellate Tribunal, MUMBAI “B” BENCH, MUMBAI
Before: SHRI SHAILENDRA KUMAR YADAV, JUDICIAL & SHRI RAJESH KUMAR.
ORDER PER SHAILENDRA KUMAR YADAV, J.M:
This appeal has been filed by assessee against the order of Commissioner of Income-Tax (Appeals)-12, Mumbai, dated 31.12.2013 for A.Y. 2008-09 on following grounds:
A.Y. 08-09 [M/s. Monoplan Securities Pvt. Ltd. vs. ACIT] Page 2 “1.Under the facts and in law, the Learned CIT (A), erred in confirming the levy of concealment penalty of Rs. 61,800/- being 100% of tax sought to have been evaded on the amount of Rs.2,00,000/- being an addition on account of write off loans under Section 271 (1) (c) of the Income Tax Act, 1961.
2. Under the facts and in law, the Learned CIT (A), failed to appreciate the fact that the amount of Rs.2,00,000/- denotes amount write off as irrecoverable loan and it’s not provision for doubtful advances which should be added back as per provisions of Income Tax Act, 1961.
3. Under the facts and in the law, the Learned CIT(A) failed to appreciate the fact that there is neither concealment of income nor furnishing inaccurate particulars as contemplated u/s 271(1) (c) of the Income Tax Act. 1961.
The various judgments relied on by CIT (A) are not applicable to the facts of the appellant's case.
The Learned CIT (A) failed to appreciate the explanation furnished to him for the alleged default u/s 271(1)(c).
The Learned CIT (A) is in error while stating that the appellant's case fall squarely within the meaning of explanation to section 271 (1) (c) of the Act.
The learned CIT (A) has passed the penalty order violating the principle of natural justice and equities.”
Brief facts of the issue in dispute as revealing from the penalty order u/s.271(1)(c) of the Act as well as assessment order u/s.143(3) of the Act are that during assessment proceedings, Assessing Officer had observed that assessee had claimed a sum of Rs.2 lacs as provision for doubtful advances. Assessee was required to show cause as to why the same should not be disallowed as it was not a deductible expense. In response, assessee had contended that nomenclature was A.Y. 08-09 [M/s. Monoplan Securities Pvt. Ltd. vs. ACIT] Page 3 incorrect and that the said amount denotes the write off of an old loan given to one Shri Vikas Saraf and it being an irrecoverable loan, the amount was written off. Assessing Officer held that under no provisions of the Act, the write-off of a loan can be allowed as a deductible expense and further held that it is a capital loss. Assessing Officer accordingly added back the said sum of Rs.2,00,000/- to income of assessee and initiated penalty proceedings u/s.271(l)(c) of the Act thereon. In the penalty order, Assessing Officer has mentioned that assessee has concealed the particulars of income and has deliberately filed inaccurate particulars of income. Assessing Officer, therefore, levied the penalty of Rs.61,800/- being 100% of tax sought to have been evaded on the addition of Rs.2,00,000/- on account of write off of a loan.
2.1 Being aggrieved by the order Assessing Officer, assessee carried the matter before CIT(A), which was confirmed by CIT(A). Same has been opposed before us on behalf of assessee and submitted that penalty in question be deleted. On other hand, ld. Departmental Representative supported the order of authorities below.
2.2 After going through rival submissions and perused the material on record, we find that stand of assessee has been that there was no concealment of income or furnishing of inaccurate particulars of income. According to him, practically it was not a provision for doubtful advances but it was actual written off of loans given to one Mr. Vikas Saraf and that while A.Y. 08-09 [M/s. Monoplan Securities Pvt. Ltd. vs. ACIT] Page 4 preparing the Balance Sheet, it was wrongly mentioned as a 'provision for doubtful advances' instead of 'balance written off'. In fact, it was a very old loan given to the said person and that the same was claimed to be written off as unrecoverable. Assessee should not be penalized for using wrong nomenclature while claiming expenses in question. Moreover, penalty proceedings and quantum proceedings are independent of each other. Penalty is not automatic on the basis of quantum addition. So, taking all facts and circumstances into consideration, penalty in question is directed to be deleted.
In the result, the appeal filed by assessee is allowed.
Pronounced in the open Court on this the 23rd day of August, 2016.
Sd/- Sd/- (RAJESH KUMAR) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai: Dated 23/08/2016 True Copy S.K.SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाइल / Guard file. By order/आदेश से,
उप/सहायक पंजीकार, आयकर अपील�य अ�धकरण, मुंबई ।