JUDGMENT : K.S. Jhaveri, J. 1. By way of this Appeal, the Appellant-Department has challenged the judgment and order dated 25.01.2008 of the Income Tax Appellate Tribunal, Ahmedabad Bench 'A' in ITA No. 468/Ahd/2004 for the Assessment Year: 1991-1992 whereby the Tribunal reversed the penalty imposed upon the assessee by the Assessing Officer and confirmed the findings of CIT (Appeals). 2. While admitting the matter on 23.04.2009, the following substantial question of law was framed by the Court for consideration:-- "Whether the Appellate Tribunal is right in law and on facts in reversing the order of the CIT(A) and thereby cancelling the penalty levied under Section 271(1)(c)?" 3. The facts of the case are as under:-- The assessee company had filed its return of income declaring total loss of Rs.76,35,086/-. The assessment u/s. 143(3) was completed on 28.02.1994 determining total income of Rs.74,44,640/-. The Assessing Officer had made an addition of Rs. 82,16,850/- towards bad debt. The assessee company withdrew the claim of bad debt amounting to Rs.82,16,850/- given to its subsidiary company, viz. Lotus Mills Ltd. The auditor had given a note with regard to the advance given to the said subsidiary company which appeared to be irrecoverable. When the assessee came to know about the possibility of recovery due to granting of refund amounting to Rs.55,85,711/- by the Assessing Officers in the case of Lotus Mills Ltd., the assessee had withdrawn its claim for bad debts for the said amount. The Assessing Officers disallowed the claim on the withdrawal of the same by the assessee but imposed the penalty u/s. 27(1)(c) holding that he is satisfied that the assessee had concealed the income by filling inaccurate particulars of income in terms of provision to section 271(1)(c) explanation-4A. The assessee company challenged the order of the Assessing Officer against imposition of penalty before the CIT(Appeals) and the CIT (Appeals) deleted the penalty with the observation that the assessee had not pressed the claim for the bad debts of Rs. 82,16,851/- because there was possibility of substantial recovery from the associate concern, Lotus Mills Ltd. After going through the letter of the ITO, the CIT (Appeals) held that Lotus Mills Ltd. would get a heavy refund from the Income Tax Department and it would be in a position to repay the debt. 82,16,851/- because there was possibility of substantial recovery from the associate concern, Lotus Mills Ltd. After going through the letter of the ITO, the CIT (Appeals) held that Lotus Mills Ltd. would get a heavy refund from the Income Tax Department and it would be in a position to repay the debt. Against the order of CIT (Appeals), the Department preferred an Appeal before the Appellate Tribunal wherein the Appeal of the revenue was dismissed. 4. Learned Counsel for the appellant-Department Mr. Nitin K. Mehta has submitted that the Tribunal has committed a serious error by reversing the penalty imposed by the Assessing Officer and confirming the order of CIT (Appeals) inasmuch as the assessee has tried to take advantage of the bad debts of Rs. 82,16,850/- and then tried to revoke this amount which can be termed as willful concealment. It is further contended that the Assessing Officer has given cogent and convincing reasons to arrive at his decision to impose penalty upon the assessee and therefore, this Court should interfere in the findings of the Tribunal. 5. On the other hand, learned Counsel for the respondent-assessee had taken this Court to the findings of CIT (Appeals) and has also drawn the attention of this Court to the decision of the Hon'ble Supreme Court in the case of Sir Shadilal Sugar & General Mills Ltd. v. CIT reported in 168 ITR 706 and relevant paragraph of the said decision reads as under:-- "From the assessee agreeing to additions to his income, it does not follow that the amount to be added was concealed income. There may be a hundred and one reasons for such admission i.e. when the assessee realize the true position, it does not dispute certain disallowances but that does not absolve the Revenue from proving the "mens rea" of quasi criminal office." Learned Counsel for the respondent has also placed reliance on the decision of the Madhya Pradesh High Court in the case of CIT vs. Suresh Chandra Mittal reported in 242 ITR 124 wherein relevant paragraph reads as under:-- "Held that the assessment was made by the Revenue and once the assessing authority had failed to take any objection in the matter, the declaration of income made by the assessee in his revised returns and the explanation that he had done so to but peace with the Department and to come out of vexed litigation could be treated as bona fide in the facts and circumstances of the case, accordingly, no penalty could be levied for concealment." Hence, it is submitted that no interference is called for in the well reasoned order of the Tribunal. 6. We have heard learned Advocates for the parties and perused the records of the case. Considering the ratio laid down in the above decisions and in the facts of the present case, we would like to refer to the findings of the Tribunal especially at Paragraph 5 which reads as under:-- "5. We have carefully considered the rival submissions and, perused the material on record alongwith the order of CIT(A). The CIT(A) has rightly deleted the penalty in this case. The assessee written off the bad debts on the advice of the auditors and as soon as the assessee came to know that the debt amount is recoverable, it immediately withdrew the claim before the AO. In our opinion, the assessee is bound to rely on the advice of the auditors until and unless it is not proved that the advice given by the auditors was not a bona fide one. No evidence or material was brought on record which may prove that the advice given by the auditors was not a bona fide one. In our opinion, the assessee is bound to rely on the advice of the auditors until and unless it is not proved that the advice given by the auditors was not a bona fide one. No evidence or material was brought on record which may prove that the advice given by the auditors was not a bona fide one. We find that the case of the assessee is duly covered by the decision of the Hon'ble Gujarat High Court in the case of BTX Chemical P. Ltd. v. CIT, (2007) 288 ITR 196 (Guj) in which the Hon'ble High Court has held as under: "Held (i) that it could not be said that the assessee knew or had reasons to believe that it claim of Rs. 1,83,492 as revenue loss, was untrue. The assessee had filed its return of income on June 30, 1980 claiming deduction of Rs. 1,83,492 on the basis of its claim lodged wit the insurance company on account of loss and damage to its plant and machinery on replacement cost basis. Since, the assessee had a bona fide believe on the basis of advice received from its CA that the loss occurred as result of destruction of assets such as plant and machinery, buildings, electrical installations etc. was of revenue nature and claimed it by way of deduction, it was not a case of "concealment" within the ambit and scope of section 271(1)(c). Penalty could not be levied, in relation to the disallowance of loss of Rs. 1,93,492. (ii) that the Tribunal, as a matter of fact, found that the double claim for an amount of Rs. 1,00,112 was made due to a bona fide mistake on the part of the assessee. No sooner was an entry made in the trading account of this year, than would it to affect the opening stock in the next year, and hence it could have been easily found out and would not have resulted in any advantage to the assessee. The penalty relatable to the disallowance of loss of Rs. 1,00,112 was rightly deleted by the Tribunal." 7. In that view of the matter, we are of the view that the issue raised in this Appeal is to be answered in favour of the assessee and against the Department.