THE INCOME TAX APPELLATE TRIBUNAL H Bench, Mumbai Before Shri Shamim Yahya (AM) & Shri Pawan Singh (JM) I.T.A. No. 1379/Mum/2016 (Assessment Year 2008-09) Kanti Beverages Pvt. Ltd. DCIT-3(2) M/s. S.D.Jaithwar & Co, CAs Vs. Aayakar Bhavan A-101, Sai Darshan Complex M.K. Road 1 s t Floor, Mamlatdar Wadi Marine Lines Road No. 1, Malad (West) Mumbai-400 020. Mumbai-400 064. PAN : AABCK7186K (Appellant) (Respondent) Assessee by Shri K. Gopal & Ms. Neha Paranjape Department by Shri Manoj Kumar Singh Date of Hearing 8.8.2019 Date of Pronouncement 3.9.2019 ORDER Per Shamim Yahya (AM) :- This appeal by assessee is directed against order of learned CIT-A dated 30.12.2015 and pertains to assessment year 2008-09. 2. grounds of appeal read as under :- 1. Learned CIT(A) failed to appreciate that Assessing Officer had not recorded proper satisfaction in assessment order before initiation of penalty. Therefore penalty of Rs. 13,55,928/- is liable to be deleted in limine. 2. Without prejudice to above, learned CIT(A) failed to appreciate that Assessing Officer had not clearly spelt out charge in respect of which penalty had been levied. Therefore penalty levied is unsustainable. 3. Without prejudice to above learned CIT(A) failed to appreciate that appellant had neither concealed its income nor furnished inaccurate particulars thereof. Therefore, penalty is liable to be deleted. 2 K n t i B e v er g e s P v t. L t d. 3. Brief facts of case leading to levy of penalty in this case is that there was disallowance of bad debt in return of income amounting to Rs. 43,88,119/- by assessing officer. said bad debt related to interest receivable from directors of company. addition was also upheld in appellate proceedings on ground that write-off of receivables due from directors cannot be allowed. 4. On this addition penalty under section 271(1)(c) of Act amounting to Rs. 13,55,928/- was also levied and confirmed. 5. Against this order assessee is in appeal before us. We have heard both counsel and perused records. Learned counsel of assessee pleaded that quantum proceedings and penalty proceedings are different. He submitted that just because addition has been confirmed in quantum proceedings it will not lead to conclusion that assessee should be levied penalty under section 271(1)(c) of Act. learned counsel also submitted that as per provision of act and decision of honourable Supreme Court in case of TRF Ltd. (CIVIL APPEAL NO.5293 OF 2003), only requirement for claim of bad debt was that said amount should be written off. He submitted that it is not in dispute said amount has not been written off. Hence, learned Counsel of assessee pleaded that assessee should not be visited with rigours of penalty. 6. Per contra, learned Departmental Representative supported orders of authorities below. He submitted that assessee has written off receivables from directors. He submitted that said amount cannot be allowed as written off. Hence he pleaded that penalty should be upheld. 7. Upon careful consideration, we find considerable cogency in submission of learned Counsel of assessee. There is no doubt that bad debts claimed has been written off in books of account. In view of Hon'ble Supreme Court decision and provisions of Act, it cannot be said 3 K n t i B e v er g e s P v t. L t d. that act of assessee was not bonafide. In this view of matter in our considered opinion assessee s issue cannot be visited with rigours of penalty u/s. 271(1)(c) of Act. This view is supported by Hon'ble Supreme Court decision in case of Hindustan Steel Ltd Vs. State of Orissa (83 ITR 26) (Supreme Court), wherein it was held that penalty need not be levied if assessee s conduct is not found to be contumacious. In facts of present case we are of opinion that assessee s conduct is bonafide and assessee should not be visited with rigours of penalty. 8. In result, appeal filed by assessee stands allowed. Order has been pronounced in Court on 3.9.2019. Sd/- Sd/- (PAWAN SINGH) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated : 3/9/2019 Copy of Order forwarded to : 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard File. BY ORDER, True Copy (Assistant Registrar) PS ITAT, Mumbai. Kanti Beverages Pvt. Ltd. v. DCIT-3(2), Mumbai