TMI Blog2015 (5) TMI 1205X X X X Extracts X X X X X X X X Extracts X X X X ..... ain item and capitalization of those expenses is concerned we are of the opinion that no concealment was involved in those transactions. The assessee had furnished all the details and claimed 100% depreciation as per the advice of the ICAI. The difference of opinion between the assessee and the AO about the allowability of the depreciation cannot and should not lead to levy of concealment penalty. Penalty could not be imposed, as a matter of course. The assessee was truthful in submitting its return and making a claim for depreciation on its understanding of law. This was not a case of claim of depreciation on machinery which was not purchased. Courts are of the view that where basic information has been provided by the assessee then for a claim made by the assessee and disallowed by the AO penalty u/s.271(1) (c)cannot be levied. Here one more thing is to be remembered that the C AG had dropped the comments made by it about the disputed amounts. Similarly on the issue of as to whether an expenditure is capital or revenue no concealment penalty can be levied. No authority is required to support the view. Making additions or disallowing certain expenses during the assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e account which is vulnerable for penalty. As stated earlier,in the other years also identical grounds have been filed-the only difference is of penalty amount involved.Details of dates of filing of returns,incomes returned,dates of assessment,assessed incomes, dates of orders of the CIT(A)can be summarised as under : Return filed on Returned Income (Rs.) Assessed income (Rs.) Date of penalty order Penalty levied (Rs.) 2004-05 29.10.2004 (-)545,69,50,845/- (-)495,50,53,512/- 28.03.2012 ₹ 11,07,97,349/- 2005-06 29.10.2005 (-)462,08,87,813/- (-)407,16,42,297/- 28.03.2012 ₹ 16,64,85,732/- 2006-07 30.11.2006 (-)327,75,38,678/- (-)282,86,44,115/- 28.03.2012 ₹ 6,44,83,352/- 2007-08 29.10.2007 (-)241,20,87,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year under appeal in schedule 10. It was further argued that the assessee had taken opinion from Institute of Chartered Accountants of India (ICAI) on treating expenditure incurred on plant and machinery upto 1 lacs as revenue expenditure that it was opined that there was no violation in compliance in AS-6 and AS-10. About repair/maintenance expenses the assessee argued that most of the items were components and parts of machinery having life span of only one year that major portion of the assessee s asset was unique in nature, that the assessee had not concealed nay particular of income or had furnished any inaccurate particulars of income, that the additions were based on some ambiguous method of accounting. After considering the submission of the assessee that AO held that in the quantum appeal proceedings the First Appellate Authority (FAA) had confirmed the additions/disallowances made by the AO, that the assessee had failed to recognise accrued income on its cost plus project while claiming the cost of deduction, that the practice followed by the were against the principles of accounting and taxation, that assessee s claim of deduction of capital expenditure on items costing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure on items costing up to ₹ 1.0 lacs the assessee submitted that the issue was raised by it before the expert committee of ICAI that the addition was made merely on the basis of observation of the special auditor who relied on the comments of C AG that the comments of the C AG about the expenditure of 33 crores were also dropped. It was also contended that while passing the assessing order the AO had not recorded the finding that the assessee had furnished inaccurate particulars of income that all details/ evidences were and explanations were duly furnished during the course of assessment and penalty proceedings, that additions/disallowances made in the assessment order were merely change of opinion and did not constitute a basis for levying concealment penalty. The assessee relied upon the case of Reliance Petroproducts Ltd(322ITR128) and Aditya Birla ( 2012-TIOL692-HC-MUM-IT). After going through the submissions of the assessee and the penalty order of the AO, the FAA held that the additions/disallowances made in the assessment order and confirmed by the FAA in quantum proceedings did not suo moto attracted levy of penalty u/s. 271(1)(c) of the Act, that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder based on the comments/observation made by the special auditor and C AG, that the FAA confirmed the additions/disallowances that the AO levied the penalty invoking the provisions of section 271(1)(c)of the Act based on the order of the FAA that the C AG later on dropped the comments by it about the assessee that the FAA in penalty proceedings held that the assessee had not concealed its particulars of income or had furnished inaccurate particulars of income. We find that the AO had made additions/disallowances on four counts and first among them is about income accrued to the assessee on account of OWK Tunnel Project. The FAA found that because of the dispute going with the Govt. of AP the assessee was not sure as to how much additional compensation would be given to the sub contractor or when it would be paid. In these circumstances if the assessee had showed the income in the year of receipt it cannot be said that it had concealed its particulars of income. It is not the case of the AO that the assessee had not disclosed the fact of ongoing dispute with the AP Govt. or the fact that amount was to be paid to sub -contractor. Income arising from the other projects had been show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate, the assessee cannot be held guilty of 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 assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(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. We do not find any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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