TaxTMI 
TaxTMI 
2003 (8) TMI 558
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....he Income Tax Act, 1961, while that of the revenue is that the learned Commissioner (Appeals) is not justified in reducing the levy of penalty from 200 per cent to 100 per cent. 3. The facts of the case in brief are that in the return of income filed for the assessment year under appeal, the assessee had claimed depreciation of Rs. 3,50,000 on imported cars. During the course of the assessment proceedings, the assessing officer noted that the assessee purchased two imported cars. The assessee had shown total hire charges of Rs. 62,651 which included an amount of Rs. 49,000 being hire charges receivable from M/s Harshad S. Mehta for use of car No. BLX7186 for the period from 5-12-1989 to 31-3-1989. The balance amount was shown as hire cha....
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....der : "The only point for consideration before me is whether the appellant- company has fulfilled the requirements to claim depreciation. Of course, it is owning foreign cars, but there is no material to substantiate the claim that the cars in question, were being used only for the purpose of foreign tourists. It has not been proved that the cars were hired to another agency for being used for foreign tourists. Since there is nothing to suggest that the cars were used in the business of running on hire for foreign tourists, no depreciation is allowable. The disallowance, is therefore, confirmed." 5. In the meanwhile, while completing the assessment, the assessing officer initiated penalty proceedings under section 271(1) (c) read with....
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....be evaded, would meet the ends' of the justice. Therefore, the penalty levied under section 271(1) (c) is reduced from Rs. 4,53,600 to Rs. 2,26,800. 7. Shri V. Mehta, the learned counsel for the assessee submitted that the learned Commissioner (Appeals) failed to appreciate that the assessing officer has never concluded that there was a prima facie case to issue notice under section 271(1) (c) of the Income Tax Act, 1961 and erred in holding that the assessing officer has rightly levied the penalty under section 271(1) (c) of the Income Tax Act, 1961. He further submitted that the learned Commissioner (Appeals) failed to appreciate that the penalty proceedings and assessment proceedings are two different and independent proceedings u....
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.... that though the assessee's appeal was rejected but it was rejected on the ground that "the fact remains that the cars were mainly and substantially used for letting out on monthly basis". The learned counsel for the assessee submitted that simply because the explanation of the assessee was rejected there is no ground for levy of penalty. In support of this contention he relied upon the following authorities : (i) ITAT "E", Bench; Kishan Gupta v. Income Tax Officer (ii) CIT v. Indian Metals & Ferro Alloys Ltd. (1994) 117 CTR (Ori) 378 (iii) ITAT Delhi Bench "C"; Smt. Shanta Kumar v. ITO (iv) CIT v. University Printers [1991]188ITR206(All) 8. The learned departmental Representative strongly supported the order of the asses....
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....gs are distinct and different from assessment proceedings. The entire material should be considered afresh by the authorities below before imposition of the penalty. Even under Explanation to section 271(1) (c) conscious concealment is necessary. The Explanation provides only a rule of evidence raising rebuttable presumption in certain circumstances. No substantive right is created or annulled, The substantive law relating to penalty is preserved. If the assessee was acting honestly or genuinely then no penalty could be imposed. 10. Coming to the facts of the case the assessee furnished all the details in support of its claim of depreciation on imported cars. The explanation of the assessee before the assessing officer was that cars were....