2014 (6) TMI 629 - AT - Income Tax

Penalty u/s 271(1)(c) of the Act Claim of depreciation on plant and machinery Held that - Penalty u/s. 271(1)(c) of the Act is leviable if the AO is satisfied in the course of any proceedings under this Act that any person has concealed the particulars of his income or furnished inaccurate particulars of such income - assessment proceedings and penalty proceedings are separate and distinct Relying upon Ananthraman & Co. Vs. CIT 1980 (4) TMI 2 - SUPREME Court - the criterion and yardsticks for the purpose of imposing penalty u/s 271(1)(c) are different than those applied for making or confirming the additions - When the assessee has made a particular claim in the return of income and has also furnished all the material facts relevant, the disallowance of such claim automatically lead to the conclusion that there was concealment of particulars of his income by the assesse or furnishing of accurate particulars of such income. All the material facts relevant to the claim had been furnished by the assessee, thus, it is not a fit case to attract the levy of penalty u/s 271(1)(c) of the Act - A mere rejection of the claim of the assessee by relying on different interpretations does not amount to concealment of the particulars of income or furnishing inaccurate particulars of income, by the assessee - no cogent material or evidence was brought to our notice which may prove that the Revenue detected the concealment thus, the order of the CIT(A) is set aside Decided in favour of Assessee.

Summary

Issues:
1. Appeal against penalty under section 271(1)(c) of the Income Tax Act.
2. Disallowance of excess depreciation claimed by the assessee.
3. Consideration of relevant facts and interpretation of tax rules.
4. Assessment of concealment of income for penalty imposition.
5. Comparison with previous tribunal judgment for penalty deletion.

Detailed Analysis:
1. The judgment involves an appeal against a penalty imposed under section 271(1)(c) of the Income Tax Act. The appellant challenged the penalty of Rs. 11,39,371/- confirmed by the Ld. CIT(A) in response to the AO's observation regarding excess depreciation claimed by the assessee-company on plant and machinery under the TUF scheme. The penalty proceedings were initiated by the AO for concealment of income, leading to the imposition of the penalty, which was upheld by the Ld. CIT(A).

2. The primary issue in the case revolved around the disallowance of excess depreciation claimed by the assessee on plant and machinery. The AO restricted the depreciation claimed by the assessee to 15% on the WDV, resulting in disallowance of Rs. 33,84,942/-. This disallowance formed the basis for initiating penalty proceedings under section 271(1)(c) of the Act, leading to the subsequent imposition of the penalty.

3. The judgment delves into the consideration of relevant facts and interpretation of tax rules, specifically pertaining to the eligibility of plant and machinery for higher depreciation under the TUF scheme. The AO questioned the eligibility of the machinery claimed by the assessee under the TUF scheme, highlighting the absence of evidence to ascertain if the machinery qualified for the higher depreciation rate. This assessment formed the basis for disallowing the excess depreciation claimed by the assessee.

4. The judgment further assessed the aspect of concealment of income for the imposition of the penalty under section 271(1)(c) of the Act. The appellant argued that the issue was debatable and all relevant facts had been disclosed, emphasizing that the claim made was bona fide. The Tribunal emphasized that the mere rejection of a claim based on different interpretations does not necessarily amount to concealment of income. It was highlighted that when all material facts relevant to a claim are furnished, and the claim is made in good faith, the penalty under section 271(1)(c) may not be justified.

5. The judgment compared the current case with a previous tribunal judgment where a penalty was deleted in a similar scenario. The Tribunal in the previous case emphasized that if all material facts relevant to a claim had been disclosed by the assessee, and the claim was made in good faith, the penalty under section 271(1)(c) may not be warranted. In the absence of any contrary binding decision cited by the revenue, the penalty imposed by the AO and upheld by the Ld. CIT(A) was deleted in the present case, and the appeal of the assessee was allowed.