TaxTMI 
TaxTMI 
2013 (7) TMI 379
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....,956/- claimed on plant and machinery. The penalty was levied of Rs.13,95,014/- being 100% of the tax to be evaded by order dated 31.03.2008. 3. The CIT (A) has granted the relief by holding as under :- "6.4. I have considered the submissions of the ld. Counsel and the facts on record. As per the facts on record, the present case is not a case of detection of receipts not reflected in Profit and Loss account return of income or bogus expenditure booked in Profit and Loss or making of a false claim, which is prohibited by the statute and therefore against the tenets of the Act itself. In the appellant's case the issue is whether claiming of depreciation, in the facts and circumstances of the case would amount to filing of inaccurate particulars of income, particularly when the facts relating to the issue stand disclosed in the return of income. 6.5 It is seen that on application of explanation 1 to section 271(1)(c) in the instant case there is no concealment of income or filing of inaccurate particulars of income. The AO's view that appellant has filed in rate particulars of income by claiming the inadmissible depreciation, hence penalty u/s 271 (....
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....ee} 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 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 the Assessing Officer for any reason} the assessee will invite penalty under section 271 (1)(c). That is clearly not the intendment of the Legislature II". 6.8 Similarly the Delhi High Court in the case of Zoom Communications Pvt. Ltd. 327 ITR 510 has observed that if the assessee has not concealed any material fact or the factual information given by the assessee has not been found to be incorrect, the assessee will not be liable to imposition of penalty u/s 271 (1)(c) even if the claim made by the assessee is unsustainable in law, provided that the asses....
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....table it could not be said that the assessee had concealed any income or furnished inaccurate particulars for evasion of tax, and in view of the finding of the Tribunal no case was made out for interference." 6.11 The Hon'ble Supreme Court in case of CIT VS. Reliance Petroproducts P. Ltd. 322 ITR 158 has held that penalty u/s 271 (1)(c) will not lie merely if an incorrect! inadmissible claim has been made in the return and when all material facts having been disclosed in the return of income. The Hon'ble Court has observed as under: "A glance at this provision would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The present is not a case of concealment of the income. That is not the case of the Revenue either. However, the Ld. Counsel for Revenue suggested that by making incorrect claim of the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of the word "particulars" is a detail or details (in plural sense); the details of a claim, ....
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....above at the time of hearing." 5. The only issue involved in the appeal is against the deleting of penalty imposed u/s 271(1)(c) of Income-tax Act, 1961 to the tune of Rs.13,95,014/-. 6. While pleading on behalf of the revenue, the ld. DR submitted that the assessee company has stopped manufacturing activities in the year 2000. The manufacturing activity has not started till date. The assessee has also sold land building and plant and machinery. Thus, there was no intention of assessee to restart the manufacturing activities. In such situation, claiming depreciation on the WDV during the year was completely a false claim. Therefore, the facts of assessee's case are nearer to the facts in the case of CIT vs. Zoom Communications Pvt. Ltd. reported in where the Hon'ble Delhi High Court did not accept the plea of inadvertence in making claim for deduction of income-tax as the circumstances in which the claim was made could not be explained. Similarly, the facts also falls within the ratio of decision of Hon'ble Delhi High Court in the case of CIT vs. Gurbachan Lal reported in 250 ITR 157 where it was held that initially burden of discharging of the onus under Explanation 1 is on ....
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....ng the penalty by holding that the issue was debatable on account of varying legal interpretation and the particulars have been disclosed by the assessee. The ld. DR pleaded to set aside the order of the CIT (A) and restore the order of the Assessing Officer. 7. On the other hand, the ld. AR submitted as under :- The assessee was a private limited company. It was engaged in the form of manufacturing, trading and otherwise deal in food, meat, eggs, poultry, vegetables, canned and tinned processed foods and foodstuffs and consumable provision of every description for human or animal consumption. The return was filed declaring a loss of Rs.4,32,89,050/-. The depreciation of Rs.37,95,956/- was claimed in the return of income. This depreciation was disallowed by the Assessing Officer. It was confirmed by the ITAT vide its order dated 23.12.2010 in ITA No.1460/Del/2008. Ld. AR submitted that although the assessee has not done any manufacturing activity during the year but depreciation was claimed on the plant and machinery on the premises that there is a temporary lull and assessee intends to start the manufacturing business. This manufacturing activity was temporarily suspended on....
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....y till date. Only the trading activity was resumed in the financial year ended on 31.03.2005 relevant to Assessment Year 2005-06. As per the Form 3CD attached with the return of income for the year under consideration, the Annexure 2 for Clause 14 of the Form the written down value of building other than residential building was of Rs.3,53,80,368/- as on 31.03.2002. Thus, this was opening WDV of building. However, as on 31.03.2003, the written down value of building is nil. This fact shows that building was sold out during the year. Assessee was not having factory, godown or office at the end of the year. In respect of plant and machinery, the written down value as on 31.03.2002 was Rs.2,76,38,427/-. As on 31.03.2003, the WDV was Rs.1,07,70,855/-. As per clause 32 of Form No.3CD, there has been no production during the year. The stock-in-trade at the end of the year was nil. Schedule 3 for fixed assets also show that the leasehold land and building were nil on 31.03.2003. All these facts clearly establish that stopping of manufacturing activity in the year 2000 was not on account of temporary lull in the business. The facts show that assessee was intended to close the manufacturing....