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TMI Blog2017 (2) TMI 1238X X X X Extracts X X X X X X X X Extracts X X X X ..... inable. Therefore the penalty u/s 271(1) (c) is definitely cannot be sustained in absence of cross examination. The assessee has sought to explain by way of evidences as noted in aforesaid paras that actual generation of electricity of 402 units has been shown for the month of September-2004. The invoices of the supplier of the machinery is also prior to the purported date of installation on 30/09/2004. The assessee has offered some explanation on deficit noted by the ITAT towards transportation and insurance. The explanation offered by the assessee is somewhat plausible particularly in the context of penal provisions of section 271(1)(c) of the Act. Needless to say, penalty proceedings are independent of assessment proceedings and it is well settled that concealment of income cannot be automatically inferred on the basis of additions/disallowance in the quantum assessment without being proved otherwise. In other words, imposition of penalty is not an automatic consequence of the assessment proceedings. The penalty cannot be levied as a matter of course on the ground that quantum additions have been confirmed by the superior authority. The assessee in the instant case has provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct dated 08/05/2015 was framed whereby penalty on the excess depreciation claimed of ₹ 2,20,10,209/- quantified at ₹ 66,03,063/- being 100% of the tax on concealed income was imposed. The relevant operative para of the penalty order of the AO is extracted below:- a. Disallowance out of claim of depreciation on Wind Mill: During the course of assessment, it was noticed that the assessee had claimed depreciation @ 80% in respect of Wind Mill which was purchased from M/s. Suzlon Energy Ltd. Its erection/installation has been made at village Soda in the Jaisalmer District of Rajasthan. On verification of the papers filled during the course of assessment proceedings, it was seen that the invoice was prepared by the said M/s. Suzlon Energy Ltd. On 25th September 2004 and as per the said invoice, the wind mill I n question was to be dispatched by road from Daman Factory to the said village in Rajasthan. As per order invoice dated 27th September to 30th September 2004 the said wind mill has been tested and commissioned on 30th September 2004. To substantiate its claim of having installed and commissioned the said wind mill on or before 30th September 2004, the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnment as they are preparing for filling the appeal in the High Court. The case was adjourned up to 01/05/2015. The assessee filled a letter on 01/05/2015 asking further adjournment for 15 days. In view of the time limit for finalizing the penalty proceeding and despite ample and adequate opportunity, there is no alternative left than to finalize the penalty proceeding on the basis of material available on record. 6. Here, it is to be noted that the matter would not have come to light if the case had not been come up for scrutiny assessment. The assessee himself has not furnished all the true facts relating to his income. Accordingly, the penalty proceeding u/s 271(l)(c) of the Act is fully justified. 7. In view of the provision of section 271(1) (c) it is clear that it is not levied on the above grounds only. Section 271(l)(c) of the Act is very clear in wording and it states that- 271. (1) if the Aseessing Officer or the Commissioner (Appeal) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person- .. (c) has concealed the particulars of his income or furnished inaccurate particulars of such income . He may direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2. Ground No.3 of the appeal is that Ld.AO erred in holding that appellant has submitted inaccurate particulars of income by claiming higher depreciation i.e. 80% on the windmill than the allowable depreciation i.e. 40%. I have also gone through the orders passed by Assessing Officer, CIT (A) and the Hon'ble Tribunal in the quantum appeal. Appellant had acquired a Windmill for ₹ 5,50,25,522/- from M/s. Suzion Energy Ltd erected and installed at Village Soda, Jaisalmer, Rajasthan. Appellant claimed depreciation @ 80% for the year on it as windmill has been tested and commissioned on 30.09.2004 as per wind project commissioning certificate issued by Executive Engineer, Barmer Rajasthan. Assessing Officer restricted the claim of depreciation @ 40% instead of 80% claimed by the appellant on the basis of some document found at the maintenance department of suzlon Industries at time of survey on that company u/s 133A of the act and report prepared by the ADIT (Inv.). It was alleged in that report as noted by AO that the certificates of commissioning are issued in routine manner without physical verification of site. Further, in the statement prepared by MIS Operator of Suzl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO at the time of verification of claim of the depreciation. The ownership of the windmill is not doubted by any of the authorities. Only the matter of dispute is the date of installation. As per Appellant it is before 30.09.2004 and as per department it is after 30.09.2004. It is also contended by the assessee that the commissioning certificates issued by the committee of many persons including the government officials it cannot be said that installation certificate is issued without due care. Further installation certificate also substantiated by the generation of electricity units which is also certified by these persons. While supporting the claim assessee relied upon three decision of high courts where the installation and commissioning certificates issued by the government officials is considered as the correct date of the installation. Merely because the claim of the assessee was found to be on installation and commissioning certificate issued by the committee of various persons including government officials, which was preferred by AO over the statement found from one of the maintenance engineer of Suzlon Limited and disallowed the claim, it cannot be said that claim