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TMI Blog2016 (7) TMI 737X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order framed under section 143(3) dt. 24- 12-2009 was also illegal, beyond jurisdiction and void ab-initio. 3. That having regard to the facts and circumstances of the case, the Id. CIT(A) erred in law and on facts in confirming the levy of penalty under section 271 (1 )(c) on the addition made in the assessment order under section 143(3) dtd. 24-12-2009 as the same addition is also contrary to law and facts. 4. That having regard to the facts and circumstances of the case, Id. CIT(A) erred in law and on facts in confirming the action of the Id. AO in levying penalty u/s 271(1)(c) which is bad in law being beyond jurisdiction and barred by limitation and contrary to the principles of natural justice and has been passed by recording incorrect facts and findings and without giving adequate opportunity to the assessee and the same is not sustainable on various legal and factual grounds. 5. That having regard to the facts and circumstances of the case, Id. CIT(A) has erred in law and on facts in confirming the action of the AO in imposing a penalty of Rs. 69,10,800/- that too without recording mandatory "satisfaction" as per law. 6. That the appellant company craves leave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that in assessment year 2006-07 also penalty of Rs. 1,91,33,400/- was levied by the AO on account of excess claim of depreciation of Rs. 5,42,93,162/- under TUF Scheme and capital subsidy of Rs. 25,50,000/- which was deleted by the Tribunal Delhi bench in order dated 01/02/2016 in ITA No. 4927/Del/2012 and, therefore, the issue being identical and bonafide mistake on the part of the assessee, the penalty levied by the AO and confirmed by the CIT(A) deserves to be deleted. 3.2 On the other hand, learned Sr. Departmental Representative relying on the order of the authorities below submitted that same mistake was committed by the assessee in assessment year 2006-07, how it was repeated again in assessment year 2007-08 and, thus, it cannot be said that it was a bonafide mistake on the part of the assessee. 3.3 In the rejoinder, the ld. AR submitted that by the time the issue came up in assessment of assessment year 2006-07, the return of income for assessment year 2007-08 was already filed and the period for revising the return was also over and, therefore, there was no malafide intention on the part of the assessee to claim the excess depreciation and it was only bonafide mistak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from Bank under TUF Scheme, it was eligible for depreciation @ 50% on the machinery purchased. The claim of depreciation was not altogether bogus. The dispute was only with respect to the rate of depreciation. The belief of the assessee is not found to be untrue or false by the A.O. On these facts it cannot be said that assessee has furnished inaccurate particulars and is therefore liable to penalty u/s.271(1)(c ). In the case of Eagle Fibres Pvt. Ltd. (supra) the Coordinate Bench, on similar facts had deleted the penalty by holding as under:- "5. We have considered the material placed on record. As far as the Revenue's appeal in respect of excess claim of depreciation on machinery is concerned, the A.O. had made a disallowance of depreciation of Rs. 18,04,688/- primarily on the ground that the depreciation on machinery and plant (TUF Scheme) was allowable @ 25%, however, the assessee had claimed the depreciation at 50%. According to A.O., the eligible depreciation as per the Income tax Rules was only 25%, hence, the same was restricted to that extent only. The excess claim of depreciation was affirmed by the Ld. CIT (A) in first appeal. Consequent thereupon the A.O. has though i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garment sector which are purchased under TUFS on or after 18 ITA No. 4927/Del/2012 18 first day of April, 2004 are eligible for 50% depreciation. The assessee did not provide any details as if the machineries claimed to have been purchased during the year under consideration is covered by TUFS. In absence of any evidences/documents it could not be ascertained as if machineries are eligible under TUFS or not. Therefore, AO was of the view that it was established that the assessee-company engaged in the field of texturising the POY which was not covered by either of the process as covered by the provision of Rule 5 of the Income Tax Rules. Hence, depreciation claimed on plant and machinery at Rs. 48,35,632/- being 50% of WDV at Rs. 96,77,264/- was restricted to the depreciation allowable at normal rate as prescribed for the block of asset under the head "Plant and Machinery" @ 15% on the WDV which comes out at 14,50,690/-. Accordingly, the excess depreciation claimed by the assessee-company which comes out at Rs. 33,84,942/- (being Rs. 48,35,632/- - Rs. 14,50,690/-) was disallowed and added to the total income of the assessee. 3. Subsequently AO initiated penalty proceedings u/s. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-fide and whether all the material facts relevant thereto have been furnished and once it is so established, the assessee cannot be held liable for concealment penalty u/s. 271(1 )(c) of the Act. Since all the material facts relevant to the said claim had been furnished by the assessee, in our opinion it is not a fit case to attract the levy of penalty u/s. 271 (1)(c) of the Act. A mere rejection of the claim of the assessee by relying on different interpretations does not amount to concealment of the particulars of income or furnishing inaccurate particulars of income, by the assessee. When two views, are possible, no penalty can be imposed, is a principle that has been enunciated in the decision in the case of CIT v. P.K. Narayanan [1999] 238 ITR 905 (Ker) Hon'ble Punjab & Haryana High Court in the case of CIT vs. Ajaib Singh & Co. (2001) 170 CTR (P & H) 489: (2002) 253 ITR 630 (P & H) have observed that merely because certain expenses claimed by the assessee are disallowed by an authority, it cannot mean that particulars furnished by the assessee were wrong. It was held that mere disallowance of expenses per- se cannot be meant that assessee has furnished inaccurate particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X
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