DCIT Vs World Series Hockey Private Limited (ITAT Mumbai)
Penalty u/s 271(1)(c) for Disallowed Bad Debts – Tribunal Upholds Deletion by CIT(A)- No Penalty for Mere Disallowance – Claim of Bad Debts Made in Good Faith- Difference of Opinion Can’t Invite Penalty u/s 271(1)(c)
Assessee filed its return for AY 2012-13 declaring a loss of ₹1.04 crore. Assessment was completed u/s 143(3) determining income at ₹5.31 crore after disallowing ₹6.95 crore claimed as bad debts written off.
AO held that since it was the first year of business, there could be no claim of bad debts & , therefore, initiated penalty u/s 271(1)(c) for furnishing inaccurate particulars of income. As the Assessee made no response during penalty proceedings (owing to liquidation proceedings under Bombay High Court orders dated 10.02.2015 & 05.02.2016), AO levied penalty of ₹2.30 crore.
CIT(A) deleted the penalty, observing that the Assessee had made a bona fide claim duly reflected in books & computation, & mere disallowance of the claim could not attract penalty.
Revenue’s Appeal:
The Department contended that:
- CIT(A) wrongly relied on Reliance Petroproducts Pvt. Ltd. (SC), as the facts were different.
- Since the quantum addition was confirmed, the claim of bad debts clearly amounted to furnishing inaccurate particulars.
Tribunal’s Findings:
- Assessee made the claim transparently in its books & computation; it was not a concealment but merely a difference of opinion regarding admissibility.
- Non-acceptance of a claim does not automatically lead to penalty.
- The case was affected by liquidation proceedings, which explained the absence of detailed evidence & late appeal filing.
- CIT(A) rightly relied on CIT v. Reliance Petroproducts Pvt. Ltd. (322 ITR 158, SC) & CIT v. Bennett Coleman & Co. Ltd. (259 CTR 383, Bom), holding that disagreement with a claim cannot constitute furnishing inaccurate particulars.
Tribunal upheld CIT(A)’s order deleting the penalty. There was no concealment or inaccurate particulars, only a disallowed claim made in good faith.
