TaxTMI 
TaxTMI 
2014 (3) TMI 398
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....mposite business of manufacture and trading in foodstuff for human and animal consumption. Apparently, it had stopped its manufacturing activities in 2000. During the relevant AY 2003-04, it claimed depreciation of Rs. 37,95,956/- in respect of its plant and machinery. The depreciation so claimed was disallowed and the matter achieved finality. In these circumstances, the penalty proceedings for concealment of income under Section 271(1)(c) were drawn and the Assessing Officer (AO) sought to recover Rs. 13,95,014/-, being 100% of the tax sought to be evaded, by order dated 31.03.2008. The AO's order was set-aside by CIT (Appeals), who held that the depreciation claim could be considered as debatable and applying the ratio of CIT v. Reliance....
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....s in fact borne out not only in the order in question but also in subsequent orders and that the claim for depreciation was inherent and known. Thus, it attracted Section 271(1)(c). 4. The CIT (Appeals), in the order, while determining the bona fide of the assessee held as follows: "6.6 As per the appellant, the claim for depreciation for correctly made in the return as (i) as activity of manufacturing of food products, was only temporarily suspended and (ii) it had income from trading activity which was in the nature of business income, therefore the business activity was been carried on. The appellant found adequate support in judicial precedents for making the claim of depreciation in such circumstances (as referred to in para 6.2 supr....
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....ourts, then making of such a claim in the return of income will not amount to filing of inaccurate particulars of income as has been held by the Hon'ble Apex Court in the case of Reliance Petroproducts Pvt. Ltd. 322 ITR 158:- "We do not 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 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). ....