TaxTMI 
TaxTMI 
TaxTMI 
2016 (3) TMI 411
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....on both the said issues. Aggrieved, the assessee preferred an appeal before the ld. CIT(A) who deleted the entire penalty and thus the aggrieved Revenue is before this Tribunal in this second appeal. 4. We have heard the rival submissions and have perused the relevant material on record. The ld. DR contended that wrong claims were made by the assessee in quantum proceedings and therefore, the AO made disallowances/additions on account of excess claim of depreciation and on account of disallowance out of capital subsidy. The ld. DR further contended that the stand of the assessee is that he claimed deprecation on the basis of news published in Financial Express News Paper under bonafide belief and hence penalty is not leviable but its auditors are well qualified and experienced therefore, this excuse is not tenable and sustainable and the AO rightly levied penalty. The ld. DR vehemently contended that the ld. CIT(A) deleted the penalty without any reasonable cause or basis. Hence the impugned order may be set aside by restoring that of the AO. 5. Per contra, the ld. AR strongly supported the first appellate order and contended that the AO imposed penalty on wrong premise and the l....
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....ication levels of the machine installed. The special dispensation will be co-terminus with TUFS, which has been extended to 2006-07... " had claimed higher depreciation. There was no concealment involved nor this is a case of filing of inaccurate particulars as everything was disclosed in the deprecation chart attached with the Income-tax Return. Furthermore, this case is also not covered under Zoom Communication, Delhi High Court, as in this case, the scrutiny u/s 143(3) was done and not simple processing u/s 143(1), as the income returned in this case is Rs. 4.72 crores. Similarly with regard to subsidy of Rs. 25,50,000/-, the assessee had also claimed depreciation. There was no concealment nor a case of furnishing inaccurate particulars. This case is covered by case of CIT Vs. Reliance Petro Produdcted Pvt. Ltd. (2010) 322 ITR 158 and CIT Vs. Brahmputra Consortium Ltd. (Delhi High Court) ITA 1582 OF 2010 wherein it is held that:- "The assessee argued that it had revised the computation because it claimed depreciation of 40% on tippers and excavators by mistake and since it had itself revised the computation, it was a bonafide error. The AO did not agree with the argumen....
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....n case relating to assessment year 2004-05. The Tribunal in consolidated order passed in ITA No. 1445/Chd/2010 in appeal filed by the assessee and ITA No. 290/Chd/2011 in the appeal filed by the revenue, vide order dated 06.03.2014 deleted the penalty levied under section 271(l)(c) of the Act on the said issue of sales tax subsidy observing as under : 43. The next item of addition is the assessability of sales tax subsidy o\ Rs. 6,80,61,977/- received by the assessee during the year under consideration. The assessee had treated the said subsidy as capital receipt in its return of income, but the same was assessed as revenue receipt in the hands of the assessee following the ratio laid down by the Hon'ble Punjab & Haryana High Court in assessee's own case reported in 286 ITR 1 (P&H). The Tribunal (supra) for the instant assessment year also held the said subsidy to be revenue in nature. However, the assessee has preferred SLP against the order of the Hon'ble Punjab & Haryana High Court and the question of law has been admitted and the SLP is pending before the Hon'ble Supreme Court of India. The issue raised vide the present appeal is in relation to levy of penalt....
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....ssue raised before us is where addition has been made in relation to such debatable issue, the assessee could be said to have furnished inaccurate particulars of income making it exigible to levy of penalty u/s 271(l)(c) of the Act. 19. The Hon'ble Punjab & Haryana High Court in CIT Vs. M/s Gurdaspur Cooperative Sugar Mills (supra) on the issue whether the amount of grant-in-aid was capita receipt or revenue receipt being debatable issue held that the penalty u/s 271(1)(c, of the Act was not imposable. The relevant findings of the Hon'ble Punjab & Haryana High Court in CIT Vs. M/s Gurdaspur Cooperative Sugar Mills (supra) are as under: 3. We find that the reliance on the above said judgment is not tenable, as in the aforesaid case, the deductions under section 80-0 of the Act was declined for the reason that the assessee has not produced any details of the expenses allegedly incurred by it. The Delhi High Court observed (page 170): "The assessee, for claiming deduction under section 80-0 of the Act, wanted the same at 50 per cent of the gross income received in convertible foreign exchange in India provided by it to its foreign clients. The Assessing Officer, howev....
