9911796707
TMI Blog2012 (6) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... erverse. Decided in favour assessee. - - - - - Dated:- 29-11-2011 - SANJIV KHANNA, EASWAR R. V., JJ. JUDGMENT 1. By an order dated March 15, 2004, the following substantial question of law was framed : "Whether the order made by Income-tax Appellate Tribunal is per- verse inasmuch as the Income-tax Appellate Tribunal has deleted the penalty of Rs. 3,71,984 imposed by the Assessing Officer under section 271(1)(c) of the Income-tax Act, 1961 ?" 2. It is noticeable that the total penalty amount is Rs. 3,71,984 which is less than the amount stipulated in the Instructions dated February 9, 2011. 3. In the present case, the Commissioner of Income-tax (Appeals) and the Tribunal have held that the assessee was a victim and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have confirmed that the assessee did not enter into lease transaction with M/s. Sears Leasing Industries and the requisite purchase money was advanced, still the fact remains that M/s. Modern Engineers and Fabricators did not manufacture or sell the gas cylinders either to the assessee, the lessor or to its nominee, the lessee, M/s. Sears Leasing Industries. In fact the facts as brought out in the assessment order show that the firm, M/s. Modern Engineers and Fabricators, did not exist. Therefore, even if the assessee's contention that it acted in most bona fide man- ner is true still in terms of law, it cannot be held that the assessee is entitled for depreciation. Whenever a depreciation is granted whether to the owner and user or to a le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... got the funds from Modern Engg. Co. The Assessing Officer has, therefore, denied the claim of depreciation to the assessee and has also added the amount of Rs. 13,70,000 (assessment year 1991-92) as the assessee's income from undisclosed sources on the ground that receipt of money by the assessee is not proved. M/s. Modern Engineers and Fabricators and Sears Leasing Industries are non-existent parties. The assessee has submitted that although it is true that Modern Engineers and Fabri- cators did not exist and the transactions of purchase of gas cylinders was bogus but the assessee was in no way connected with the bogus transactions and fabrication of evidence in this regard. It is submitted that it has been cheated by an unscrupulous pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. He has been arrested and released on bail and the matter is pending with the Magistrate. The assessee has submitted that although its claim of depreciation has been disallowed still no penalty should be levied because it has itself been cheated by certain unscru- pulous persons. It has acted in the most bona fide manner. Its conduct in the whole transaction is bona fide and, therefore, no penalty should be levied. 7. I have considered the facts and circumstances of the case. The facts of the case bring out that the assessee did not own the alleged impugned gas cylinder, therefore, the claim of depreciations has rightly been disallowed. However, penalty in this regard can be sustained only when it is found that the assessee has not ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the accounts of Modern Engg. Co. in Canara Bank opened under the name of one Sh. Raj Kumar was introduced by Sh. Tara who was the director of the lessee company. The evidence do not show that the assessee was in any way involved in the opening of the accounts of Modern Engg. Therefore, in all probability the accounts of Modern Engg. in Canara Bank was owned and controlled by Sh. Tara. It, therefore, proves that the assessee was not connected in the bogus transactions of creation of false documents or in enjoying the fruit of the financial gain which arose on account of this lease transaction. The assessee only made its claim of depreciation which was based on the documents supplied by the broker to the transaction and the lessee company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they were within the knowledge of the assessee. The conduct of the assessee in making the claim of depreciation is bona fide and, there- fore, it is held that it is not a fit case for the levy of penalty. Penalty of Rs. 3,71,984 is, therefore, deleted." 10. The contention of the appellant is that Rs. 6 lakhs was paid to the respondent. On the said aspect the reply of the respondent in the assess- ment proceedings was as under : "The lessee, M/s Sears Leasing Ind. Ltd., approached us with a proposal for leasing cylinders. Since we were interested in reducing our tax liability and this proposal enabled us to do so, we accepted the proposal and expressed readiness in finance the gas cylinders worth Rs. 7,06,860. Sears agreed to give us ..... X X X X Extracts X X X X X X X X Extracts X X X X
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