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2017 (2) TMI 1238 - ITAT RAJKOTPenalty u/s.271(1)(c) - inaccurate particulars of income by claiming higher depreciation i.e. 80% on the windmill than the allowable depreciation i.e. 40% - Held that:- The purchase of windmill in question and depreciation claimed thereon is very much part of financial statements and return of income furnished by the appellant where date of installation is stated to be 30.9.2004 which is supported by the evidences mentioned herein above. Contention of Assessing officer that the claim was not bonafide and assessee could have claimed the depreciation in the subsequent years. This itself proves that in fact windmill is installed which is used for the purposes of the business depreciation is allowable on it. Reliance of Assessing Officer on statement prepared by officials of the Suzlon was not examined by department nor was any opportunity granted to appellant for cross examination. Even for making an addition based on statement of third parties, AO is duty bound to give cross examination of that party otherwise the addition is also not sustainable. Therefore the penalty u/s 271(1) (c) is definitely cannot be sustained in absence of cross examination. The assessee has sought to explain by way of evidences as noted in aforesaid paras that actual generation of electricity of 402 units has been shown for the month of September-2004. The invoices of the supplier of the machinery is also prior to the purported date of installation on 30/09/2004. The assessee has offered some explanation on deficit noted by the ITAT towards transportation and insurance. The explanation offered by the assessee is somewhat plausible particularly in the context of penal provisions of section 271(1)(c) of the Act. Needless to say, penalty proceedings are independent of assessment proceedings and it is well settled that concealment of income cannot be automatically inferred on the basis of additions/disallowance in the quantum assessment without being proved otherwise. In other words, imposition of penalty is not an automatic consequence of the assessment proceedings. The penalty cannot be levied as a matter of course on the ground that quantum additions have been confirmed by the superior authority. The assessee in the instant case has provided plausible evidence which are not totally bereft of merits. - Decided against revenue.
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