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2021 (7) TMI 94

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....e Act'), qua the assessment year 2009-10 on the ground that :- "On the facts and in the circumstances of the case and in law, the ld. CIT (A) has erred in deleting the penalty u/s 271(1)(c) on the grounds that appellant should not penalized merely for showing the receipt of consultancy as other income despite the fact that the AO has verified during the assessment that the assessee did not furnish any documents on record to prove that the assets were put to use." 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : On the basis of assessment framed under section 143 (3) of the Income-tax Act, 1961 (for short 'the Act'), disallowance of depreciation claimed at Rs. 1,07,43,586/- by the assessee, penalty p....

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.... dispute that the penalty has been levied u/s 271(1)(c) of the Act for alleged incorrect claim of the business loss for the year under assessment. It is also not in dispute that the AO has disallowed the depreciation claimed by the assessee on the ground that similar depreciation was disallowed in AY 2008-09. It is also not in dispute that the assessee had claimed unabsorbed depreciation of the year 2008-09 as brought forward in the AY 2009-10 and had not claimed brought forward business losses for AY 2008-09. 7. In the backdrop of the aforesaid facts and circumstances of the case and arguments addressed by the ld. DR for the Revenue, the sole question arises for determination in this case is :- "as to whether the assessee has concealed ....

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....eciation the Assessing Officer has observed that the assessee has only 'other income' in the nature of consultancy income reportedly received from outside India. 6.4 The appellant's contention that it was maintaining an office of about 11,600 square feet and employed approximately 60 personnel and there was no new addition to the fixed assets or computers and the depreciation has been claimed on assets brought forward from the earlier year vehemently challenge the conclusion drawn by the Assessing officer that the assets were not put to use. 6.5. The assessee's appeal against the quantum addition was dismissed by me vide order dated 18.01.17 because I did not find sufficient reasons to condone a delay of 519 days in fili....

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....er, when the assessee is undisputedly maintaining office space of 11,600 sq.ft. having 60 employees with no new addition to the fixed assets or computer, the depreciation has been claimed on assets brought forward from earlier years because of electronic system of e-filing of the return. Even otherwise, there is not an iota of material on the file to prove the fact that there was concealment of income or furnishing of inaccurate particulars of income by the assessee. Merely lodging a wrong claim of depreciation does not ipso facto amount to concealment of particulars of income or furnishing of inaccurate particulars of income. 10. Hon'ble Supreme Court in a case cited as CIT vs. Reliance Petro Products Pvt. Ltd. 322 ITR 158 (SC) decided t....

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....71(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars." 11. Furthermore, assessment order passed in this case shows that the AO has failed to record a valid satisfaction to initiate the penalty proceedings u/s 271(1)(c) of the Act because he has merely recorded that, "penalty proceedings u/s 271(1)(c), u/s 271B and 271F of the Income Tax Act, 1961, have been initiated separately", without specifying if the assessee has furnished concealment of particulars of income or has furnished inaccurate particulars of income. 12. Even at the time of pas....