TaxTMI 
TaxTMI 
2023 (4) TMI 1176
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....be noticed: 4. The respondent/assessee, which is a public sector company, had filed its return of income on 28.07.2009, declaring its income as Rs. 1,16,540/-. 4.1 Thereafter, a revised return was filed by the respondent/assessee on 31.03.2010, when respondent/assessee chose to declare its income as "nil". 5. The return filed by the respondent/assessee was subjected to scrutiny. In the course of scrutiny, the AO, inter alia, disallowed Rs. 14,25,49,948/- on account of foreign exchange fluctuation losses. The assessment order in that behalf, under Section 143(3) of the Act, was passed by the AO on 23.12.2011. 6. The record shows that prior to the aforementioned assessment order being passed, during scrutiny, an issue arose, inter alia, with regard to the claim made by the respondent/assessee on account of foreign currency fluctuation losses. This aspect arose in and about 28.11.2011. 6.1 The record shows that before the assessment order was passed, the respondent/assessee on 15.12.2011, submitted a letter to the AO, whereby it claimed depreciation to the extent of Rs. 3,45,93,316/-, on account of the increase in the cost of machinery due to foreign currency fluctuation losses. ....
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....depreciation @15% and additional depreciation @20% has to be allowed as per the provisions of sec 32(1)(ii) and (iia) of the I.T. Act. The A.O. is, therefore, directed to allow the depreciation of Rs. 3,45,93,316/- as above. The appeal is allowed on the ground." 9. It is also pertinent to note that while passing the assessment order, the AO had also initiated penalty proceedings against the respondent/assessee under Section 271(1)(C) of the Act. In doing so, the AO had triggered both limbs of the said provision, i.e., that not only had the respondent/assessee furnished inaccurate particulars of its income, but had also concealed its income. This penalty order was passed on 31.03.2014. 9.1 Consequently, penalty amounting to 100% of the tax sought to be evaded was imposed on the respondent/assessee. As indicated above, the penalty imposed upon the respondent/assessee was pegged at Rs. 4,40,47,933/-. 10. We may note that there is no dispute that prior to imposition of penalty, a show cause notice was served on the respondent/assessee under Section 274 of the Act. This show cause notice was dated 07.01.2014. 11. Being aggrieved, the respondent/assessee preferred an appeal with the ....
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....l staff and hard pressing of time due to late receiving of reports etc from auditors of sub offices\Mills, whose figures are clubbed together. In fact Tax audit Report was signed as on 25th Sept 2009 and received as on 26th Sept 2009 for filling of ROI as on 27th Sept 2009. In fact on discovery of mistake by NTC during assessment proceedings, NTC voluntarily surrendered the amount as per documents placed on record and even not disputed it in the regular appeal also being bona-fide error. 2.5. NTC was formed solely to fulfill its social objects by taking over SICK CLOTH MILLS to safe guard the interest of WORKERS and later on also become sick and referred to B1FR for restructuring and President of India is the 98.67% shareholders of the NTC and all the Directors including CMD is appointed by GOI. In other words by no stretch of imagination it can be presumed that NTC or its employee were ever having mala-fide intention to show increased losses with the intention of getting it's benefit in the coming years. At the most it is a venial & technical mistake committed in preparation of Computation of Income, for which your Goodself are humbly requested to quash the Penalty proceedin....
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....the appellant/revenue, submits that the view taken by the Tribunal and the CIT(A) cannot be sustained. It is Mr Bhatia's contention that course correction was made by the respondent/assessee only after the issue regarding the claim made by it, was pointed out by the AO. 15. On the other hand, Mr Ved Jain, who appears on behalf of the respondent/assessee, submits that it was a bona fide error and the course correction was made at the earliest, even before the assessment order was passed. 16. We may note that initially, Mr Jain had also raised the point that the AO had committed an error in not indicating, clearly, as to which limb of Section 271(1)(c) of the Act was applicable, in the facts and circumstances of the case. However, Mr Jain did not, ultimately, press this submission. Analysis and Reasoning 17. We have heard the counsel for the parties and perused the record. Clearly, the record shows that the respondent/assessee could not have claimed the loss on account of foreign currency as deductable expenditure, in view of the provisions of Section 43A of the Act. 17.1 This provision, broadly, mandates adjustment in the cost of an asset, depending on whether there was an incr....