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TMI Blog2005 (10) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The relevant and material facts for the disposal of this ground of appeal are that the return declaring a loss of ₹ 6,79,41,607was filed by the assessee. The Assessing Officer concluded the assessment at a total loss of ₹ 5,25,00,280. The assessee has claimed 60 per cent depreciation on the item like foot, paddle, UPS etc. by treating it as a part of the computer. However, the Assessing Officer restricted the depreciation @ 25 per cent by treating it as a plant and machinery and not as a part of computer. 3. On appeal, the CIT (Appeals) confirmed the view of the Assessing Officer. The Assessing Officer initiated penalty proceedings against the assessee under section 271(1)(c ) of the Income-tax Act, 1961 [hereinafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of the appellant s belief that being items that helped the appellant in its computer operations in its business they were entitled to depreciation on the same rate as computers /data processing equipment and that for this purpose they were to be treated as computers. The appellant was of the view that these equipments were used for hearing and processing the voice received from the external source and hence could have been shown under the block of data processing equipment. Similarly the 400 KVA Voltage Stabilizer having value of ₹ 4,50,000 and UPS battery of ₹ 52,000 were used to control the voltage fluctuation to allow smooth processing on the computer. While I have agreed that these assets were not entitled to dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds and carefully going through the orders of the tax authorities below. In the instant case, we find that there is no concealment on the part of the assessee because he has furnished all the details with regard to the assets, including the block and the rate of depreciation claimed in his return. At the most the assessee s claim of depreciation @ 60 per cent could be treated to be wrong belief that items that helped the assessee in its computer operations in his business were entitled to depreciation on the same rate as computers/data processing equipment and that for this purpose these were to be treated as computers. The assessee was of the view that these equipments were used for hearing and processing the voice received from the externa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of ITO v. Shri Badan Singh, Gurgaon in [I.T. Appeal No. 3088 (Delhi) of 2004] pertaining to assessment year 1996-97 [order dated May, 2005] and the Tribunal held that in case the Assessing Officer has not recorded any specific satisfaction as warranted under section 271 of the I. T. Act while framing the assessment the jurisdiction assumed by the Assessing Officer in initiating the penalty proceedings against the assessee under section 271(1)(c) is bad in law and the penalty imposed by the Assessing Officer is liable to be cancelled by making the following observations in that order :- On going through the order of assessment passed by the Assessing Officer we find that in the entire order the Assessing Officer has not recorded h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order did not record the satisfaction as warranted by section 271 for initiating proceedings. The Tribunal was justified in cancelling the penalty. No question of law arose from its order. In its decision their Lordships also referred to 44 ITR 739 (SC), 92 ITR 513 (P H) and 86 ITR 557 (SC). (b)In Diwan Enterprises v. CIT and Others 246 ITR 571 (Delhi) their Lordships held as under : As regards Section 271(1)( c), the Assessing Officer had nowhere recorded till the conclusion of the assessment proceedings his satisfaction that the assessee had concealed the particulars of his income or furnished inaccurate particulars of such income. This was a jurisdictional defect which could not be cured. The initiation of the penalty proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not recorded the specific satisfaction during the course of assessment proceedings the penalty is still leviable under section 271 (1)( c) of the Act because the satisfaction recorded by the Assessing Officer stands revealed in the penalty notice issued against the assessee as well as in the penalty order imposed by the Assessing Officer as well as in the assessment order while making addition/disallowance, does not appear to have much force because their Lordships of Delhi High Court in their above decisions (supra ) after considering these citations, have came to the conclusion that if the Assessing Officer had nowhere the satisfaction that the assessee had concealed the particulars of his income or furnished inaccurate particulars of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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