2012 (10) TMI 1009 - AT - Income Tax

Summary

Issues Involved:
1. Imposition of penalty u/s 271(1)(c) for concealment of income and furnishing inaccurate particulars.
2. Bona fide nature of the assessee's actions and the validity of the explanation provided.
3. Applicability of legal precedents and interpretations of "concealment" and "inaccurate particulars."

Summary:

Issue 1: Imposition of Penalty u/s 271(1)(c)

The appeal challenges the confirmation of a penalty of Rs. 6,12,610/- imposed u/s 271(1)(c) by the CIT(A)-XIV, New Delhi. The assessment proceedings were completed u/s 143(3) with the disallowance of depreciation on land and an imported car. The penalty was imposed after the Assessing Officer (AO) initiated proceedings u/s 271(1)(c) and considered the assessee's reply.

Issue 2: Bona Fide Nature of Assessee's Actions

The assessee argued that the mistake in claiming depreciation was discovered during the audit of the subsequent year and was corrected in the return for the assessment year 2006-07, filed before the completion of the assessment for the year 2005-06. The assessee contended that the claim was made inadvertently and was based on prescribed depreciation rates. The CIT(A) upheld the penalty, stating that the concealment of income was established and the levy of penalty was justified.

Issue 3: Applicability of Legal Precedents

The Tribunal considered various case laws cited by both parties. It noted that the AO did not specify which particulars were inaccurate or concealed. The Tribunal emphasized that assessment and penalty proceedings are distinct, and the findings in assessment proceedings are not conclusive for penalty purposes. The Tribunal referred to the Supreme Court's observations in Dilip N. Shroff v. Jt. CIT and CIT v. Reliance Petro Products (P.) Ltd., which clarified that a mere erroneous claim does not amount to concealment or furnishing inaccurate particulars if the claim was bona fide and all material facts were disclosed.

Conclusion:

The Tribunal concluded that the assessee had disclosed all relevant particulars and the claim for depreciation was made in a bona fide manner. The mere disallowance of the claim did not constitute concealment or furnishing inaccurate particulars. Therefore, the penalty imposed u/s 271(1)(c) was unjustified. The Tribunal directed the deletion of the penalty and accepted the appeal of the assessee.

Order pronounced in open court on 26.10.2012.