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TMI Blog2010 (12) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Petroproducts Pvt. Ltd. (2010 -TMI - 75701 - SUPREME COURT) - Do not find any infirmity in the order of the learned CIT(A) in canceling the penalty on this issue - The finding of fact recorded by the learned CIT(A) is accordingly confirmed - Thus, departmental appeal on this issue is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... the opinion that the issue with regard to depreciation is a debatable one, the levy of penalty u/s. 271 (1) (c) of I. T. Act is not warranted. 4.1.5 It is further seen that the appellant made the depreciation in good faith which, however, is not accepted by the A.O., therefore, it cannot be said that very claim made was with a malafide intention. 4.1.6 Having considered the facts and circumstances of the case, I find that the levy of penalty on disallowance confirmed towards depreciation is not sustained." (ii) Suppression of sales: It was submitted that disallowance was made on account of low yield of production of Mango Pulp which was made on ad hoc and estimated basis. Therefore, no penalty should be imposed. The learned CIT(A) accepted the contention of the assessee and noted that the addition is made on estimate. The estimation of low yield and ultimate alleged suppression of sales are not proved before levy of penalty. Therefore, penalty should not be imposed. Penalty was accordingly canceled. (iii) Claim u/s 80 I: It was submitted there was inadvertent mistake in computation of claim u/s 80 IA which is corrected by the assessee at the assessment stage and the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of the Hon'ble Kerala High Court in the case of Kuttookaran Machine Tools vs ACIT and Another (313 ITR 413) in which it was held as under: "Held, that the assessee had made bogus claims of investment allowance and depreciation in respect of machinery which was not purchased, installed or commissioned during the previous year. Though the returns were prepared by the auditor for the assessee, it was for the assessee to ensure that wrong claims were not made by the practitioner or auditor. Imposition of penalty was valid." As regards claim u/s 80 I of the IT Act, the learned DR submitted that the assessee accepted the wrong claim before the AO at the assessment stage and that no appeal was preferred before the learned CIT(A) or before the Tribunal. Therefore, penalty was rightly imposed for such a matter which should not have been deleted by the learned CIT(A). He has relied upon the decision of the Hon'ble Delhi High Court in the case of CIT vs Zoom Communication Pvt. Ltd. 327 ITR 510 considering the decision of the Hon'ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. (supra) relied upon by the learned Counsel for the assessee distinguished the same in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee was not disbelieved and that in the case of the assessee plant and machinery was purchased, installed and trial production was commenced. Therefore, on mere difference of opinion that trial production led to manufacturing of articles, penalty was imposed, therefore, penalty has been rightly deleted by the learned CIT(A). He has further submitted that it was not a debatable issue and that claim was made on the basis of evidence and material on record. With regard to claim u/s 80 IA of the IT Act, the learned Counsel for the assessee submitted that the AO asked the assessee as to why expenses of head office, marketing office and R and D Unit should not be deducted for the purpose of claim of deduction u/s 80 I of the IT Act. He has submitted that the assessee furnished all the particulars of deduction u/s 80 IA of the IT Act and there was a difference of opinion with regard to computation of deduction only which was corrected at the assessment stage by filing revised working after allocating expensed of all the three units. Therefore, the assessee has not furnished any inaccurate particulars of income or concealed particulars of income. Therefore, penalty was rightly c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter to the file of the AO for reconsideration of the issue. Therefore, there is no definite finding of fact on record that the assessee has furnished inaccurate particulars of income or concealed the particulars of income. The addition is merely made on estimate and ad hoc basis on which the learned CIT(A) has rightly canceled the penalty u/s 271(1) ( c) of the IT Act. More so, when the matter was restored to the file of the AO, addition has been deleted by the Tribunal, it would not support the findings of the AO that penalty shall have to be necessarily imposed on such a matter. We accordingly, do not find any merit in the departmental appeal on canceling the penalty on such issue. The departmental appeal on this issue is dismissed. 10. On claim of depreciation, it is admitted fact that the AO and the learned CIT(A) maintained addition and when the matter went to the ITAT Ahmedabad on quantum, the appeal of the assessee on this issue was dismissed vide order dated 29-08-2000. The parties have referred to Para 14 of the Tribunal order in which the Tribunal has specifically noted that the conclusion of the learned CIT(A) through which the assessee commenced trial production is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking order. Considering the facts and circumstances, it would be appropriate to restore the matter to the file of the learned CIT(A) with direction to redecide the issue afresh bypassing reasoned order in writing giving point for determination and reasons for decision in the appellate order. The learned CIT(A) shall give reasonable sufficient opportunity of being heard to the assessee. In the result, part of this ground of appeal of the revenue is allowed for statistical purpose. 11. As regards penalty on claim u/s 80 I of the IT Act, the AO noted in the asstt. order that the assessee made claim of deduction u/s 80 I of the IT Act and the AO asked the explanation of the assessee as to why the expenses of the head office and others have not been allocated. The assessee revised the working of the allocating expenses in all the three units mentioned in the assessment order and in the revised working of the computation of allocating expenses of head office, claim of deduction u/s 80 I of the IT Act was reduced. It is therefore, a matter where the AO granted lesser relief on the basis of profit of the undertaking less prorate administrative expenses of central office/head office. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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