2018 (5) TMI 259

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....eciating the evidences filed by the appellant? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the appellant had claimed depreciation by furnishing inaccurate and false particulars and therefore liable to penalty under Section 271 (1)(c) of the Act? 3. Mr.R.Vijayaraghavan, learned counsel for the appellant filed a memo seeking permission to raise additional substantial question of law with regard to the defect in the notice issued under Section 271(1)(c) of the Income Tax Act, 1961. 4. We have heard the learned senior counsel for the Revenue on the prayer made and subject to the objection by the Revenue the following additional substantial question of law is also framed for consideration: Whether a notice issued under Section 27(1)(c) of the Act which does not show the default which assessee was required to explain is a valid notice for levy of penalty? 5. The appellant is in the business of hire purchase, equipment leasing and allied activities. For the Assessment year 1995-96, the Assessing Officer treated the lease transaction entered into with M/s.Prakash Industries Ltd., by the appellant, as....

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....ich has been framed for consideration was not raised earlier, that being a pure question of law, can be allowed to be raised by amendment to the appeal memo. Reliance was placed on the decision of the High Court of Karnataka in Commissioner of Income Tax & Another Vs. Manjunatha Cotton and Ginning Factory reported in (2013) 359 ITR 0565 to support the contention that the notice issued under Section 274 of the Act should specifically set the grounds mentioned in Section 271(1)(c) of the Act i.e., whether it is for concealment of income or furnishing of inaccurate particulars of income and mere sending of printed form where all grounds mentioned in Section 271 are mentioned would not satisfy the requirement of law. It is submitted that the decision in the case of Manjunatha Cotton Mills has been confirmed by the Honble Supreme Court in Commissioner of Income Tax and another Vs. M/s.SSAs Emerald Meadows reported in 2017-TIOL-14-SC-IT. Reliance was also placed on the decision of High Court of High Court of Karnataka in Muninaga Reddy Vs. Assistant Commissioner of Income Tax reported in (2017) 396 ITR 0398 (Karn) to support the submission that the assessee should know the grounds for wh....

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....ncealment of income and furnishing of inaccurate particulars would not operate as resjudicata in penalty proceedings and it is open to the Assessee to contest the said proceedings on merits. 11. Bearing the above legal principle in mind, we examined the factual position of the case on hand. The Assessees case before the authorities and the Tribunal was that it claimed depreciation on a genuine belief that the transaction was bonafide and that the depreciation was claimed on the basis of documents and other evidence made available to it at that point of time in good faith. Therefore, the assessee contended that it has neither concealed any particulars of income nor furnished any inaccurate particulars of income. 12. The entire issue came to light on account of a search under Section 132 of the Act conducted in the case of Pioneer Engineering Company by the Investigation Wing at Ranchi, during which a sworn statement was recorded from a Managing Partner of the said Company, who had stated that his company has not sold any air pollution control equipment to any leasing company including the assessee company. It was found that various Current Accounts were opened in the name of P....

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....xplanation offered by the assessee. We are in agreement with the factual findings rendered by the authorities since the petitioner is a leasing company as it is very hard to believe a case where the leasing company had made advances for leasing out a machinery, which never in existence. That apart, the assessee has not mentioned either before the lower authorities or before this Court as to what action they had initiated against the lessee, who is alleged to have committed fraud. The entire issue would not have come to light but for the search conducted in the case of Pioneering Engineering Company and when the assessee was confronted with the findings, they have voluntarily reversed depreciation claimed by them. Thus, we find that the Assessing Officer, first appellate authority and the Tribunal rightly held that the assessee is liable for penalty. 14. With regard to the third substantial question of law, which has been framed for consideration, firstly we wish to point out that such a contention was never raised by the assessee at any point of time. The argument of the learned counsel for the petitioner is that this being a question of law can be allowed to be raised at this s....