2014 (3) TMI 1207 - HC - Income Tax

Penalty u/s 271(1)(c) - assessee made a wrong claim of depreciation knowing fully well that the assets are not owned by him and not transferred by M/s. IVRCL - HELD THAT - It is not a case of concealment of income and also it cannot be said that the assessee has furnished inaccurate particulars of the income. In view of the above fact finding, it is difficult for us to take a decision in the absence of allegation of perversity. Moreover, we noticed that the Tribunal has recorded the fact that the assessee claimed depreciation on plant and machinery taken on lease from M/s. IVRCL on 30.03.2001. It is in consonance with the agreement. Tribunal has not agreed with the contention of the assessee s counsel in its appeal in quantum addition. Therefore, if the assessee claims any deduction for any reason under law and such deduction is not allowed, this cannot be said to be concealment of income or furnishing inaccurate particulars of income. Assessee thought that this income should not be added to for taxation purpose. Therefore, entire income was disclosed without giving any wrong or inaccurate particulars and the benefit allowable under law claimed was not allowed. Learned Tribunal, in our view, has correctly appreciated the fact and applied the law in deleting penalty imposed by the Revenue. Hence, we do not find any reason to interfere with the same.

Summary

Issues:
- Appeal against deletion of penalty for wrong claim of depreciation
- Allegation of concealment of income
- Furnishing inaccurate particulars of income
- Correct application of law by the Tribunal

Analysis:
The judgment pertains to an appeal against the deletion of a penalty for a wrong claim of depreciation made by the assessee. The main issue revolves around whether the Tribunal was correct in law in deleting the penalty despite the assessee's erroneous claim of depreciation on assets not owned by them. The Hon'ble Chief Justice, in delivering the judgment, highlighted that the Tribunal found no concealment of income or furnishing of inaccurate particulars. The Tribunal established that the assessee had claimed depreciation on plant and machinery leased from another entity, which was in accordance with the agreement. Although the deduction was disallowed, the Tribunal reasoned that this did not amount to concealment or furnishing inaccurate particulars. The assessee disclosed the entire income without providing misleading information, and the claimed deduction was legitimately sought but not allowed under the law.

The judgment emphasizes that the Tribunal correctly interpreted the facts and applied the relevant legal principles in overturning the penalty imposed by the Revenue. The Court concurred with the Tribunal's decision, stating that there was no basis for interference. The decision underscores that the assessee's actions did not constitute concealment or providing inaccurate particulars, as the income was fully disclosed, and the claimed deduction was based on a genuine belief in compliance with the law. Consequently, the appeal against the deletion of the penalty was dismissed, with no costs awarded.

In conclusion, the judgment underscores the importance of distinguishing between genuine errors in claiming deductions and deliberate attempts to conceal income or provide misleading information. The Tribunal's decision to delete the penalty was upheld based on the understanding that the assessee's actions did not amount to concealment or furnishing inaccurate particulars, but rather stemmed from a legitimate interpretation of the law regarding allowable deductions.