TaxTMI 
TaxTMI 
2017 (1) TMI 625
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....the circumstances of the case, the Ld. CIT(A) has erred in ignoring the fact that AO had no initiated penalty proceedings u/s 271(1)(c) in the assessment order while framing assessment. Initiation of penalty proceedings is clearly mentioned in the assessment order and a valid notice was served upon the assessee. 3 Whether on the facts & in the circumstances of the case, the Ld. CIT(A) has erred in appreciating the that the show cause notice was issued by the AO having jurisdiction over the case. The assessee confirmed that order of penalty was time barred without examine the facts of the case and a misstated argument of the assessee before the AO, the assessee never argued on this issue. 4 Whether on the facts & in the circumstances of the case, the Ld. CIT(A) has erred in allowing relief on account of additions on Advance Against Depreciation which was later admitted by the assessee itself in the subsequent years and also assessee had withdrawn the appeal from Hon'ble ITAT on this ground by accepting the stand on the Revenue on this ground. 5 The appellant craves to be allowed to add any fresh grounds of appeal and / or delete or amend any of the grounds of appeal." AS....
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....tion of Rs. 211.90 Crores and Rs. 216.10 crores in assessment year 2005-06 and 2006-07 respectively would invite penalty under section 271(1)(c) of the I.T. Act, 1961 under the charge of ' Furnishing inaccurate particulars of income". ii. Whether the addition to income of Income Tax Recoverable from State Electricity Board of Rs. 1.53 Crores and Transmission charges of Rs. 12.09 crores would invite penalty u/s 271(1) (c) of the act under the charge of ' Furnishing inaccurate particulars of income'. 04. The brief facts of the case for assessment year 2005-06 is that assessee is a Public Sector Undertaking engaging in transmitting power to State Electricity Board from generating units. For the year under consideration, it filed its return of income at Rs. NIL, however, paid taxes on the Book Profit u/s. 115JB of the I.T. Act, 1961. The assessment under section 143(3) of the Act was made on 28.12.2007 wherein an addition of Rs. 216.10 crores was made on account of disallowance of advance against depreciation. Similar addition was also made to the Book Profit under section 115JB of the I.T. Act. Both these additions were confirmed by the Ld. First Appellate Authority and before the C....
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....hat the assessee has not agitated this issue at the higher forum and has withdrawn the Appeal before the Tribunal itself shows that assessee has claimed these deductions which has invited the penalty under section 271(1) ( c ) of the I.T. Act, 1961. He therefore, vehemently argued that Ld. CIT(A) has erroneously deleted the penalties without giving cogent reasons. 06. Ld. A.R. of the assessee submitted that penalty could not be levied on advance against depreciation, in view of the decision of Hon'ble Supreme Court in the case of NHPC vs. CIT 320 ITR 374 (SC) wherein it held that advance against depreciation is not an income. He, therefore, submitted that the Ld. CIT(A) has rightly deleted the penalty u/s. 271(1)(c) of the Act. He further submitted that on the income tax recoverable, the Ld. CIT(A) has held that as assessee has disclosed the full facts in the Notes on Account, hence, the penalty was deleted. He further submitted that merely withdrawal of the appeal by the assessee before the Coordinate Bench does not advance or hamper the case of the assessee as far as the issue of levy of penalty is concerned. He further submitted that after the withdrawal of the appeal by the as....
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....fits. AAD is not meant for an uncertain purposes. AAD is an amount that is under obligation, right from the inception, to get adjusted in the future, hence, cannot be designated as a reserve. AAD is nothing but an adjustment by reducing the normal depreciation includible in the future years in such a manner that at the end of the useful life of the plant (which is normally 30 years) the same would be reduced to nil. Therefore, the assessee cannot use the AAD for any other purpose (which is possible in the case of a reserve) except to adjust the same against future deprecation so as to reduce the tariff in the future years. As stated above, at the end of the life of the plant AAD will be reduced to NIL. In fact, Schedule XII-A to the balance sheet of the financial years 2004-05 onwards indicates recouping. In our view, AAD is "income received in advance". It is timing difference. It represents adjustment in future which is inbuilt in the mechanism notified on May 26, 1997. This adjustment may take place over a long period of time. Hence, we are of the view that AAD is not a reserve." 08. According to the above decision of the Hon'ble Supreme Court advance against depreciation is a....
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....ccurate, not exact or correct ; not according to truth ; erroneous ; as an inaccurate statement, copy or transcript." 11. We have already seen the meaning of the word "particulars" in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the * [2007] 291 ITR 519 (SC). ** [2008] 306 ITR 277 (SC). assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars. 12. It was tried to be suggested that section 14A of the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Ac....
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....he dealer's turnover disallowing the exemption, penalty cannot be imposed. The penalty levied stands set aside."" 09. In the present case, the claim of the asssessee is not at all disallowable Therefore it stands on better footing than the case decided by honourable Supreme court in above case. Furthermore, we do not find any provisions under section 271(1) ( c) which depends upon the filing of the Appeal by the assessee before the Higher Forum contesting the addition. Therefore, whether the assessee files an appeal or did not contest the addition or disallowance at higher forums , it does not have any bearing on the statutory provisions of section 271(1) ( c) of the I.T. Act, 1961In view of this, we do not incline to uphold the order of the AO on levy of penalty under section 271(1) ( c) of the I.T. Act, on advance against depreciation disallowed while computing the Book Profit under section 115JB of the I.T. Act as well as under the normal computation of total income. In view of this, we do not find any infirmity in the order of the Ld. CIT(A) in cancelling the penalty levied by the AO. 10. With respect to other disallowances of Income Tax recovery and Transmission charges,....