Chennai ITAT upholds Sec 271(1)(c) penalty levy on an assessee (a NBFC) for providing incorrect treatment to ‘cash collateral’ offered to bank, holds it a case of furnishing inaccurate particulars of income for AY 2007-08; 

Holds that assessee’s false claim supported by Chartered Accountant’s opinion cannot absolve assessee from Sec 271(1)(c) penalty, relies on co-ordinate bench ruling in Rattha Cidadines Boulevard Chennai (P) Ltd.;  

Assessee in present case sold portion of ‘loan receivables’ to a Bank on Bilateral Buy Out basis and offered ‘cash collateral’ @ 2% of receivables, AO added such cash collateral  to assessee’s income and initiated penalty proceedings;  

Rejects assessee’s stand that cash collateral (which was utilized by Bank to cover loan realization deficiency)  was in the nature of retention money and hence cannot be recognized as income until retention period was over; Observes that while assessee claimed realization deficiency as Bad debts, income of 2% was not considered in P&L A/c, opines that “these are incorrect treatment given by the assessee company and have no sanction of law and also not supported by any Accounting standard.”:ITAT