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TMI Blog2016 (5) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... er only says that assessee has committed a default but what is the nature of default has not been discussed at all. The Assessing Officer is silent on exactly which provisions of section 271 (1 )(c), he is invoking to impose the penalty. This is not justified at all for imposition of penalty. Assessing Officer has not made out a case of what is the default committed and what is the provision of the Income-tax Act applicable in that default for imposing penalty. There is inadequate satisfaction of the Assessing Officer for imposition of penalty on facts also. I am satisfied that the evidences relied upon in the assessment proceedings are only indicative and do not go to establish non existence of pilot plants. In fact the evidence relied upon by appellant in the penalty proceedings, particularly, insurance documents which clearly mention existence of the plants at the sites, goes to establish the other way round. In such a situation, the confirmation of quantum addition is to our mind based upon a perception of preponderance of probabilities about existence or otherwise of the pilot plants. There is no conclusive deduction in the assessment order or in the first appellate order of q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings and on the basis of which the depreciation was allowed. There was no sufficient evidence / proof available before the AO to draw a reasonable opinion that income had indeed escaped assessment. Ld. AR invited our attention to the fact that the entire investigation report relied upon by the AO is based on statements and oral submissions of persons who are not even connected with the lease transaction between M/s. Western Paques India Limited (WPIL) and the assessee. It was further argued by ld. AR that the alleged non committal response of the WPIL representative in his statement dated 5-2-1996 has been stated selectively and out of context. It was further argued by ld. AR that the statement recorded by the AO on 21-2-1997 (and cited at page 11 of the assessment order) relates to the lease transactions of F. Y. 1993-94 (A. Y. 1994-95), which clearly shows a hastily drawn opinion and / or conclusion regarding income escaping assessment in the Appellant's case for A. Y. 1993-94. 6. In view of the above it was contended that the entire assessment proceedings be declared bad in law and therefore be quashed. 7. On merit it was argued by ld. AR that the CIT(A) erred in disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the bio gas plant. The Site Report No.31 clearly shows that no spot verification of the bio gas plant appears to have been conducted by the department. As per ld. AR the letter dated 19.2.96 from the MD of Satara SSK Ltd., on the basis of which the AO has denied depreciation to the appellant cannot be relied upon because in the said letter he has denied, Satara SSK Ltd. ever considering WPIL's proposal for setting up a bio-gas plant while at the same time vide his own earlier letter dated 31.1.94 addressed to WPIL has referred to a Board Meeting of Satara SSK Ltd. held on 31.1.94 accepting a proposal for energy generation from distillery spent wash. Having submitted a detailed explanation regarding this lease transaction vide letter dated 25.3.1997, the AO refused the appellant's request for an opportunity of being heard again and instead the assessment was completed in haste i.e. within 1 month of the reopening of the assessment and in disregard of the principles of natural justice. 9. With regard to decline of claim of depreciation in respect of Bio Gas Pilot Plant, located at Daulat S.S.K.Ltd., it was submitted by ld. AR that CIT(A) erred in disallowing the depre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Installation Certificate d) Delivery challan dated 2.2.93 for dispatching pilot plant material from Shirwal R&D Centre to the Resident Engineer WPIL Co. Niphad SSK Ltd. Nasik e) Lorry receipt dated 2.2.93 Ref.GC Note 57 of Manohar Transport Services Pune f) Letter dated 4.11.91. Ref.:WPIL/DDS/92-1011 from WPIL to the MD Niphad SSK Ltd. g) Letter dated 11.2.93 Ref.WPIL/DDS/K-137 from WPIL to Niphad SSK Ltd. h) Letter dated 7.8.93 Ref.Lagoon/93-94/3930 from Niphad SSK Ltd to WPIL i) Certificate dated 4.6.96 issued by the MD of Niphad SSK Ltd. The AO has however relied on the site inspection report compiled by the Pune ADIT wherein it was stated that no pilot plant was found on 9.2.96 by them. Further, they stated that the AO relied upon the statement of Shri Shantaram Laxman Satbhai, MD of Niphad SSK Ltd. which according to the AO confirmed the non-existence of a bio gas pilot plant after 1990 (i.e. "2 years starting from 1988"). Considering the documentary evidence mentioned above establishes the physical existence of the bi gas plant during the year in which the asset was purchased and leased to WPIL i.e. Financial Year 1992-93. The said bio gas pilot plant was dispa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant has not brought any new material or fresh evidence on record to substantiate or justify the claim of depreciation. The Assessing Officer has talked of the attitude of the assessee towards statutory provisions. He has relied upon one decision of Punjab High Court that mere offering of explanation does not absolve the assessee from liability of penalty. However, in the order imposing penalty, the Assessing Officer has not talked as to why penalty is irnposable. None of the facts of the matter has been discussed. Assessing Officer only says that assessee has committed a default but what is the nature of default has not been discussed at all. The Assessing Officer is silent on exactly which provisions of section 271 (1 )(c), he is invoking to impose the penalty. This is not justified at all for imposition of penalty. In my view, Assessing Officer has not made out a case of what is the default committed and what is the provision of the Income-tax Act applicable in that default for imposing penalty. There is inadequate satisfaction of the Assessing Officer for imposition of penalty on facts also. I am satisfied that the evidences relied upon in the assessment proceedings are only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, not exact or correct, not according to truth or erroneous, and unless there is a finding that any details supplied by the assessee in the return were found to be incorrect or erroneous or false, there would be no question of inviting the penalty u/s 271(1)(c). The Apex Court further held that mere making of the claim which is not sustainable in law by itself will not amount to furnishing inaccurate particulars of income of the assessee, and such claim made In the return cannot amount to inaccurate particulars. The Apex Court held that if the assessee has 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 claim was not accepted or was not acceptable to the revenue, that by itself would not attract the penalty u/s.271(1)(c). The Apex Court went on to hold that if the contention of the revenue is accepted then in case of every return where the claim made is not acceptable by the AO for any reason, the assessee will invite penalty u/s.271 (1 )(c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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