DCIT Vs Vankadara Padmavathi (ITAT Bangalore)
Conclusion: Addition of Rs.10 Crore under Section 271(1)(c) was not justified as Revenue failed to specify whether the addition was being made alleging concealment of income or for furnishing inaccurate particulars of income.
Held: Assessee was proprietor of M/s. Mineral Embassy, which was engaged in procurement and export of iron ore. Assessee filed return of income declaring total income of Rs. 1,71,350 and was issued statutory notices. During the course of assessment proceedings, it was found that assessee gave advances to Associated Mining Corporation of Rs.10,32,39,139 towards supply of iron ore and transportation and to BST (HK) Ltd. of Rs.2,73,36,715 being amount not receivable from the party due to dispute, was written off as bad debt. The details of the transactions were called for and the reply submitted by the assessee was not accepted. Assessment was completed u/s. 143(3) r.w.s. 153C of the Act by order involving a disallowance of Rs.10,32,39,139 relating to claim of bad debt written off. Assessee filed appeal before the CIT(Appeals) and the ITAT which was dismissed. Further the appeal filed appeal before the jurisdictional High Court u/s. 260A of the Act which was pending. AO initiated penalty proceedings and passed penalty order u/s. 271(1)(c) r.w.s. 274 of the Act observing that assessee had filed inaccurate particulars of income and imposed penalty of 3,30,00,000. On appeal, CIT(Appeals) after considering the grounds of assessee and submissions of assessee, allowed the appeal of assessee following various judgments including the judgment of jurisdictional High Court in the case of CIT v. Manjunatha Cotton Ginning Mills (2013) 35 taxmann.com 250 / 359 ITR 565 (Kar). It was held that following judgment of the Gujarat High Court in CIT v. Whiteford India Ltd. (2013) which held that “In absence of clear finding of Assessing Officer whether assessee is guilty of concealment of income or furnishing incorrect particulars of income. penalty levied under section 271(1)(c) cannot be sustained”. Thus, there was no infirmity in the preceding order by CIT(A), ITAT dismissed the present appeal by Revenue.
