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TMI Blog2012 (12) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... es : a. Excess claim of depreciation Rs. 2,00,06,968/-. b. Non inclusion of Excise duty as per the provisions of section 145A Rs. 2,68,423/-. c. Disallowance of unpaid bonus Rs. 1,60,474/-. So far as the claim of excess depreciation is concerned, it was noted by the AO that the assessee company in the depreciation chart attached with return has devalued the asset and has claimed depreciation of Rs. 2,00,06,968.50. The AO noted that the machineries are devalued by the company on its own accord even though the machineries are in operation. Some machineries have been devalued by 100% and some machinery by 75%. The devalued amount has been claimed in the form of depreciation and to that extent excess claim of depreciation has been made. During the assessment proceedings, on being questioned by the AO to justify the claim, it was submitted by the assessee that the machineries are old, therefore, these were devalued to bring them to correct value. However, the AO was not satisfied with the explanation given by the assessee. According to him, under the Income Tax Act depreciation is granted on the basis of WDV and not on the cost of the asset. Such devaluation made have reduced the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's report, i.e. disclosure in the return, does not absolve the assessee from penalty u/s. 271(1)(c). Regarding the other disallowances, revenue holds that the said claims of the assessee are in violation of the relevant express provisions of the statute. Details of the provisions violated by the assessee are as under : "A. We have perused the said para 4 on page 7 of the paper book ie Auditor's Report vide the letter dt 18th October 2004 and find item 1 relates to extra depreciation and the same read as under. "1. The company has identified certain items of Plant and Machinery the value of which was not in consonance with its real value. Hence company has claimed extra depreciation on the same in the books of accounts. The said depreciation is accounted below the line...... This depreciation is not in conformity with the concept of block of assets. " From the above the assessee is aware that the claim of depreciation on the wrong WDV figures of the 'block of assets' is not as per the provisions of section 43(6) of the Act. By claiming the depreciation wrongly, the assessee preferred real value demonstration at the cost the compliance to the provisions. We have also perused the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paying the same with in the time permitted under the Act. C. Finally, we have gone through the provisions of section 145A of the Act in connection with the claim of non inclusion of the Excise duty and relevant provisions are 145A(b) and the assessee is under obligation of the statute to include the same in valuing the closing stock and it is an admitted fact the same is not done. 11.Keeping the above rival positions of the parties in dispute and violation of law in mind, we have perused the decisions relied on by the parties. So far as the decision of the Kanbay Software India P Ltd vs DCIT (122 TTJ 721) is concerned, we find it is the case where the assessee filed the revised return of income, filed the explanation for the revised claim and said explanation is not found to be false as the claim of deduction u/s 10A has support of some possible interpretation of CBDT circular in its favour. There is irrevocable act of filing of the revised return of income in this case, which is statutorily approved. Whereas in the assessee's case, the section 43(6) provides for the definition and it an exhaustive definition and the assessee clearly violated in decreasing the cost of asset by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. Thus the claim is patently wrong. In such a situation, the finding of the CIT (A) that there is no wilful negligence by the assessee is totally misplaced. 8. In matters relating to the provisions of section 271(1)(c), the wilfulness of the assessee, in concealing the income or in furnishing of inaccurate particulars, is not essential in. Relevant provisions of said section and the Explanation 1 are important and they read as under. " 271(1) If the assessing officer or the commissioner (Appeals) or the commissioner in the course of any proceedings under this Act, is satisfied that any person- (a)... (b)... (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, (d).. he may direct that such person shall pay by way of penalty,-- Explanation1.- where in respect of any facts material to the computation of the total income of any person under this Act,- (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or commissioner to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Dilip N Shroff (161 Taxmann 218) (SC) too.The gists of the said judgment in the case of Dharamendra Textiles Processors (supra) and relevant paragraphs are as under. "Absence of specific reference to mens rea in provisions of penalties is not a case of casus omisus. In fact, the provisions with expression 'liable to pay penalty', by no stretch of imagination, be said that the adjudicating authority has even a discretion to levy less than what is legally ad statutorily leviable (para 12). It is a well-settled principles, in law, that the Court cannot read anything into a statutory provision or a stipulated condition which is plain and unambiguous. A statute is a determinative factor of the legislative intent (para 13). It is significance to note that the conceptual and contextual difference between section 271(1)(c) and section 276C was lost sight of in Dilip N Shroff's case (para 24) The explanations appended to section 271(1)(c) entirely indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars of income while filing return. The judgment in Dilip N Shroff's case (supra) had not considered the effect ad relevance of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d bonus as a deductible expenses, which is not an allowable expenditure and liable to be disallowed u/s 43B of the Act. The claims are patently wrong and ex facie bogus in the language of the Delhi bench decision in the case of Tel-Abridge International Limited (supra). It is not the case of the assessee that the he is not aware of the provisions and the case of the assessee is that he wants to project the real value of the fixed assets, in our words, even it means violation of the enshrined legal provisions. 