9911796707
TMI Blog1998 (4) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 1,81,30,363 (3) On furniture, vehicles office equipment ₹ 85,484 ₹ 2,08,45,093 2. The company had also claimed investment allowance on plant and machinery amounting to ₹ 1,08,79,252 in respect of the new unit. The AO completed the assessment on 30-3-1992 on an income of ₹ 4,64,09,745. While assessing the income at this figure, the AO did not inter alia, allow the following claims of the assessee : (1) Depreciation on all the assets ₹ 2,08,45,093 (2) Investment allowance on new unit ₹ 1,08,79,252 (3) Investment allowance on additions ₹ 4,65,036 to old unit 3. In the concluding paragraph of his order, the AO made observation to the effect that the assessee had neither installed nor used the plant and machinery in the New Unit, its claim for depreciation investment allowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he penalty after the relief allowed by the Tribunal in its second order, the AO in his order dated 30-10-1996 has still taken the income in respect of which inaccurate particulars have been filed at ₹ 2,63,97,203 and has computed tax on that at ₹ 1,41,73,532 and on that basis has worked out the minimum penalty at ₹ 78,91,702 (p.157 of paper book). 8. In this background, Shri Mehta submitted that since the AO had initiated the penalty proceedings only in respect of depreciation and investment allownce on plant and machinery of the new unit, there was no justification for his imposing the penalty with reference to the depreciation on other assets. 9. We have considered this submission of Shri Mehta and find force in it. However, since all other disallowances except depreciation on UHP furnace of the new unit, stand deleted, even on merits the penalty on the basis of disallowance of depreciation and investment allowance on other assets cannot be sustained. 10. Therefore, the only item which deserves our attention is assessee s claim for depreciation on UHP furnace which stands finally disallowed by the Tribunal and the question whether penalty u/s. 217(1)(c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ositively that it had done commercial user of the UHP furnace on 31-3-1989. At the same time the Tribunal had clearly held that the department had also not been able to prove its case. According to Shri Mehta, assessee s failure to prove the user may lead to disallowance of depreciation but it cannot lead to imposition of penalty u/s. 271(1)(c). 14. In this context, the ld. counsel further submitted that the notice of the AO did not specify whether the proceedings were for concealment or for filing inaccurate particulars of income. He referred to some case law to plead that such circumstances the imposition of penalty should be quashed. 15. He also referred to a number of decided cases of various benches of the ITAT, High Courts and Supreme Court, photocopies of which have been filed before us, to canvass that in the facts and circumstances of assessee s case, penalty u/s. 271(1)(c) cannot be sustained. 16. The ld. Departmental Representative, on the other hand, argued that user of the UHP furnace, as considered by the Tribunal in its detailed order dated 10-8-1993, was not proved. According to him, since as per p.109 of the paper book assessee s production on 25-3-198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and against the revenue. It is by now a settled law that whereas the onus of proving the claim for any deduction, exemption or allowance is on the assessee, the onus of proving that the assessee has concealed the income or has filed inaccurate particulars, always remains with the department. Even according to the provisions of Explanation 1 to sec. 271(1) (c), the burden from the assessee shifts to the department the moment the assessee is able to show that its claim was bona fide. In the instant case, we have given the various stages of assessment of assessee s income to indicate that assessee s claims were, in any case, such contentious issues that the various authorities could reject assessee s claim after very detailed arguments and, yet, had to rectify the mistakes committed by them to give further relief to the assessee. Then the Tribunal in its order dated 10-8-1993 disallowed the claim of depreciation on UHP furnace, yet, allowed depreciation on cranes, the disallowance of which had been upheld by the authorities upto CIT(A) s stage. Finally, the Tribunal vide its order dated 22-11-1995 allowed all the claims of the assessee regarding depreciation and investment allowace ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance on the ground that the relevant machinery had not been commissioned on or before 31-3-1986. That AO had also rejected the evidence in the form of log book, General Manager s certificate (which is there in assessee s case also) and technician s report and also initiated penalty proceedings. It was held that assessee s claim could not be disallowed. Again,the facts and circumstances in the case of Dy. Commissioner v. Texmo Industries (1995) 53 ITD 370 (Mad.) were similar. The Madras Bench of the Tribunal held that when assessee s claim for depreciation and investment allowance were bona fide, mere refusal of allowance for want of conclusive proof that machines were installed on date in question, could not be a basis for imposition of penalty under section 271(1)(c). In the case of Smt. Ramilaben Ratilal Shah v. Asstt. CIT (1998) 60 TTJ (Ahd.) 171, the Ahmedabad Bench of the Tribunal held that notings in diary could be sufficient evidence for making additions but not for imposing penalty under section 271(1)(c). In the case of Kejriwal Bros. v. Asstt. CIT (1997) 60 ITD 502 (Pat.) where the assessee had agreed to an addition of ₹ 5 lakhs to its income, the penalty under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted, the result would be that even if the assessee raises a bona fide contention that a particular item is not liable to be included in the taxable turnover, he would have to show it as forming part of the taxable turnover in his return and pay tax upon it on pain of being held liable for penalty in case his contention is ultimately found by the court to be not acceptable. That surely could never have been intended by the Legislature. 21. Taking into account all the facts and circumstances of the case as discussed above, we hold that the assessee had made bona fide claims for depreciation and investment allowance on its large number of items of plant and machinery and if depreciation on one item was not allowed at the Tribunal stage, against disallowance of both depreciation and investment allowance on all the items made by the AO, the assessee cannot be held to be liable for default under section 271(1)(c) even if it is read with Explanation 1 of that section. Since, we are cancelling the penalty on merits we do not consider it necessary to give our opinion regarding the legal implications of not specifying in the notice clearly whether the penalty was initiated for conceal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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