Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, PUNE “A” BENCH : PUNE
Before: SHRI SATBEER SINGH GODARA & SHRI INTURI RAMA RAO
short the “NFAC”] Delhi’s Din and Order No. ITBA/NFAC/S/250/2023-24/1058833374(1) dated 18.12.2023, in proceedings u/s.270 of the Income Tax Act, 1961 (in short “the Act”).
Heard both the parties at length. Case file perused.
We advert to the assessee’s sole substantive grievance herein challenging correctness of sec.270A penalty of Rs.16,69,750/- levied by the Assessing Officer in his order
2 I.T.A.No.357/PUN./2024 dated 11.12.2019 as upheld in the CIT(A)-NFAC’s lower appellate discussion as under :
“DETERMINATION AND DECISION
4. APPELLATE FINDINGS:
4.1. Grounds of Appeal Nos.1to7 : These grounds of appellant pertains to imposition of penalty at Rs.16,69,750/- by the Assessing Officer under section 270A of the Income Tax Act vide order dated 09.09.2021.
In this case, the assessment was completed under section 143(1) of the Act on 11.12.2019 and addition of Rs.1,00,33,623/- was made by the Assessing Officer. It is noticed that the said addition was not conferred by the appellant before the appellate authorities. Before the Assessing Officer, the appellant admitted that this was a mistake but not done with an intention. Similar contentions were taken by the appellant during the appellate proceedings.
4.2. In view of the above facts and circumstances, I hold that the Assessing Officer has taken legally correct view by imposing penalty as the so called mistake would have not been pointed out by the department, the revenue might have been escaped. It is on the part of the appellant to furnish accurate particulars and such mistake are prejudicial to revenue and cannot be waived.”
3 I.T.A.No.357/PUN./2024 3. Suffice to say, there is hardly any dispute between the parties that the quantum issue herein is that of assessee’s claim involving bad and doubtful debts in it’s computation during the course of assessment. Even the learned assessing authority(ies) assessment discussion in para-3 page-2 dated 11.12.2018 makes it clear that the assessee had followed RBI norms for the purpose of making the impugned bad and doubtful resources computation, whereas the same was held to be admissible only under the corresponding sec.36(1)(viia) of the Act. This lead to fresh computation resulting in addition of Rs.1,00,30,583/- followed by sec.40(a)(ii) disallowance to the tune of Rs.3,040/- respectively. There is again no quarrel between the parties that the assessee did not avail it’s quantum appeal remedy rendering the foregoing twin additions to have attained finality.
The assessee’s first and foremost argument before us is that it had committed a bonafide mistake in following RBI norms than computing it’s provision of “bad and doubtful debts” u/sec.36(1)(viia) of the Act in light of the assessment discussion(s) supra.
The Revenue on the other hand sought to buttress the point that we are dealing with the newly introduced penalty provision inserted by the Finance Act, 2016 w.e.f.
01.04.2017 onwards wherein sub-sec.(2)(a) thereof is a 4 I.T.A.No.357/PUN./2024 mandatory clause which gets attracted herein since the assessee’s income assessed is greater than that processed u/sec.143(1)(a) of the Act. Mr. Sathe sought to draw a distinction between the earlier penalty provision u/sec.271(1) of the Act vis-à-vis this newly introduced penalty mechanism.
He highlighted the fact that the earlier leverage of assessee claiming a bonafide mistake is no more available under this newly introduced provision and therefore, we ought to upheld both the lower authorities action imposing the impugned penalty.
We have given our thoughtful consideration to the Revenue’s vehement contentions and see no merit therein. It is an admitted fact that the assessee’s computation of bad and doubtful debts was in tune with RBI norms which has been held to be admissible only in compliance to sec.36(1)(vii) of the Act. We further reiterate that the assessment discussion (supra) had already treated as a bonafide mistake only. Faced with this situation, we note from perusal of the newly introduced provision i.e., sec.270A(6)(a) that the legislature has itself stipulated that the former limb of “under-reported income” under sub-sec.(2) hereinabove would not include an instance of the tax payer offering bonafide explanation disclosing all the material facts in support thereof. We are of the considered view that the assessee’s foregoing computation of bad and doubtful debts provision is a fit case to be treated
5 I.T.A.No.357/PUN./2024 as a “bonafide” one since it had duly followed the banking sector regulator’s norms. That being the case, the legislature has itself offered a leverage to such bonafide mistakes u/sec.270A(6)(a) of the Act. Their lordships’ landmark decision in CIT vs. Reliance Petro Products [2010] 322 ITR 158 (SC) would also apply herein as well that it is not each and every disallowance/addition in question which attracts the consequential penalty. We accordingly delete the impugned penalty of Rs.16,69,750/- in very terms. Ordered accordingly.
This assessee’s appeal is allowed in above terms.
Order pronounced in the open Court on 29.07.2024