13.We have so far discussed the fact of blatant violation of the provisions of 43(6)(c) on the issue of extra depreciation, 43B on the claim of unpaid bonus and 145A(b) on non inclusion of excise duty. We have also examined the scope of 271(1)(c) in the light of the apex court's judgments. As on date and as per the latest apex court's judgment in the case of Atul Mohan Bindal (supra), the law is that the penalties u/s 271()(c) have to be decided in the light of the apex court's judgments in the case of Dharmendra Textile processors (supra) and the Rajasthan Spinning & weaving Mills (supra). It was also held that the judgment in the case of Dilip N Shroff is not a good law. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t agree with the above explanation as the assessee is well aware of the fact of violation as informed to the assessee by the Auditors vide the letter dt 18th October 2004 as per the extraction above. The word 'deliberate' as defined in the Oxford dictionary are that 'done consciously and intentionally or careful and unhurried'. In the instant case Auditors have informed the assessee the violations relating to claim of extra depreciation and assessee had sufficient time to discuss or deliberate on the consequences of such a wrong claim, which assessee describes as an error. This being the position, we have perused the impugned order and find that the CIT(A) relied on the judgment of the Dilip N Shroff (supra) while deleting the penalties and he did not have the benefit of either Dharmendra Textile processors (supra) or Rajasthan Spinning & weaving Mills (224 CTR 1)(SC) or the latest judgment of Atul Mohan Bindal (supra). As such, the Apex court felt need of remanding the judgment of the Delhi High Court, which was decided based on the judgments in the case of Dilip N Shroff (supra). Regarding the issue of levy of penalty in cases of assessment, which resulted in reducing of losses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther been held that a mere making of a claim which is not sustainable in law by itself will not amount to "furnishing of inaccurate particulars" regarding the income of the assessee. Such claims made in the return, therefore, cannot amount to furnishing of inaccurate particulars. He submitted that in the instant case the Tribunal has recorded that all particulars were furnished. The only reservation of the Tribunal was that the assessee was making a legally unsustainable claim. This reservation is squarely answered by the Hon'ble Supreme Court in the decision cited (supra). He accordingly submitted that the penalty so levied by the AO and sustained by the CIT(A) should be deleted. 8. The learned DR on the other hand heavily relied on the order of the learned CIT(A). She submitted that the language used in the provisions of section 271(1)(c) are very clear and unambiguous. Referring to the finding given by the Tribunal she submitted that the Auditors in their report has mentioned that the extra depreciation claimed by the assessee on account of revaluation of certain plant and machinery is not in conformity with the subject of block of assets. Further, the Tribunal has held that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any details supplied by the assessee in its return are incorrect or false. Further according to the learned counsel for the assessee a mere making of a claim which is not sustainable in law by itself will not amount to furnishing of inaccurate particulars regarding the income of the assessee. It is the submission of the learned DR that the above cited decision is distinguishable and not applicable to the facts of the present case. 10. We find the Tribunal in the order dated 29-01-2010 extracted the report of the Auditors which read as under : "1. The company has identified certain items of Plant and Machinery the value of which was not in consonance with its real value. Hence company has claimed extra depreciation on the same in the books of accounts. The said depreciation is accounted below the line...... This depreciation is not in conformity with the concept of block of assets. " 11. We find despite such observation by the Auditors as mentioned above the company has not reduced the excess claim of depreciation. We find the Tribunal at page 12 of the order has also observed as under : "Secondly, regarding the explanation of no deliberate intention to mislead the revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; (1) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under s.271(1)(c). If we accept the contention of the Revenue then in case of every return where the claim made is not accepted by AO for any reason, the assessee will invite penalty under s.271(1)(c). That is clearly not the intendment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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