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TMI Blog2012 (12) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... alty confirmed - Decided against the assessee. - ITA 1855/2010 - - - Dated:- 6-12-2012 - MR. S. RAVINDRA BHAT AND MR. R.V. EASWAR JJ. Appellant: Mr. Sanjeev Sabharwal, Sr. Standing Counsel with Mr. Puneet Gupta, Standing Counsel. Respondent: Mr.Ajay Vohra, Ms.Kavita Jha Mr. Somnath Shukla, Advs. R.V. EASWAR, J. This is an appeal filed by the CIT under Section 260A of the Income Tax Act, 1961 (Act, for short). 2. Admit. 3. The following question of law is framed:- Whether the Tribunal erred in law in deleting the penalty of Rs.14,46,239/- imposed by the assessing officer under Section 271(1)(c) of the Income Tax Act, 1961 and confirmed by the CIT (Appeals)? 4. The appeal relates to the assessment year 2005-06. The assessee, respondent herein, is a private limited company engaged mainly in the business of investment and to undertake and transact financial services. It filed its return of income declaring nil income and the same was processed under Section 143(1). It was later picked up for scrutiny and notice under Section 143(2) was issued. It was noticed by the assessing officer in the course of the assessment proceedings that the assessee-comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-allowance of the depreciation. 6. The assessing officer thereafter initiated proceedings for the levy of penalty for concealment of income under Section 271(1)(c) of the Act. The assessee s explanation was called for and after considering the same, the assessing officer, came to the conclusion that the assessee by claiming depreciation in respect of a property which was not used for business purpose and by including the cost of land in the claim of depreciation, though no depreciation is allowable under the Act on the land, had not only concealed its income but also furnished inaccurate particulars thereof. He accordingly imposed the minimum penalty of Rs.14,46,239/- by order dated 30.6.2008. 7. The assessee challenged the levy of penalty in appeal before the CIT(Appeals) and contended that the property was acquired for the purpose of the business but later it was not found suitable for commercial activities because of prevailing local conditions and was therefore sold after four months. It was also pointed out that even after disallowance of the claim of depreciation, the assessment resulted in a loss and thus there was no motive or intention to claim any undue tax benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of business and same was acquired on 29.4.2004 and was sold on 18.9.2004 through an Agreement to sell. Therefore, the claim of the depreciation is not allowable since the asset has not been put to use during the year. Whereas the learned counsel for the assessee Shri R.S. Singhvi, CA pointed out at Pages 17 to 21 of the Paper Book in specific Page 19 Para 3 of the Agreement to Sell where it is specifically mentioned in the said agreement that the consideration of Rs. 1.50 crore will be paid by the intending vendee to the intending vendor on or before 31.3.2006 or till such further time as discussed and mutually agreed by both the parties and the Sale Deed will be executed and registered by the parties and possession of the demised premises handed over to the vendee immediately thereafter. Therefore, the observation of the AO that through Agreement to Sale placed at Pages 17 to 21 of the Paper Book, the property has been sold during the year is without any basis. Shri Singhvi also pointed out PB Page 7, copy of balance-sheet where the property has been reflected under the head Fixed assets and not as investment. The assessee company does not own any other property and the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y material to the contrary, the Tribunal was clearly in error, and at any rate took an irrational view, in cancelling the penalty. 11. On the other hand, it was contended on behalf of the assessee that the property was not transferred in the relevant previous year, that it continued to remain with the assessee till 2006 as found by the Tribunal, that thus the condition of Section 32 that the property should be owned by the assessee was fully satisfied and even the assessing officer had accepted the same, by observing in the office note appended to the assessing order, that the question of capital gains will be examined in the assessment year 2006-07. Reference was invited to the judgment of the Supreme Court in Mysore Minerals Ltd. vs. Commissioner of Income Tax, (1999) 239 ITR 775. As far as the other condition, namely, the user of the property for the purpose of the assessee's business is concerned, it was submitted that Smt. Ritu Aggarwal, the director of the assessee-company, used the property for her residence and thus this condition also stood satisfied. It was contended that ultimately the assessment resulted only in a loss despite the disallowance of depreciation and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts (supra) cited on behalf of the assessee has been explained and distinguished by the Division Bench of this Court in CIT vs. Zoom Communications P. Ltd., (2010) 327 ITR 510 (Del). This is not a case where all the correct particulars relating to the claim were furnished and a claim for relief or allowance was made on that basis, which was not accepted by the assessing officer who did not question the particulars relating to the claim, but merely took a different view on the very same particulars. This is a case where questionable details and particulars relating to the claim were furnished by the assessee and such details were so fundamental to the genuineness and bona fide of the claim that the mere furnishing of those particulars made the claim vulnerable. In this background, we are wholly unable to countenance the observations of the Tribunal that the assessee had purchased the property for the purpose of its business and sold it in the following year when it found the property not suitable for its commercial activities. We are also unable to subscribe to the view of the Tribunal that the explanation submitted by the assessee appears to be bona fide and all the facts were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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