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....ture and hence taxable. Upholding the order of the CIT (Appeals) we dismiss the grounds of appeal raised by the Revenue in ITA No.70/Chd/2012. " 46. Following the same finding, we find no merit in holding the assessee to have furnished inaccurate particulars of income in respect of such debatable issue. The assessee is not exigible to levy of penalty under section 271(1)(c) of the Act on the aforesaid treatment of sales tax subsidy as revenue in the hands of the ass .see and we uphold the order of the CIT (Appeals) in directing the Assessing Off's r to delete the same." 8. In view of the above penalty is not imposable where the issue is debatable and the assessee has lost its ground in quantum proceedings as the issue is debatable in the present case penalty with regard to capital subsidy cannot be held as sustainable and the ld. CIT(A) was right in deleting the same. 9. In the case of ITO Vs. M/s Deshraj [supra] the Tribunal upheld the first appellate order which deleted the penalty on excess claim of depreciation on TUF scheme with the following findings: "7. Before us the Ld. D.R. submitted that the assessee has claimed higher depreciation on the machinery purchased ....
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....e A.O. had made a disallowance of depreciation of Rs. 18,04,688/- primarily on the ground that the depreciation on machinery and plant (TUF Scheme) was allowable @ 25%, however, the assessee had claimed the depreciation at 50%. According to A.O., the eligible depreciation as per the Income tax Rules was only 25%, hence, the same was restricted to that extent only. The excess claim of depreciation was affirmed by the Ld. CIT (A) in first appeal. Consequent thereupon the A.O. has though it proper to levy the penalty. However, when the question of levy of penalty was challenged, Ld. CIT (A) has noted, as per the paragraph reproduced above, that the machineries were only purchased out of the loan given by the Bank under a TUF Scheme floated by Ministry of Textile. The assessee was under an impression that the claim of depreciation was as per the specific rates prescribed, however, it was found by the A.O. that that specific rate of depreciation was not admissible as per the Income Tax Rules, 1962. 5.1. On due examination of the circumstances, once the claim of depreciation was not altogether bogus or malafides but the dispute was in respect of the correct rate of depreciation, then ....
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....t Rs. 96,77,264/- was restricted to the depreciation allowable at normal rate as prescribed for the block of asset under the head "Plant and Machinery" @ 15% on the WDV which comes out at 14,50,690/-. Accordingly, the excess depreciation claimed by the assessee-company which comes out at Rs. 33,84,942/- (being Rs. 48,35,632/- - Rs. 14,50,690/-) was disallowed and added to the total income of the assessee. 3. Subsequently AO initiated penalty proceedings u/s. 271(1)(c) of the Act and after giving opportunity of being heard levied penalty of Rs. 63,494/- u/s. 271(1)(c) of the Act for concealment of income. This action of AO was confirmed by Ld. CIT(A). 4. Aggrieved by this order of Ld. CIT(A) now the assessee is before us. 5. At the time of hearing at the outset learned counsel of the assessee submitted that the issue involved in this appeal is covered by the order of Hon'ble Tribunal in the case of ITO vs. Hanuman Filament P. Ltd vide ITA No. 2819/Ahd/2009 dated 17/12/2009 in which on identical facts the Hon'ble Tribunal has deleted the penalty by observing as under:- "6.1. The penalty u/s. 271(1)(c) of the Act is leviable if the AO is satisfied in the course of any proc....
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....P.K. Narayanan [1999] 238 ITR 905 (Ker) Hon'ble Punjab & Haryana High Court in the case of CIT vs. Ajaib Singh & Co. (2001) 170 CTR (P & H) 489: (2002) 253 ITR 630 (P & H) have observed that merely because certain expenses claimed by the assessee are disallowed by an authority, it cannot mean that particulars furnished by the assessee were wrong. It was held that mere disallowance of expenses per- se cannot be meant that assessee has furnished inaccurate particulars of its income. In the case under consideration, we find that the assessee had given all the particulars of income and had disclosed all facts to the AO. It is not the case of the AO or the assessee that in reply to the query of the AO, some new facts were discovered or the AO had dug out some information which was not furnished by the assessee. In such circumstances, Hon'ble Delhi High Court held in the case of CIT vs. Bacardi Martini India Ltd, 288 ITR 585 (Del) that no penalty was leviable. No cogent material or evidence was brought to our notice which may prove that the Revenue detected the concealment. In CIT vs. Harshvardhan Chemicals & Minerals Ltd (259 ITR 212) Hon'ble Rajasthan High Court upheld the finding of t....