TaxTMI 
TaxTMI 
2016 (5) TMI 250
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....irector of Income Tax (Inv.) Pune. During the previous year 1992-93 corresponding to assessment year 1993-94, the assessee entered into three lease transactions with Western Paques India Ltd. (WPIL). The assets leased in question were 3 bio gas pilot plants. The details are as under :- Lease Agreement No Lease Date Cost-Rs. Site at which the Bio Gas Plant located 1097/93 16.03.1993 50 lakhs Niphad S.S.K.Ltd. 1097/93 16.03.1993 50 lakhs Daulat S.S.K.Ltd. 1110/93 03.02.1993 50 lakhs Satara S.S.K.Ltd. All the lease transactions were for tenure of 36 months. In the reassessment order, the AO disallowed depreciation on the above three bio gas plant on the ground that the assets were not in existence. 4. By the impugned order, the CIT(A) confirmed the reopening as well as disallowance of claim of depreciation. For the years under consideration the assessee is aggrieved for decline of claim of depreciation as well as validity of reopening for the assessment year 1993-94. 5. It was argued by ld. AR that the CIT(A) erred in confirming the reopening proceedings u/s. 147 without having any reason to believe that any income chargeable to tax has escaped assessment. A....
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....enied in view of the fact that subsequently in October 1993, an order for purchase of the main bio-gas plant was placed by Niphad SSK Ltd. with WPIL. Ld. AR vehemently argued that the response of the AO of IDBI dated 14.2.1997 has not been appreciated in its true perspective because the conclusions drawn by the AO seem to be premature and in haste. Having submitted a detailed explanation regarding this lease transaction vide letter dated 25.3.1997, the AO refused the appellant's request for an opportunity of being heard again and instead the assessment was completed in haste i.e. within 1 month of the reopening of the assessment and in disregard of the principles of natural justice. 8. With regard to bio gas plant located at Satara, it was argued by ld. AR that the CIT(A) erred in disallowing the depreciation amounting to Rs. 25,00,000/-in respect of Bio Gas Pilot Plant located at Satara S.s.K. Ltd leased to M/s. Western Paques India Limited on the ground that the assets are not in existence. Documentary evidence clearly establishes the physical existence of the bio gas pilot plant, especially during the year in which the asset was purchased and leased to WPIL i.e. Financial Y....
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....with the contents of letter dated 30.11.91 from Daulat SSK Ltd. to WPIL which clearly states that Daulat SSK Ltd. was pleased to place work order on WPIL for conducting the pilot plant studies and also agreed to provide the necessary infrastructure at free of cost to WPIL. Ld. AR also placed on record order of the coordinate Bench in case of Monoplan Securities, ITA No.5501/Mum/2008, order dated 1-9-2014, wherein claim of depreciation in respect of bio-gas plant leased to M/s Western Pacques, was allowed. 10. On the other hand, ld. DR relied on the orders of the authorities below and contended that the AO was correct in declining assessee's claim for depreciation on the Bio Gas Plant. 11. We have considered rival contentions and carefully gone through the orders of the authorities below and found from the record that there was sufficient reason to believe that there an escapement of income as per the findings recorded by the AO on the basis of investigation report dated 11-11-1996. Accordingly, we do not find any infirmity in reopening the concluded assessment. 12. With regard to the merit of addition we found that during the course of reassessment hearing following documentary ....
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....13. In view of the available documentary evidence; the positive affirmation made by WPIL, the lessee who is a party to the lease transaction, regarding the existence of the bio gas pilot plant; the inconsistent statements made by the MD of Niphad SSK Ltd and the incomplete inquiry in the case of IDBI, about the ownership of the bio gas plant, non-existence of bio-gas plant especially during F.Y.1992-93 was not conclusively proved by lower authorities. 14. In view of the above discussion and keeping in view the totality of facts and circumstances of the case, we set aside the orders of both the lower authorities and the matter is restored back to the file of AO for deciding afresh considering the documentary evidences discussed above and after giving due opportunity to the assessee. 15. In the result, both the appeals of the assessee are allowed for statistical purposes. ITA No.5332/Mum/2008(Revenue's Appeal) 16. This is an appeal filed by the revenue against the order of CIT(A) for the assessment year 1993-1994 in the matter of penalty imposed u/s.271(1)(c) of the Act. 17. The penalty has been imposed for decline of claim of depreciation. By the impugned order the CIT(A) delet....
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....nishing of inaccurate particulars of income, therefore, it must be shown that the conditions u/s.271(1)(c) of the Act exist before the penalty is imposed." 19. In the case of C.I.T. v Atul Mohan Bindal, 317 I.T.R. 1 (S.C.), the Apex Court held that for applicability of section 271(1)(c ) the conditions stated therein must exists. The conditions are that the assessee should have concealed the particulars of income or furnished inaccurate particulars of such income before the penalty u/s 271 (1 )(c ) could be levied. This has been reiterated in a recent decision of the Apex Court in C.I.T. v Reliance Petro Products P. Ltd, 322 I.T.R. 158, wherein Hon'ble Apex Court interpreted the meaning of the expressions, "concealment", "inaccurate", and "particulars" used in clause (c) of section 271(1) and held that everything would depend upon the return of income filed because that was the only document where the assessee can furnish the particulars of income. The Apex Court held that when such particulars are found to be inaccurate the liability of penalty would .arise. Reading the words "particulars" in conjunction with the word "inaccurate", the Apex Court held that they only mean that....