o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l)(c). That is clearly not the intendment of the Legislature. Therefore merely because the claim of the depreciation made by assessee is confirmed, it cannot invite penalty u/s 271(1)(c) of the Act. Therefore following: the Supreme Court decision also the order of penalty cannot be sustained. Further the issue is also covered in favour of the assessee in view of decision of Honourable supreme court in case of Price Water House Coopers Pvt. Ltd. V CIT [2012] 25 taxmann.com 400 as all-the documents were furnished and available and even in audit financial statements and return of income the date of addition was 30.09.2004. The contents of the Tax Audit Report suggest that there is no question of the assessee concealing its income. It, is not concealing but submitting the complete evidence including the documents which are not the responsibility of the assessee in the form of transport vouchers and delivery challans of the supplier's transporters and insurance details which was to be obtained by the supplier. Hence, no penalty can be levied u/s 271(1) (c) for a bonafide claim. AO has levied penalty for furnishing of inaccurate particulars of income and also for concealmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court and various decision of ITAT depreciation is allowable to the assessee as the electricity board has certified the date of commission of the windmill or stating that commissioning certificate issued by Govt. Authorities shall be conclusive evidence of installation and commissioning of Windmill. Though disallowance of depreciation is confirmed by hon. ITAT in appellant's case but it is no where alleged by any authority that documents submitted by appellant are false or misleading. As regards the furnishing of inaccurate particulars, no information given in the Return was found to be incorrect or inaccurate. The words inaccurate particulars mean that the details supplied in the Return are not accurate, not exact or correct, not according to truth or erroneous. In the absence of a finding by the AO that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false, there would be no question of inviting penalty u/s 271(l)(c). By no stretch of imagination can the making of an incorrect claim in law tantamount to furnishing inaccurate particulars. Therefore on this score also the penalty order does not stand. Further, the purchase of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he penalty order passed by AO is not sustainable. Appellant has contended that no penalty should be levied as the appeal is admitted by High court and substantial question of law is framed which makes the issue debatable. AR of the appellant has brought before me the decision of Honourable Gujarat high court which says that merely on admission of the appeal of the assessee it cannot be said that issue is debatable and penalty u/s 271(1) (c) is not sustainable. The argument raised before me is that it is not the mere admission of the appeal but the substantial question admitted by the Honourable High court a and also the second issues admitted by the honourable high court on the perusal of evidence by Hon ITAT coupled with the issues of the depreciation both the issue makes that the issue is debatable. I have carefully perused that decision of Honourable High court and here it is not the case that only argument of the assessee is that as the appeal of the assessee is admitted before high court no penalty shall be levied Further, against the order of Tribunal appellant has preferred an appeal before Hon'ble High Court of Gujarat and the same is admitted wherein substantial que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be upheld. 8. The Ld.AR for the assessee Mr.Ankit Gokani, on the other hand, submitted that the thrust of the argument on behalf of the Revenue hinges around the order of the ITAT in quantum assessment. The Ld.AR submitted that the assessee has claimed depreciation on wind-mills. The impugned wind-will was commissioned on 30/09/2004 which was substantiated by a certificate dated 04/10/2004 issued by the Executive Engineer. The acquisition of wind-will is supported by the invoice of the seller M/s.Suzlon Energy Ltd. on 25/09/2004 and some other invoices dated between 27/09/2004 to 30/09/2004. As per other invoices dated between 27/09/2004 to 30/09/2004, the said wind-will has been tested and commissioned on 30/09/2004. The asset was found to be physically existing. The copy of power purchase agreement and date-wise sale of electricity alongwith supporting etc. were also produced. The Ld.AR also adverted our attention to a report received by the assessee from the seller which was also surveyed by the Assistant Engineer Jodhpur Vithran Nigam Ltd. being monthly summary of generation of electricity for the month of September-2004. Referring to the aforesaid report, the ld.AR contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilized against the assessee in breach of principle of natural justice. The Ld.AR finally submitted that the judgement of Hon ble Madras High Court in the case of Kences Foundation reported in 289 ITR 509 (Mad.) is directly on the point. 9. We have carefully considered the rival submissions and perused the orders of the authorities below in quantum assessment and penalty proceedings. The limited issue that arises for determination is whether in the facts of the case, reduction of claim of depreciation by 50% on windmill calls for imposition of penalty towards such excessive claim or not. As noted in the earlier paras, the claim of depreciation of the assessee was scaled down to 50% by AO on the ground that the wind-mill has been installed after 30/09/2004 and accordingly was put to use for less than 180 days. The CIT(A) allowed the full claim of the assessee in quantum appeal. The ITAT again restored the order of the AO. Ostensibly, the issue involves some traces of uncertainties and debate on appreciation of facts. While the quantum assessment has been decided against the assessee on preponderance of evidence, it is permissible for the assessee in the penalty proceedings t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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