9911796707
TMI Blog2007 (8) TMI 390X X X X Extracts X X X X X X X X Extracts X X X X ..... y business. The loss claimed in the return of income relates to depreciation and miscellaneous expenditure. In the absence of any business done as admitted by the assessee by his letter dated 1-2-2006 the expenditure claimed cannot be allowed and depreciation is also not admissible and hence not allowed to be carried forward. Accordingly, the income is determined at NIL ignoring the loss returned. Further, in the computation statement, the assessee claimed business loss and also depreciation loss for earlier years starting from the assessment year 1998-99. The assessee has not filed the returns of income for assessment year 1998-99, 1999-2000, 2000-01, 2001-2002 and 2002-03 within the due date for filing the return of income. The assessee has claimed business loss and depreciation loss for the years 1998-99 to 2002-03 as under: ------------------------------------------------------------ Asst. Date of filing Business Depreciation Date of Year Return of Income loss loss lodging ----------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bu ACIT, Circle 16(l),Hyderabad." 3. Against the above assessment order, the assessee did not file any appeal. From the reading of the above assessment order, it is found beyond any doubt or dispute that the Assessing Officer has not recorded any satisfaction for initiating penalty proceedings under section 271(1)(c) of the Act. However, in the penalty order passed under section 271 (1)(c) of the Act dated 30-8-2006, it was observed by the Assessing Officer that at the time of completion of assessment a notice under section 271(1)(c) of the Act was issued. It was further observed by the Assessing Officer that in response to the above notice, the assessee filed reply dated 25-8-2006, which was reproduced by the Assessing Officer at page-2 of the impugned penalty order, as under: "With reference to the above, we request your Hon. Self to drop the proceedings under section 271 (1)(c) as the net taxable income for the assessment year is nil. The company filed its return of income, by declaring loss and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igible in this case on the ground of concealment of income. The Assessing Officer, therefore, was justified in levying the penalty of Rs. 1,72,15,033 and hence the impugned order is confirmed." 6. Still aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us challenging in all the grounds, the sustenance of penalty imposed by the Assessing Officer under section 271(1)(c) of the Act. 7. At the time of hearing, the ld. counsel for the assessee has also raised an additional ground of appeal, which reads as under: "The penalty proceedings having been initiated without recording of any satisfaction - Whatsoever during the course of assessment proceedings is bad in law and, therefore, the levy of penalty under section 271(1)(c) at Rs. 1,72,15,033 (One Crore Seventy-two Lakhs Fifteen Thousand Thirty three Only) is Unsustainable." 8. On the admission of additional ground, the Id. counsel for the assessee submits that since it is a legal ground, the same may be admitted, which was not objected to by the ld. Departmental Representative. 9. After hearing the rival parties, we find that the additional ground raised by the assessee does not require any Investigation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d.) of 2002, dated 21-9-2006 for the assessment year 1992-93 and on a recent judgment of the Honourable Supreme Court in the case of Dilip N. Shroff v. Jt. CIT [2007] 291 ITR 519. 11. On the other hand, the ld. Departmental Representative while strongly relying on the order of the Assessing Officer and ld. CIT(A), submits that there was failure on the part of the assessee to file returns of income as per the provisions of section 139(3) of the Act. Since the assessee has consciously made wrong claim of excess loss of Rs. 4,91,85,509 in its return for the year under consideration, the Assessing Officer was justified in lodging the said return of income as non est and in imposing penalty under section 271(1)(c) of the Act which the ld. CIT(A) has rightly confirmed. He, therefore, submits that the order of the ld. CIT(A) does not call for any interference and, therefore, the penalty imposed by the Assessing Officer and sustained by the ld. CIT(A) be upheld. 12. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that the assessee filed return on 1-10-2004 showing a loss of Rs. 1,01,79,983, which comprises of busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly it was held that the onus was on the assessee to prove that it was not a case of concealment or of deemed concealment. No such situation arises in this case. Likewise omission of word 'deliberate' from section 271(1)(c) of the Income-tax Act, is not relevant to solve the controversy. The above omission has shifted burden of proof from the revenue to the assessee. It has nothing to do with the effect of non-submission of the return. In the light of the above discussion I hold that no penalty can be levied on the assessee under section 271(1)(c) where no return of income is submitted. I concur with the view taken by the learned Judicial Member." 13. We further find that the penalty was imposed on the disallowance of business loss and depreciation claimed. In the assessment order it was observed by the Assessing Officer that in the absence of any business done, the expenditure claimed cannot be allowed and depreciation is also not admissible. The Assessing Officer while imposing the penalty under section 271(1)(c) of the Act was of the view that the assessee made a wrong claim and the case is liable for penalty in view of Explanation 4 to section 271 (1)(c) of the Act. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer found that the work rolls are part of plant and machinery and, therefore, eligible for depreciation at the rate of 25 per cent and accordingly he disallowed depreciation to the extent of Rs. 11,50,413. It has been held by the Tribunal by relying on the judgments of the Honourable Orissa High Court in the case of CIT v. Indian Metal & Ferro Alloys Ltd. [1995] 211 ITR 35 and the Delhi High Court in the case of CIT v. International Audio Visual Co. [2007] 288 ITR 570 that merely because the Assessing Officer did not agree with the assessee with regard to rate of depreciation, it cannot be said that there was concealment of income or furnishing of inaccurate particulars, therefore, there cannot be any levy of penalty under section 271(1)(c) of the Act in respect of claim of depreciation on work rolls. Respectfully following the same, we are of the view that penalty under section 271 (1)(c) is not leviable on this account also. 16. As regards non-initiation of penalty proceedings under section 271(1)(c) of the Act, we find that there is no discussion in the assessment order for initiation of penalty proceedings under section 271(1)(c) of the Act. Thus, it is evident that the As ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
