TaxTMI 
TaxTMI 
2010 (12) TMI 856
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....e assessee. The reply of the assessee was however, not considered by the AO as satisfactory and penalty was accordingly imposed vide separate order. Penalty order was challenged before the learned CIT(A) and it was submitted that in the assessee's case it has neither furnished any inaccurate particulars of income nor concealed any income. All the three items on which penalty has been imposed has been considered by the learned CIT(A) separately. The gist of the same is as under: (i) Claim of depreciation: It was submitted that the claim of depreciation on trial production was rightly made which was in accordance with law laid down by the Hon'ble Gujarat High Court in the case of Ashima Syntex Ltd. Therefore, the disallowance of depreciation on trial production was not warranted and no penalty should be imposed. It was alternatively contended that there exists a consistent controversy between trial production and commercial production and it was not a fraud on the part of the assessee to claim depreciation. It was also claimed that the claim of depreciation on the noodles manufacturing plant was made which was set up in the year of appeal. The production of manufactur....
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.... claim of the deduction and has not furnished any wrong particulars of income. It was further submitted that since the penalty proceedings are quasi criminal proceedings and that the assessee has not acted in conscious disregard of its obligations, therefore, penalty should not be imposed even if the assessee accepted the addition before the AO. It was further submitted that the AO granted relief on the basis of profit of undertaking less prorate administrative expenses of Central Office due to which claim was reduced. Therefore, assessee's claim was prima facie on correct, legitimate and bona fide claim. It was, therefore, explained that penalty should not be imposed on such a matter. The learned CIT(A) accepted the claim of the assessee and relied upon the decision of the Hon'ble Supreme Court in the case of Hindustan Steel Ltd. vs State of Orissa 83 ITR 26 and held that assessee's claim was not incorrect and that reply of the assessee has been accepted. Therefore, penalty should not be imposed on such an addition. The learned CIT(A) accordingly, canceled the penalty. 4. The learned DR challenging the order of the learned CIT(A) in canceling the penalty of all the items r....
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....rder and has held as under: "Held, that admittedly, in view of the provisions contained in section 40(a) (ii) of the Act, the amount of income-tax could not have been claimed as a deduction while computing income of the assessee. As regards the amount claimed on account of unusable and discarded assets, the Tribunal, was entirely incorrect in taking the view that the deduction claimed by the assessee was admissible to it under section 32(1) (iii). Clause (i) of sub-section (1) of section 32 relates to assets of an undertaking engaged in generation and/or distribution of power. Admittedly, the assessee-company was not engaged in generation and for distribution of power, during the relevant year. Thus, the provisions of clause (i) of sub-section (1) of section 32 would not apply in respect of the assets claimed to have become unusable and written off. Therefore, the assessee had no justification to claim this amount of Rs.13,24,539 as a revenue expenditure. In fact, the assessee did not claim, either before the Assessing Officer or before the Commissioner (Appeals) that such a deduction was permissible under section 32(1) (ii). It was also not the case of the assessee that it....
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....ty was rightly cancelled by the learned CIT(A). 6. We have considered the rival submissions and the material available on record. 7. The Hon'ble Supreme Court in the case of CIT vs Reliance Petroproducts Pvt. Ltd. 322 ITR 158 (SC) held that "A glance at the provisions of section 271(1) (c) of the Income-tax Act, 1961, suggest that in order to be covered by it, there has to be concealment of particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word "particulars" used in section 271(1) (c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnis....
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....e assessee commenced trial production is 360 Kgs. only which was not found sufficient to even start trial production. The Tribunal, therefore, opined that the departmental authorities were justified in incoming to the conclusion that the assessee has failed to satisfactorily prove that the trial production has in fact started. It was also held that there is no evidence like production report indicating the quality of raw material consumed and production of noodles and the names of dealers to whom the alleged noodles were distributed for marketing. The Tribunal ultimately held that the assessee is not entitled to depreciation as well as the claim of expenses in relation to the alleged trial production which is not supported by any evidence. The finding of fact recorded by the Tribunal in the case of the assessee thus proves that the claim of the assessee was in fact wrong. It is settled law that the findings given in the assessment order are relevant and have probative value. When the assessee produces no fresh evidence or presents any additional or fresh circumstances in the penalty proceedings, he would be deemed to have failed to discharge the onus placed on him and levy of penal....