9911796707
TMI Blog2012 (10) TMI 1009X X X X Extracts X X X X X X X X Extracts X X X X ..... take of claim of depreciation in respect of imported car and land included in the block of buildings had come to the notice of the auditors during the audit of subsequent year i.e. year ended 31.3.2006 and in the return of income filed for the assessment year 2006-07, the assessee had suo moto reduced claim of deprecation by ₹ 18,20,000/- and paid additional tax thereon while filing the return for the A.Y. 2006-07 which came to be filed on 31.10.2006. This fact was duly brought to the notice of the Assessing Officer during the assessment proceedings for assessment year 2005-06 vide letter dated 26.11.2007. During the course of penalty proceedings u/s 271(1)(c), it was duly explained to the Assessing Officer vide letter dated 16.6.2008 in continuation to earlier letter dated 18.1.2008 that the depreciation on imported car was inadvertently claimed and depreciation of ₹ 15 lacs on land was also claimed inadvertently. Regarding depreciation on land, the assessee had during the year purchased a building for ₹ 2,51,80,502/- (which included land) and while finalizing the account as on 31.3.2005, depreciation was taken as 10% of entire purchase price of the building with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in holding that the factum of concealment of income had been fully established and the levy of penalty u/s 271(1)(c) was justified. I am fortified in this view by the ratios decidendi laid down in the cases reported as Western Automobiles (India) vs. CIT (1978) 112 ITR 1048 (Bom.); Durga Timber Works vs. CIT (1971) 79 ITR 63 (Del.); Addl.CIT vs. Smt. Chandrakanta Anr. (1992) 205 ITR 607 (MP); S.S. Ratanchand Bholanath vs. CIT (1994) 201 ITR 682 (MP); CIT vs. Sree Krishna Treading Co. (2002) 253 ITR 645 (Ker.); Electrical Agencies Corporation vs. CIT (2002) 253 ITR 619 (Del.); K.P. Madhusudanan vs. CIT (2001), 251 ITR 99 (SC) and Escort Finance vs. CIT, 28 DTR 293. In a nutshell, the concealment of income and furnishing of inaccurate particulars is established in respect of disallowance of depreciation. In view of these facts and the legal position cited in the preceding paras, I hereby uphold the action of the Assessing Officer. The penalty levied is thus upheld. 4. Still aggrieved, assessee has come up in further appeal and while reiterating the submissions as made before the Assessing Officer and before Ld.CIT(A), the assessee has also relied upon the following decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciation was claimed on the basis of mere mis-conception of facts and there was no mala-fide involved. In the case of Zoom Communication Pvt. Ltd. (supra), consideration was completely different and since there is no mala fide involved in this case and principle laid down by the Hon ble Supreme Court in the case of CIT vs. Reliance Petro Products Pvt. Ltd. (supra), is fully applicable, so, in view of the same, it was submitted that penalty imposed u/s 271(1)(c) and confirmed is unjustified and may be deleted. Further, reliance was placed on CIT vs. Glow Tech Steels (P) Ltd., 280 ITR 133 (Guj.), 277 ITR 335 (MP), and Concord of India Insurance Co. Ltd. vs. Smt. Nirmala Devi Others, 118 ITR 507 to plead for deletion of the impugned penalty. 6. Ld.DR relied upon the orders of authorities below, has pleaded for confirmation of the impugned order. It was further submitted that all the case laws being cited herebefore this bench was cited before CIT(A), who, while considering the facts of the case as well as case laws and by discussing the issue elaborately in detail and placing reliance on the case laws cited in the order passed by the CIT(A) has rightly concluded to confirm the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Act that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. It is settled position that assessment proceedings and penalty proceedings are separate and distinct and as held by Hon'ble Supreme Court in the case of Ananthraman Veerasinghaiah Co. Vs. CIT, 123 ITR 457, the findings in the assessment proceedings cannot be regarded as conclusive for the purposes of the penalty proceedings. It is also well settled that the criterion and yardsticks for the purpose of imposing penalty u/s 271(1) (c) of the Act are different than those applied for making or confirming the additions. It is, therefore, necessary to re-appreciate and reconsider the matter so as to find out as to whether the addition or disallowance made in the quantum proceedings actually represents the concealment on the part of the assessee as envisaged in sec. 271(1)(c) of the Act, and whether it is a fit case to impose the penalty by invoking the said provisions. The provisions of section 271(1)(c) of the Act stipulate that if the Assessing Officer or the CIT(Appeals) or the Commissioner, in the course of proceedings under this Act, is satisfied that any perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he instant case, the assessee discharged the onus cast on it in terms of explanation 1 to sec. 271(1)(c) of the Act. Hon ble Supreme Court in the case of Dilip N. Shroff v. Jt . CIT [2007] 210 CTR (SC) 228 : [2007] 291 ITR 519 (SC) while considering the scope of these provisions u/s 271(1)(c) of the Act observed in the following terms: The legal history of sect ion 271(1) (c) of the Act traced from the 1922 Act prima facie shows that the Explanations were applicable to both the parts. However, each case must be considered on its own facts. The role of the Explanation having regard to the principle of statutory interpretation must be borne in mind before interpreting the aforementioned provisions. Clause (c) of sub-sect ion (1) of section 271 categorically states that the penalty would be leviable if the assessee conceals the particulars of his income or furnishes inaccurate particulars thereof . By reason of such concealment or furnishing of inaccurate particulars alone, the assessee does not ipso facto become liable for penalty. Imposition of penalty is not automatic. Levy of penalty is not only discretionary in nature but such discretion is required to be exercised on the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. In the case under consideration, there is nothing to suggest that the assessee furnished any inaccurate particulars or concealed the particulars. Admittedly, the claim for depreciation was there in the documents forwarded with the return. In this view of the matter, no fault can be found with the claim of the assessee that it had claimed the deduct ion in a bona fide manner. 12. In the case under consideration, it is noted that the assessee had given all the particulars of income and had disclosed all facts to the AO in relation to claim of depreciation. Mere disallowance of a claim will not amount to filing of inaccurate particulars of income. It can at best be a wrong claim not a false claim . In such circumstances, Hon ble Delhi High Court held in the case of Commissioner of Income-Tax vs. Bacardi Martini India Limited., 288 ITR 585(Del) that no penalty was leviable. In CIT vs. Harshvardhan Chemicals Minerals Ltd. (259 ITR 212) (Raj), Hon ble Rajas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 Section 271(1)(c). If we accept the contention of the Revenue then in case of very Return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under Section 271(1)(c). That is clearly not the intendment of the Legislature. 11. In this behalf the observations of this Court made in Sree Krishna Electrical v. State of Tamil Nadu Anr. [(2009) 23VST 249 (SC)] as regards the penalty are apposite. In the aforementioned decision which pertained to the penalty proceedings in Tamil Nadu General Sales Tax Act, the Court had found that the authorities below had found that there were some incorrect statements made in the Return. However, the said transactions were reflected in the accounts of the assessee. This Court, therefore, observed: So far as the question of penalty is concerned the items which were not included in the turnover were found incorporated in the appellant's account books. Where certain it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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