TaxTMI 
TaxTMI 
2015 (10) TMI 2834
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....ware business and filed its return of income for the year under consideration admitting Nil income. Later, it filed a revised return of income on 24/08/10 admitting Nil income under normal provision and Rs. 1,21,03,661 under M.A.T. The case of assessee was taken up for scrutiny and AO passed the assessment order u/s 143(3) dated 16/12/2011 assessing the total loss admitted by assessee as under: Loss admitted as per return of income Rs. 22,76,77,589 Less: Excess depreciation disallowed Rs. 19,99,56,403 Loss revised Rs. 2,77,21,186 2.1 With regard to the aforesaid disallowance on excess depreciation, during the course of assessment proceedings, it was noticed by AO that assessee had claimed higher depreciation on soft....
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....rdingly he levied a minimum penalty of Rs. 6,79,65,180 u/s 271(1)(c) of the Act. 3. Aggrieved by the penalty order of AO, assessee carried the matter in appeal before ld. CIT(A). 4. During the course of appeal proceedings, assessee stated that it had disclosed fully and truly all material facts and there was no information collected from outside by AO. Further, it was stated that the error in depreciation was only in respect of percentage claim. It was pointed out that it was a debatable issue because software development is increasingly being recognized as a revenue expenditure by various courts. 5. The ld. CIT(A) after considering the submissions of assessee and analyzing the issue in dispute with case laws, cancelled the penalty impos....
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.... 4.8 From above, it is clearly seen that the proper and full disclosure had been made by the appellant and the higher percentage claimed in depreciation was only a bone fide error which was corrected by the appellant. In any case, there was no tax due even after the correction of the error. Therefore, applying the aforementioned case law I find that this is not a fit case for the imposition of penalty. The same is accordingly cancelled." 6. Aggrieved by the order of ld. CIT(A) in cancelling the penalty imposed by AO u/s 271(1)(c), the revenue is in appeal before us raising the following grounds of appeal: "1. The CIT(A) erred on facts and in law in granting relief to the assessee. 2. The CIT(A) erred in deleting the penalty....
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....9. We have heard the arguments of both the parties and perused the material on record as well as the orders of revenue authorities. It is seen that assessee was claimed depreciation at a higher rate on software development and AO found the mistake during the course of assessment proceedings and pointed out to assessee. Assessee agreed to the lower claim of depreciation and did not contest the addition in appeal. The ld. CIT(A) while cancelling the penalty, regarding the conduct of assessee, observed as follows: "it is seen that the appellant had filed a revised return of income wherein an income of Rs. 1.21 crore was disclosed under MAT and taxes were paid on this income. Further, the entire details had been disclosed by the appella....
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.... and this onus is to be discharged by the department. [See D.M. Manasvi v. Commissioner of Income Tax, Gujarat,-II [(1973) 3 SCC 207] 49. While considering as to whether the assessee has been able to discharge his burden, the assessing officer should not begin with the presumption that he is guilty. 50. Once the primary burden of proof is discharged, the secondary burden of proof would shift on the assessee because the proceeding under Section 271(1)(c) is of penal nature in the sense that its consequences are intended to be an effective deterrent which will put a stop to practices which the Parliament considers to be against the public interest and, therefore, it was for the department to establish that the assessee shall be guilty of ....
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....f furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the ....