Ita/187/2014 Of Commissioner Of Income Tax v. M/S. Sanu Palace

IN THB HIGH COURT OF KARNATAKA AT BENGALURU DATEBD THIS THE [th]DAY OF JANUARY 2015) PRESENT THER HON’BLE MR. JUSTICE N.KUMARAN 1 THER HON’BLE MR. JUSTICE B.VBEBRAPP I.T.A. NO.187/2014 BETWEEN: 1.|Commissioner of Income Tax, Mangalore. oD Assistant Commissioner Of Income, Circle 1(1), Mangalore. ...APPELLANTS (By Sri.E.R.Indrakumar, Sr. Adv. for Sri.E.I.Sanmathi, Adv.) | AND: M/s.Sanu Palace,International Pvt. Ltd.,4-9-776/46, Sanu Palace,M.G.Road, Kodialbail, Mangalore. ... RESPONDENT (By Sriyuts A.Shankar & Lava, Advs.) . . . . This I.T.A. is filed under Section ZJO0OA of thIncome Tax Act, 1961, arising out of order dated03.01.2014 passed in I.T.A. No.1360/Bang/2012 for theAssessment Year 2008-2009 praying to: /#0Decide the foregoing question of law and orsuch other questions of law as may beformulated by the Hon’ble Court as deemedfit.such other questions of law as may beformulated by the Hon’ble Court as deemedfit. /##0Set-asidetheappellateorderdated03.01.2014 passed by the ITAT, A’ Bench,Bangalore in appeal proceedings No.I.T.A.No.1360(BNG)/2012—forAssessmentYearAOQOOR-ZOOY03.01.2014 passed by the ITAT, A’ Bench,Bangalore in appeal proceedings No.I.T.A.No.1360(BNG)/2012—forAssessmentYearAOQOOR-ZOOY This I.T.A. coming on foradmission,this day,N.Kumar J., delivered the following: JUDGMENT The Revenue has preferred this appeal against theconcurrent findings recorded by the two AppellateAuthorities, setting-aside the order imposing the penalty by the Assessing Authority. 2. The Assessee-Company is engaged in thebusiness|oT|promotingbuildinganddeveloping| properties. The Assessee had declared loss under thehead income from other sources’ of Rs.79,66,1609/-. Incomputing the aforesaid loss, the assessee had claimeddeduction of a sum of Rs./9,87,193/-, on account ofbad debts written off. The Assessing Authority, whileconcluding the assessment proceedings, dis-allowed theclaim of the assessee. It is in respect of the said dis-allowance, the penalty proceedings were initiated undersection 271(1)(c) of the Income-tax Act, 1961 (for short‘the Act). It is to be noticed that the assessee did notdispute the said addition and the said order has becomefinal. In the penalty proceedings, the assessee pointedout that the assessee had incurred a loss, which is not)in dispute. It was not allowed under the head incomefrom other sources’ as only the expenses under Section57 of the Act was allowable. Thus, the assessee hasneither furnished inaccurate particulars of income norwas there any concealment of particulars of income. — The said contention was not accepted by the Income-taxauthority. Therefore, it proceeded to impose penalty. 3. The First Appellate Authority after considering.the rival contentions held that where a certain claim|was made under bonafide intention but the same was|not allowed, that by itself would not amount tofurnishing of inaccurate particulars. Therefore, the saidpenalty was set-aside. Aggrieved by the said order, theRevenue preferred an appeal to the Tribunal. TheTribunal was of the view that if the assessee had been|more diligent in declaring its income in the form ofinterest under the head income from business’, itwould have legitimately got its claim for deduction onaccount of deduction as bad debts and therefore,dismissed the appeal. Aggrieved by the said order, thepresent appeal is filed. 4. The substantial question of law raised in thisappeal is as under: Whether, on the facts and circumstances ofthe case, the assessee’s claim of deduction on|account of bad debts written off under the|incomefrom)otherSOUSLCECconstitutes‘furnishingof|inaccurateparticularsof|income’ as per Section 271(1)(c) of the Income|Tax Act and therefore, is a fit case for levy ofpenaltyP oS. From the aforesaid facts, it is clear that theassessee sustained loss to the extent ot the deduction|claimed on account of bad debts, is not in dispute. | 4. The substantial question of law raised in thisappeal is as under: Whether, on the facts and circumstances ofthe case, the assessee’s claim of deduction on|account of bad debts written off under the|incomefrom)otherSOUSLCECconstitutes‘furnishingof|inaccurateparticularsof|income’ as per Section 271(1)(c) of the Income|Tax Act and therefore, is a fit case for levy ofpenaltyP oS. From the aforesaid facts, it is clear that theassessee sustained loss to the extent ot the deduction|claimed on account of bad debts, is not in dispute. | The assessee had claimed a portion under business andbalance under other sources. The claim under businesswas allowed. The dispute is in relation to claim underother sources. The Tribunal has verified the return andcame to the conclusion that penalty is not to be levied. When two tact finding authorities have held that itwolullNOTamount.TO furnishingoT|inaccurate.particularsaS|nothingWaS concealedfromthe|Department, it cannot be said that the case forimposing penalty under Section 271(1)(c) of the Act,would arise. Accordingly, we do not see any merit inthis appeal. Appeal is dismissed Sd/-.JUDGE| Sd/-.JUDGE| SPS