2017 (6) TMI 14 - AT - Income Tax

Penalty levied under section 271(1)(c) - eligibility for depreciation on energy meters - Held that - We find that issue in dispute in respect of which the penalty was levied by the Assessing Officer has already been restored to the file of the Assessing Officer for the re-computation of depreciation and there for penalty levied by the Assessing Officer in respect of those additions/disallowances cannot survive and the ground raised by the Revenue is rendered merely academic. Accordingly, the ground of appeal is dismissed. - Decided in favour of assessee.

Summary

Issues involved:
- Appeal against deletion of penalty under section 271(1)(c) of the Income-tax Act, 1961.
- Assessment of penalty for concealment and furnishing inaccurate particulars of income.
- Interpretation of Explanation 4 of section 271(1)(c) of the Act.
- Dispute over depreciation rates for energy meters.
- Treatment of grant-in-aid for fixed assets.

Analysis:
1. The appeal was against the deletion of a penalty under section 271(1)(c) of the Income-tax Act, 1961, for the assessment year 2006-07. The penalty of ?15,14,62,400 was levied by the Assessing Officer, which was subsequently deleted by the Ld. Commissioner of Income-tax (Appeals). The Revenue challenged this deletion, citing that it fell within the ambit of Explanation 4 of section 271(1)(c) of the Act.

2. The case involved a company engaged in the distribution of electricity/power, which declared a loss of ?57,84,42,538 for the relevant year. The Assessing Officer made certain additions/disallowances, including issues related to depreciation rates for energy meters. The penalty was imposed based on these additions, treated as concealment and furnishing of inaccurate particulars of income.

3. The Ld. CIT-A deleted the penalty, stating that the income was computed on the basis of 'book profit' under section 115JB of the Act. The Tribunal had allowed the appeal of the assessee for statistical purposes, directing the Assessing Officer to recompute the depreciation and grant-in-aid issues.

4. The Revenue contended that the assessee furnished inaccurate particulars of income by claiming a lower depreciation rate for energy meters. However, the counsel for the assessee argued that the Tribunal had directed the allowance of depreciation at a higher rate and adjustments for grant-in-aid, rendering the penalty unjustified.

5. The Tribunal found that the issues for which the penalty was levied had been restored to the Assessing Officer for re-computation, making the penalty unsustainable. The grounds raised by the Revenue were considered academic, leading to the dismissal of the appeal.

6. The judgment emphasized that the penalty under section 271(1)(c) could not be sustained when the additions/disallowances were already under re-computation. As a result, the appeal filed by the Revenue was dismissed, and the decision was pronounced on 17th May 2017.