News Update

Bengaluru Customs nabs 4 pax with gold powder worth Rs 1.96 CroreKejriwal’s assistant put in police custody for 5 days in Swati Maliwal caseAllahabad HC upholds decision to dismiss judicial officer demanding dowryNawaz Sharif alleges former Chief Justice plotted to oust him as PM in 2017Heavy downpours claim 50 lives in Central AfghanistanSoaring funeral costs compelling people to let go bodies unclaimed in Canada9 pilgrims burnt to death as bus catches fire near Nuh in HaryanaSpain denies dock permission to Indian ship carrying arms to Israel12 Unicorns, over 125 startups commit to onboarding ONDCBEML secures Rs 250 crore order from Northern Coal FieldsBharat Parv celebration takes centerstage at Cannes Film FestivalSteel industry should work towards reducing emissions: Steel SecretaryI-T - Additions framed on account of unexplained cash credit & unexplained money, are not tenable where cash deposits & withdrawals were of personal funds & were done through banking channels: ITATUS says not too many vibrant democracies in the world than IndiaI-T - Benefit of section 11(2) can not be denied merely on reasoning that form 10 is filed belatedly: ITATSwati Maliwal case takes new turn with Kejriwal’s assistant Bibhav Kumar filing FIR against herI-T- Unexplained money - Additions sustained as assessee unable to provide proper explanation for amount withdrawn & subsequently deposited into same bank account: ITATIndia says Chabahar Port to benefit Central Asia and AfghanistanRussia seizes Italy’s UniCredit assets worth USD 463 mnCus - Order re-determining transaction value based on CRCL test report is not correct & hence unsustainable: CESTATPutin says NO to Macron’s call for ceasefire in Ukraine during OlympicsCus - If price is not sole consideration for sale, then transaction value can be rejected under Rule 8 of Export Valuation Rules & then must be redetermined sequentially through Rules 4 to 6: CESTATSC upholds ICAI rules capping number of audits per year
 
Income Tax - Whether an assessee can be penalised for concealment, on ground that assessee has withdrawn its claim for bad debts subsequent to filing of return, upon noticing that debt amount is recoverable - NO: HC

By TIOL News Service

AHEMDABAD, AUG 11, 2016: THE issue before the Bench is - Whether an assessee can be penalised for concealment, on the ground that assessee has withdrawn its claim for bad debts subsequent to the filing of return, upon noticing that the debt amount is recoverable. NO IS THE ANSWER.

Facts of the case:

The assessee had filed its return declaring total loss of Rs.76,35,086/-. The assessment u/s 143(3) was however completed determining total income of Rs.74,44,640/-, wherein the AO added Rs.82,16,850/- towards bad debt. When the assessee came to know about the possibility of recovery due to granting of refund amounting to Rs.55,85,711/- by the AO in the case of its subsidiary, Lotus Mills Ltd., the assessee had withdrawn its claim for bad debts for the said amount. The AO disallowed the claim of withdrawal but imposed penalty u/s 27(1)(c) holding that he was satisfied that the assessee had concealed the income by filling inaccurate particulars of income in terms of provision to section 271(1)(c) explanation-4A. On appeal, the CIT(A) deleted the penalty.

After hearing the parties, the High Court held that,

++ it is seen that the Tribunal has given an observation that: "the assessee written off the bad debts on the advice of the auditors and and as soon as the assessee came to know that the debt amount is recoverable, it immediately withdrew the claim before the AO. In our opinion, the assessee is bound to rely on the advice of the auditors until and unless it is not proved that the advice given by the auditors was not a bonafide one. No evidence or material was brought on record which may prove that the advice given by the auditors was not a bonafide one. It is also seen that the case of the assessee is duly covered by the decision of the Gujarat High Court in the case of BTX Chemical P. Ltd. v. CIT. In that view of the matter, the issue raised in this Appeal is to be answered in favour of the assessee.

(See 2016-TIOL-1702-HC-AHM-IT)


POST YOUR COMMENTS
   

TIOL Tube Latest

Shri N K Singh, recipient of TIOL FISCAL HERITAGE AWARD 2023, delivering his acceptance speech at Fiscal Awards event held on April 6, 2024 at Taj Mahal Hotel, New Delhi.


Shri Ram Nath Kovind, Hon'ble 14th President of India, addressing the gathering at TIOL Special Awards event.