2001 (6) TMI 192 - AT - Income Tax

Summary

Issues Involved:
1. Confirmation of penalty u/s 271(1)(c) of the I.T. Act.
2. Allegation of furnishing inaccurate particulars of income.
3. Commencement of trial production during the assessment year 1990-91.
4. Agreement to disallowance of depreciation and investment allowance.
5. Basis of claim for depreciation and investment allowance.

Summary:

1. Confirmation of Penalty u/s 271(1)(c) of the I.T. Act:
The appeal by the assessee challenges the order of the CIT (Appeals) dated 20-4-1993, which confirmed the penalty imposed by the Assessing Officer u/s 271(1)(c) of the I.T. Act for the assessment year 1990-91. The Tribunal noted that the CIT(A) erred in confirming the penalty and found that the lower authorities acted wrongly in imposing the penalty without considering all the facts and circumstances of the case in its entirety.

2. Allegation of Furnishing Inaccurate Particulars of Income:
The CIT(A) found that the assessee deliberately furnished inaccurate particulars of its income. However, the Tribunal disagreed, stating that the assessee had some production in the relevant accounting year and did not raise any false claims. The Tribunal emphasized that it was a case of difference of opinion and not of concealment of income or filing of inaccurate particulars.

3. Commencement of Trial Production During the Assessment Year 1990-91:
The assessee claimed that trial production commenced during the assessment year 1990-91. The Tribunal noted that the assessee maintained records of initial production and sales, including sales of scrap, and that the claim for depreciation and investment allowance was based on the commencement of trial production. The Tribunal found that the lower authorities did not properly consider these facts.

4. Agreement to Disallowance of Depreciation and Investment Allowance:
The assessee agreed to the disallowance of depreciation and investment allowance as a gesture towards avoiding litigation. The Tribunal noted that this agreement was primarily to buy peace with the Department and did not indicate an admission of false claims or inaccurate particulars.

5. Basis of Claim for Depreciation and Investment Allowance:
The assessee's claim for depreciation and investment allowance was based on the commencement of trial production. The Tribunal found that the claim was supported by records and that the assessee had made full disclosure and cooperated with the Department. The Tribunal concluded that the case was one of difference of opinion and not of concealment or filing of inaccurate particulars.

Conclusion:
The Tribunal set aside the orders of the lower authorities and canceled the penalty levied u/s 271(1)(c) of the I.T. Act, allowing the appeal in favor of the assessee.