If in an independent appraisal in penalty proceedings if it proved that assessee provide inaccurate than penalty can be imposed under Sec 271

Court :
HIGH COURT OF DELHI

Brief :
The facts leading up to the levy of penalty may be noticed in brief. The assessee is a domestic company. In respect of the year under appeal, it filed a return of income on 27th November, 2000 declaring income of Rs.1,43,40,680/-. The return was first processed under Section 143(1), but was thereafter selected for scrutiny and notice under Section 143(2) was issued. The assessee participated in the enquiry and submitted the details called for. In the course of the assessment proceedings, the assessing officer noticed that an amount of Rs.2,38,32,392/- was claimed by way of bad debts as a deduction. He, therefore, called upon the assessee to explain why the claim should not be disallowed as was done in the assessment year 1990-2000 wherein bad debts of Rs.75 lacs had been disallowed. The assessee explained that in the assessment year 1999-2000 there were no documents to substantiate that the debts had become irrecoverable and bad, whereas in the year under appeal the assessee was in possession of all the documents to substantiate the claim. It was submitted that out of the total amount of bad debts claimed as a deduction, a sum of Rs.2,10,34,000/- represented the principal amount and Rs.22,65,867/- represented interest offered for taxation in various years and another sum of Rs.5,32,325/- represented lease rent which was offered for taxation in various years. In support of the claim for deduction, it was further pointed out by the assessee that it was in the business of money lending for more than 10 years and from the assessment year 1989-90 to the assessment year 1998-99 it had lent a total amount of Rs.41,97,02,612/- and offered an aggregate amount of Rs.8,17,39,297/- as interest for taxation. It was also pointed out that the assessee had been showing the business as money lending/finance in its return, tax audit report and Memorandum and Articles of Association. As regards the query raised by the assessing officer relying upon the assessment of the earlier year, the assessee submitted that even in that year the assessee’s claim that it was carrying on the business of money lending was not rejected.

Citation :
KANCHENJUNGA ADVERTISING P.LTD. ……..Appellant Through Mr.S.Krishnan, Advocate.VERSUS COMMISSIONER OF INCOME TAX-I …..Respondent Through Mr. N.P.Sahni, Standing Counsel