Case Law Details
Ventura Textiles Ltd. Vs CIT (Bombay High Court)
The issue under consideration is whether the levy of penalty u/s.271(1)(c) of the Act is justified in law for for making a claim which may be erroneous or wrong ?
In present case, the assessee is resident company. Assessee filed its return of income. During the assessment proceedings it was found amongst others that assessee had debited Rs.62,47,460.00 under the head ‘selling and distribution expenses’ and claimed it as bad debt in the books of account thus claiming it as a deduction under Section 36(1)(vii) of the Act. Subsequently it was found that the aforesaid amount was paid to M/s. JCT Ltd. as compensation for the supply of inferior quality of goods. Thus Assessing Officer held that the amount claimed as bad debt was not actually a debt and therefore it was not allowable as a deduction under Section 36(1)(vii) of the Act. Assessing Officer further held that the said claim was also not admissible even under Section 37(1) of the Act. Taking the view that assessee had furnished inaccurate particulars of income, Assessing Officer ordered that penalty proceedings under Section 271(1)(c) of the Act be initiated separately.
HC states that, in the statutory show cause notice, Assessing Officer did not indicate as to whether penalty was sought to be imposed for concealment of income or for furnishing inaccurate particulars of income though in the assessment order it was mentioned that penalty proceedings were initiated for furnishing inaccurate particulars of income. Be that as it may, in the order of penalty, Assessing Officer held that assessee had concealed its income as well as furnished inaccurate particulars of income. Concealment of particulars of income was not the charge against the appellant, the charge being furnishing inaccurate particulars of income. It is trite that penalty cannot be imposed for alleged breach of one limb of Section 271(1)(c) of the Act while penalty proceedings were initiated for breach of the other limb of Section 271(1)(c). This has certainly vitiated the order of penalty. It is quite evident that assessee had declared the full facts; the full factual matrix or facts were before the Assessing Officer while passing the asessment order. It is another matter that the claim based on such facts was found to be inadmissible. This is not the same thing as furnishing inaccurate particulars of income as contemplated under Section 271(1) (c) of the Act.
Thus, on a careful examination of the entire matter, the appeal would stand allowed and the order of penalty as affirmed by the two lower appellate authorities would consequently stand interfered with.
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