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TMI Blog2020 (11) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Revenue : Shri Michael Jerald (DR) ORDER PER AMARJIT SINGH, JM: The assessee has filed the above mentioned appeals against the different order passed by the Commissioner of Income Tax (Appeals)-16, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Ys. 2011-12 2014-15 in which the penalty levied by the AO has been ordered to be confirmed. ITA. NO.3467/M/2019 2. The assessee has filed the present appeal against the order dated 28.03.2019 passed by the Commissioner of Income Tax (Appeals)-16, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Y. 2011-12 in which the penalty levied by the AO has been ordered to be confirmed. 3. The assessee has raised the following grounds: - (1) The Ld. CIT(A)-16 has erred in confirming levy of penalty under section 271(1)(c) of the Income tax Act 1961 amounting to ₹ 34,19,860/-. b). Your appellant prays that the said penalty imposed u/s 271(1)(c) may be deleted. Your appellant craves leave to add, alter, modify or amend any ground of appeal. 4. The brief facts of the case are that the assessee filed its return of income on 29.09.2011 declaring total income at loss in sum of ₹ 1,59,26,705/-. The return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justice. However, on the other hand, the Ld. Representative of the revenue has strongly relying upon the order passed by the CIT(A) in question. The factual position is not in dispute that the assessee claimed the depreciation on set up box and on the control room equipment @ 60% which was disallowed and restricted to the extent of 15%. The ITAT Pune Bench in the case of Kanbay Software Enterprise Ltd. Vs. DCIT (122 TTJ 271 (ITAT Pune Bench) has given the following finding.:- 70. Before we part with the matter, we would like to make a couple of observations. Firstly, we may mention that, as we have stated earlier in this order as well, this appeal was taken up for hearing along with several other appeals relating to penalties under section 271(1)(c) of the Act. While deciding one aspect of this appeal, i.e., impact of Hon'ble Supreme Court's judgment in the case of Dharamendra Textile Processors (supra) on the legal framework relating to imposition of penalty under section 271(1)(c), we also had the benefit of arguments advanced by learned counsels, as also by the learned Departmental Representatives, in all those cases. We would like to place on record our deep appreciatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te to use the words and expressions employed in these rulings, in isolation, as complete exposition of law and as a blind man's walking stick, rather than luminosity of judicial knowledge with the benefit of which we have to perform our duties of office. 71. The appeal is allowed. 6. In the case of DCIT Vs. Apollo Hospitals Enterprises Ltd. (supra) the Hon‟ble ITAT Chennai Bench has held as under.:- 5. The facts of the present case are very simple. In Appendix I provided under rule 5 of the Income-tax Rules, 1962, different rates of depreciation are provided for different classes of machineries and assets. In the case of life saving devices the depreciation suggested is 40 per cent. There is no separate rate available in the appendix for hospital equipments as such. Therefore, obviously, the rate of depreciation applicable to hospital equipments, other than life saving devices , will be the general rate applicable to plant and machinery. 6. But, while computing and claiming depreciation, the assessee-hospital treated its entire equipments as life saving devices and claimed depreciation at 40 per cent. The assessee is not a factory or a manufacturing system so as to name i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by an assessee. 9. In the present case the assessee has furnished the entire details of the medical equipments deployed in its hospital. As far as that matter is concerned, there is no concealment and there is no furnishing of any inaccurate particulars. The assessee also has not claimed depreciation at a non existent rate. The assessee has not misrepresented any fact. Everything was open before the Assessing Officer. It is true that the assessee claimed depreciation at 40 per cent. on the entire medical equipment. That may be a wrong claim. But, that does not mean that the assessee has concealed its income or furnished inaccurate particulars. 10. The Revenue has relied on the decision of the hon'ble Supreme Court rendered in the case of Union of India v. Dharamendra Textile Processors [2008] 306 ITR 277/174 Taxman 571, wherein the hon'ble apex court has held that mens rea is not an essential ingredient for levying penalty under section 271(1)(c) of the Act, as it is in the nature of a civil liability. The present case does not reach to the point where the above decision should be considered by us. The above decision declares that mens rea need not be present in a ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng inaccurate particulars of such income . We do not think that such can be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In Commissioner of Income Tax, Delhi Vs. Atul Mohan Bindal [2009(9) SCC 589], where this Court was considering the same provision, the Court observed that the Assessing Officer has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income. This Court referred to another decision of this Court in Union of India Vs. Dharamendra Textile Processors [2008(13) SCC 369], as also, the decision in Union of India Vs. Rajasthan Spg. Wvg. Mills [2009(13) SCC 448] and reiterated in para 13 that:- 13. It goes without saying that for applicability of Section 271(1)(c), conditions stated therein must exist. 8. Therefore, it is obvious that it must be shown that the conditions under Section 271(1)(c) must exist before the penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind enactment of Section 271(1)(c) read with Explanations indicated with the said Section was for providing remedy for loss of revenue and such a penalty was a civil liability and, therefore, willful concealment is not an essential ingredient for attracting civil liability as was the case in the matter of prosecution under Section 276-C of the Act. The basic reason why decision in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai Anr. (cited supra) was overruled by this Court in Union of India Vs. Dharamendra Textile Processors (cited supra), was that according to this Court the effect and difference between Section 271(1)(c) and Section 276-C of the Act was lost sight of in case of Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai Anr. (cited supra). However, it must be pointed out that in Union of India Vs. Dharamendra Textile Processors (cited supra), no fault was found with the reasoning in the decision in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai Anr. (cited supra), where the Court explained the meaning of the terms conceal and inaccurate . It was only the ultimate inference in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t agree, as the assessee had 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 1/28/2020 C.I.T., Ahmedabad vs Reliance Petro products Pvt. Ltd on 17 March, 2010 https://indiankanoon.org/doc/1030377/ 5/6 up to the authorities to accept its claim in the Return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under Section 271(1)(c). If we accept the contention of the Revenue then in case of every Return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under Section 271(1)(c). That is clearly not the intendment of the Legislature. 11. In this behalf the observations of this Court made in Sree Krishna Electricals v. State of Tamil Nadu Anr. [(2009) 23VST 249 (SC)] as regards the penalty are apposite. In the aforementioned decision which pertained to the penalty proceedings in Tamil Nadu General Sales Tax Act, the Court had found t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 347 (SC) and also on the latest decision of the Hon'ble Supreme Court in the case of CIT (LTU) Vs. Reliance Industries Ltd. *2019+ 410 ITR 466 (SC). Thus, as per the settled law no disallowance u/s 36(1)(iii) of the Act is warranted on this issue. This ground is accordingly allowed in favour of the assessee. 55. G round No . 9 : - Ground No. 9 is general in nature and does not require any specific adjudication. This appeal of the assessee stands partly allowed. 9. The factual position as well as the legal position are on record. It is quite clear that the declining of the claim of depreciation of the assessee nowhere come within the ambit to levy the penalty u/s 271(1)(c) of the Act. Moreover, we find that in the case of the Fastway Transmission P. Ltd. (supra), the depreciation claim upon the set top box (STB) has been held justifiable @ 60%. Anyhow, the penalty is not justifiable, therefore, by relying upon the above mentioned law, we set aside the finding of the CIT(A) on this issue and delete the penalty. In the result, the assessee filed by the assessee is allowed. ITA. NO.3468/M/2019 10. The facts of the present case are quite similar to the fact of the case as narrated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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