2016 (7) TMI 737 - AT - Income Tax

Penalty under section 271(1)(c) - excess depreciation claimed in plant and machinery purchased under the TUF Scheme - Held that - The facts and circumstances of the case being identical to the assessment year 2006-07, respectfully following the above precedent in the case of the assessee itself wherein it was held that merely because claim of the assessee was not accepted or not found to be acceptable by the Revenue does not amount to concealment of particulars of income or furnishing of inaccurate particulars of income we hold that no penalty under section 271(1)(c) of the Act can be sustained on the issue of excess depreciation claimed by the assessee on plant and machinery purchased under the TUF scheme and hence same is deleted. - Decided in favour of assessee

Issues Involved:
1. Jurisdiction and validity of penalty order under section 271(1)(c).
2. Legality of the assessment order under section 143(3).
3. Legality of the addition made in the assessment order.
4. Validity of penalty under section 271(1)(c) considering jurisdiction, limitation, and principles of natural justice.
5. Requirement of recording mandatory "satisfaction" for imposing penalty.

Issue-wise Detailed Analysis:

1. Jurisdiction and Validity of Penalty Order under Section 271(1)(c):
The appellant argued that the penalty of ?69,10,800/- was levied without proper jurisdiction, making the penalty order illegal and void ab-initio. The Tribunal examined the context of the penalty, which was related to an excess claim of depreciation on plant and machinery under the Technology Upgradation Fund Scheme (TUFS). The Tribunal noted that the appellant had previously faced a similar penalty for the assessment year 2006-07, which was deleted by the Tribunal. The Tribunal concluded that the penalty for the current assessment year was also based on a bona fide mistake and thus should be deleted.

2. Legality of the Assessment Order under Section 143(3):
The appellant contended that the assessment order dated 24-12-2009 was illegal, beyond jurisdiction, and void ab-initio. The Tribunal did not find any new arguments or evidence to support this claim beyond what was already considered in the context of the penalty. The Tribunal's focus remained on the penalty rather than the assessment order itself.

3. Legality of the Addition Made in the Assessment Order:
The appellant challenged the addition made in the assessment order under section 143(3), arguing it was contrary to law and facts. The Tribunal referenced its earlier decision for the assessment year 2006-07, where it had found the excess depreciation claim to be a bona fide mistake rather than an attempt to conceal income. Therefore, the Tribunal held that the addition did not warrant a penalty under section 271(1)(c).

4. Validity of Penalty under Section 271(1)(c) Considering Jurisdiction, Limitation, and Principles of Natural Justice:
The appellant argued that the penalty was beyond jurisdiction, barred by limitation, and contrary to the principles of natural justice. The Tribunal reviewed the facts and determined that the penalty was based on a bona fide mistake. The Tribunal emphasized that the appellant had disclosed all factual information correctly and that the excess depreciation claim was based on a misunderstanding rather than an intention to evade taxes.

5. Requirement of Recording Mandatory "Satisfaction" for Imposing Penalty:
The appellant contended that the Assessing Officer did not record the mandatory "satisfaction" required by law before imposing the penalty. The Tribunal found that the penalty was not sustainable because the excess depreciation claim was a bona fide mistake. The Tribunal referenced its previous decision and other relevant case law, concluding that merely disallowing a deduction does not automatically imply concealment of income or furnishing inaccurate particulars.

Conclusion:
The Tribunal allowed the appeal, deleting the penalty of ?69,10,800/- under section 271(1)(c). The Tribunal's decision was based on the finding that the excess depreciation claim was a bona fide mistake, and there was no intention to conceal income or furnish inaccurate particulars. The Tribunal's decision was pronounced in the open court on 10th June 2016.

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