9911796707
TMI Blog2005 (11) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... 1995 at 'Nil' income. On first appeal, the Ld. CIT(A) set aside the assessment for reconsideration. During the second round of the assessment, it was found by the Assessing Officer that the assessee claimed depreciation of Rs. 32,77,267 despite the fact that in the year under consideration the company suspended its operation and no manufacturing activity necessitating the use of plant and machinery was undertaken. It was stated by the assessee that the mill was under suspension due to labour unrest. There were untiring efforts on the part of the directors of the company to resume the work and negotiations were going on throughout but due to differences in the stand taken by the labour unions among themselves, the work could not be resumed. However, the company was always ready to start the mill and kept ready the infrastructure including the Plant & Machinery for use. There was, therefore, not actual but passive use of the Plant & Machinery. During the year even though there was suspension of work by the labourers the company had to spend various establishment and other expenses to keep the mill ready for use, as and when the need arises. The reliance was placed on the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings initiated under section 271(1)(c) it was submitted by the assessee that in this case since no tax is payable, therefore, following the decision in CIT v. Prithipal Singh & Co. [2001] 249 ITR 670 (SC), the penalty is not leviable. It was further submitted by the assessee that the assessee was under the bona fide belief that the depreciation was allowable and the facts of depreciation were duly mentioned in the auditor's report and the depreciation was claimed in view of the decisions referred in the assessment order. It was further submitted by the assessee that filling up of pond was considered to be a revenue expenditure in view of the decision of Hon'ble Bombay High Court in Teksons (P.) Ltd v. CIT [1979] 120 ITR 745. It was also claimed by the assessee that the travelling expenditure had been legitimately claimed, therefore, there is no concealment on the part of the assessee. However, the Assessing Officer did not accept the assessee's explanation and was of the view that the claim of depreciation on the assets which was not used by the assessee due to suspension of work in the mill and the claim of pond filling expenditure is clearly capital in nature an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal. The Ld. Departmental Representative after relying on the decision cited in the order of the penalty and in the order of the Tribunal in quantum appeal also relied on the decision in CIT v. Bijay Iron Stores [2001] 252 ITR 408 (Cal), CIT v. Sree Krishna Trading Co. [2002] 253 ITR 645 (Ker.) and the decision of the Tribunal in Dy. CIT v. EIH Ltd. [IT Appeal No. 283 (Kol.) of 2005, dated 8-8-2005] for the assessment year 1998-99. He, therefore, submits that the penalty imposed by the Assessing Officer be restored. 6. On the other hand, the Ld. Counsel for the assessee while reiterating the same submissions as submitted before the Assessing Officer and the Ld. CIT(A) further submits that the depreciation was claimed as the assessee kept itself always ready to start the operation of the mill and for that purpose, the infrastructure including the plant and machinery had to be maintained and kept ready. He further submits that although the functioning of the mill was temporarily suspended but the company had to meet up various establishments and other expenses to keep the mill ready for the use and hence, it cannot be said that the mill was closed, more so, when it restarted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi) of 2000, dated May 11, 2004] for the assessment year 1996-67, Jt. CIT v. Aroh Trading (P.) Ltd. [2005] 96 ITD 79 (Mum.) the penalty is not leviable. He further submits that the Assessing Officer has not recorded any satisfaction in the assessment order, therefore, on this ground p also the penalty is not leviable. The reliance was placed on the decisions in CIT v. Ram Commercial Enterprises Ltd. [2000] 246 ITR 568 (Delhi), Diwan Enterprises v. CIT [2000] 246 ITR 571 (Delhi) and Jt. CIT v. Rakesh Fuel (P.) Ltd. [2005] 147 Taxman 109 (Delhi) (Mag.). The reliance was also placed on the decisions in CIT v. Onkar Saran & Sons [1992] 195 ITR 1 (SC), Brij Mohan v. CIT [1979] 120 ITR 1 (SC) and CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC). He, therefore, submits that the order passed by the Ld. CIT(A) in deleting the penalty be upheld. 7. We have carefully considered the rival submissions of the parties and perused the material available on record. We find that the facts are not in dispute. We further find that the assessee has filed annual report of the company disclosing complete facts including the financial statement of the company for the year ended 31-3-1992. We furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion that the claims of deductions on account of depreciation, filling up pond as revenue expenditure and travelling expenses were made under a bona fide belief that the same were allowable deductions therefore cannot be q discounted. In any event, all the details of the claim on account of depreciation are available and noticeable in para 12 to the Notes on Accounts and the computation of income, and in respect to filling up of the pond in para 11 to the Notes on Account. The figures relating to disallowance under rule 6D is also available on record in the Auditor's Report. As all the claims and figures are noticeable and available on record, it cannot be said that the appellant had falsely supplied or given inaccurate particulars of income or that it had concealed particulars of income. As claim of deductions may be allowable or disallowable. However, such claim cannot be said to be giving inaccurate particulars of income or concealing the particulars of income as it remains a claim only, to be allowed or disallowed depending on the facts of the case. In addition, a debatable issue cannot lead to a conclusion that inaccurate particulars of income or concealment had taken pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal before the Tribunal, the Tribunal held that it is a fit case for imposing penalty under section 271(1)(c) of the Income-tax Act but reduced to the minimum. 11. In the case before us, there is no material on record to show that the assessee has not disclosed all the particulars of his income or there is any admission by the assessee for concealing such income or there is no basis for the claim of depreciation, pond filling expenses and traveling expenses or the assessee's explanation was not found to be false, therefore, all the decisions relied on by the ld. Departmental Representative are distinguishable and not acceptable to the facts of the present case. 12. In the absence of any centrary material brought on record by the revenue against the finding of the ld. CIT(A) and keeping in view that the assessee was under the bona fide belief that depreciation, pond filling expenses and traveling expenses are allowable and such bona fide belief of the assessee was not found to be false at any stage, we are of the view that the assessee has not concealed the particulars of his income or furnished inaccurate particulars of such income. 13. We further find that there is no di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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