Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (9) TMI 1369 - AT - Income TaxPenalty levied u/s. 271(1)(c) - Disallowance of deduction u/s 35E as none of the income was proved by the assessee was earned from the business of prospecting for or extraction/production of mineral eligible to claim - HELD THAT:- It is seen from record that the assessee was granted mining lease for “lignite” for a period of 30 years in Bhavnagar District. There is also report from Gujarat Electricity Board and Mining Department, Government of Gujarat evidencing that the assessee is engaged in the prospecting activities for the minerals during the assessment year 2003-04. The assessee incurred necessary expenditures for this preliminary activities for the mining works and claimed u/s. 35E - assessee could not start commercial production within 5 years. The Co-ordinate Bench of this Tribunal has confirmed the disallowance u/s. 35E only on the ground that the assessee does not meet the parameters of eligibility prescribed within section 35E of the Act and the assessee also failed to commence the commercial production during the assessment year 2003-04. Lower Authorities failed to appreciate that the assessee has obtained mining rights from Government of Gujarat and the assessee also signed a letter of intent with Reliance Industries Ltd. for Development and sale of net electrical output generated to GEB. Thus it cannot be construed that inaccurate particulars have been furnished by the assessee to make a wrong claim u/s. 35E of the Act, thus does not warrant levy of penalty u/s. 271(1)(c) - It is undisputed fact that the lese of sale and leased back of LP Rotor Machines to GEB by the Assessing Officer but denied the benefit on the ground that no change of possession was taken place. Lower Authorities failed to consider that leasing activity is one of the objects of the assesse company and lease rent received has been treated as its “business income” and assessed to taxes. Consequently the assessee is entitled to claim depreciation on the leased machineries. The sale and leased back transaction entered into by the assessee with GEB which is nothing but an extension of financial assistance to GEB between two Public Sector Undertakings. In order to invoke the penalty proceedings under section 271(1)(c) of the Act, the Revenue should prove that the claim made was not sustainable in law and also the assessee had made a concealment of the particular income. In order to expose the assessee to penalty, the Revenue should show that there was contumacious conduct on the part of the assessee in suppressing the income in the return. The rejection of such a claim by the Appellate Tribunal does not amount to furnishing inaccurate particulars of income, thereby levying penalty u/s. 271(1)(c) of the Act as held by the Hon’ble Supreme Court in the case of Reliance Petroproducts (P.) Pvt. [2010 (3) TMI 80 - SUPREME COURT] Hon’ble Madras High Court in the case of CIT vs. Cholamandalam Investment & Finance Co. Ltd. [2014 (3) TMI 774 - MADRAS HIGH COURT] held that where the A.O. failed to give independent finding that there was a deliberate design on the part of the assessee to inflate cost of acquisition so as to claim higher depreciation, penalty could not be imposed - thus penalty levied u/s. 271(1)(c) for furnishing inaccurate particulars of income is hereby deleted. - Decided in favour of assessee.
|