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2013 (7) TMI 379 - AT - Income TaxPenalty u/s 271 - disallowance of depreciation claimed on plant and machinery - CIT(A) deleted penalty - Held that:- Assessee was engaged in manufacturing and selling of food items & during the year, no manufacturing activity was carried out which was clear from the audited accounts where opening stock was nil and quantity manufactured during the year was also shown as nil. The assessee has stopped manufacturing activity in the year 2000. Assessee has not started manufacturing activity till date. Only the trading activity was resumed in the financial year ended on 31.03.2005 relevant to Assessment Year 2005-06. As per the Form 3CD attached with the return of income for the year under consideration, the Annexure 2 for Clause 14 of the Form the written down value of building other than residential building was of Rs.3,53,80,368/- as on 31.03.2002. Thus, this was opening WDV of building. However, as on 31.03.2003, the written down value of building is nil. This fact shows that building was sold out during the year. Assessee was not having factory, godown or office at the end of the year. In respect of plant and machinery, the written down value as on 31.03.2002 was Rs.2,76,38,427/-. As on 31.03.2003, the WDV was Rs.1,07,70,855/-. As per clause 32 of Form No.3CD, there has been no production during the year. The stock-in-trade at the end of the year was nil. All these facts clearly establish that stopping of manufacturing activity in the year 2000 was not on account of temporary lull in the business. The facts show that assessee was intended to close the manufacturing activities. These facts make the claim of depreciation on the plant and machinery was a prima facie inadmissible claim made in the return of income. Since the assessee has failed to make a satisfactory explanation for makings such patently false claim in the return of income, the CIT (A) was not at all justified in deleting the penalty. There is nothing on record which could establish that claim was due to varying legal interpretation. Therefore, restore the order of AO for levying the penalty u/s 271(1)(c) - appeal of the revenue allowed.
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