TaxTMI 
TaxTMI 
2010 (2) TMI 863
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....levy of penalty under sec.271(1)(c) of the Act. 3. The assessee is engaged in the business of leasing and financing. The assessee claimed depreciation of Rs.10,70,000/- @ 100% in respect of one sugar mill roller leased out to M/s. Mahalaxmi Sugar Mills Co. Ltd. (MSMC). During the course of assessment proceedings the Assessing Officer found that the said roller was purchased for a sum of Rs.10,70,000/- from Rachna Pvt. Ltd. on 2.6.1995 who in turn purchased it from M/s. Vipin International Pvt. Ltd. on 16.9.1994 for a sum of Rs.2,50,000/- and M/s. Vipin International Pvt. Ltd. had purchased it for a sum of Rs.70,600/- from M/s. Mahalaxmi Sugar Co. Ltd. on 30th July, 1994. The Assessing Officer also found that all these concerns bel....
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....lted into computing the total income at Rs.5,65,300/- against Rs.9,22,120/- computed by the Assessing Officer. 4. The Assessing Officer in the penalty proceedings held that the assessee deliberately furnished inaccurate particulars of income to the tune of Rs.10,70,000/- being excess depreciation claimed and interest income to the tune of Rs.1,34,820/- not offered. The total Rs.12,04,820/- was considered to be income in respect of which the assessee has concealed the particulars by furnishing inaccurate particulars of income and penalty was levied under section 271(1)(c) of the Act. Before the learned CIT(A) the assessee not only challenged levy of penalty but also argued that penalty if leviable can only be restricted to the exte....
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....se rent offered for 3 years Rs.12,96,840/- Depreciation claimed Rs.10,70,000/- Total income Rs.2,26,840/- Thus the claim of the assessee was bona fide. Even there is difference of opinion between the Assessing Officer and the Tribunal. The Assessing Officer had held the transaction to be lease transaction whereas the Tribunal has held the transaction to be a financial transaction. However, whether the transaction is a finance transaction or lease transaction is not the subject mater of dispute. The dispute was with reference to the cost to be adopted for the purpose of claim of depreciation. Just as the assessee claimed higher cost, higher amount of lease rental was offered for tax and that too much prior to the order of t....
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....able for both the disallowances/additions. In reply, the learned counsel for the assessee submitted that the lease rentals were already offered for tax and since the same were reduced to that extent, the penalty is not sustainable. 7. We have carefully considered the relevant facts, arguments advanced and the case laws cited. We are in agreement with the submissions made on behalf of the assessee. The subject matter of dispute before the Tribunal was as to what is the amount on which the depreciation is allowable and not whether the transaction is a lease transaction or a financing transaction. The Tribunal has ultimately held the transaction to be financing transaction. This itself shows that the view of the assessee that there w....
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.... in the ultimate analysis the income offered by the assessee is the same as directed to be computed by the Tribunal, the assessee cannot be fastened with further liability of penalty merely because the income in one year is higher than that offered but in subsequent year the income offered by the assessee is higher than that assessable. It is not the case that higher income was offered in subsequent years on receipt of order of the Tribunal. Income was offered in regular course by showing the entire lease rental as income. Therefore, the assessee having offered an explanation which is also substantiated, which is bona fide and since all the facts relating to same and material to the computation of total income have been disclosed by him, ev....