TMI Blog2006 (8) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... epreciation, which was not found to be allowable, the AO imposed penalty of Rs. 80,37,014 under s. 271(1)(c) which was enhanced to Rs. 88,40,715 by passing order under s. 154. The facts in brief are that the assessee claimed 100 per cent depreciation amounting to Rs. 1,48,83,369 on the biogas plant, which was disallowed by the AO on the ground that tills plant has not started giving the end product, i.e., biogas during the year. Since the plant started giving biogas only from the subsequent year, i.e., 1991-92, 100 per cent depreciation was allowed in the subsequent year. The order of the AO for asst. yr. 1990-91, disallowing the depreciation in the instant year was confirmed by the CIT(A) and in second appeal by the Tribunal. The AO accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articulars of income. Under the circumstances and in view of the various judicial decisions relied on by the appellant as also on other decisions quoted above, I am of the opinion that, in the instant case, the appellant has proved beyond doubt that the claim of depreciation made during the year on biogas plant was bona fide and not with any mala fide intention and has thus discharged the onus cast on it under Expln. 1 to s. 271(1)(c). On the other hand, AO has not brought on record any material which would establish that the claim was mala fide. There is no finding to this effect. Under the circumstance, imposition of penalty in this case, is not justified and is hereby cancelled." 5. We have considered the rival contentions, gone throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the system could be stabilized in steps. During these operations different parameters like PH and temperature of the feed as well as that of the reactor had to be monitored carefully and optimized at various loads of feed. 6. Biogas plant so installed was having dual purpose, first to treat the water effluent of the assessee's distillery and the second was to produce biogas out of such treatment of effluent. To produce biogas a minimum level of sludge/effluent/water is required in the reactor. Industrial waste and water started pouring into the reactor tank w.e.f.21st March, 1990but as the reactor tank was huge, it took time to fill upto the minimum level required for production of biogas during the year, which has been achieved only in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rge the onus either by direct evidence or circumstantial evidence or by both. The cumulative effect of all facts should be taken into consideration. During the course of penalty proceedings, the assessee is entitled to show and establish by the material and relevant facts, which may go to affect and having direct bearing on the liability for penalty. Whether there is a concealment to make the penalty exigible is normally a question of fact. Where the burden of proof in a given case has been discharged on a set of facts, is also a question of fact. The burden is cast on the assessee to offer a bona fide explanation. There are also plethora of judgments to the effect that findings recorded or conclusion drawn in deciding the quantum appeal, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of penalty that the amount has been assessed as income, and (ii) the circumstances must show that there was animus, i.e., conscious concealment or act of furnishing of inaccurate particulars on the part of the assessee. The Explanation has no bearing on factor No. 1 but it has bearing only on factor No. 2. The Explanation does not make the assessment order conclusive evidence that the amount assessed was in fact the income of the assessee. No penalty can be imposed if the facts and circumstances are equally consistent with the hypothesis that the amount does not represent concealed income as with the hypothesis that it does. If an assessee gives an explanation which is unproved but not disproved, i.e., it is not accepted but ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s explanation with evidence to prove the bona fide thereof and also to disclose all the relevant facts in relation thereto. 10. The Department itself allowed the assessee's claim in the very next year when the production of biogas started. Under these circumstances the assessee-company cannot be alleged with the charge of concealment or furnishing of inaccurate particulars of income. Undisputedly, the action of the assessee was bona fide, even though its claim was not allowed during the year under consideration but was allowed in the very next year. Deeming fiction contained in Expln. 1 to s. 271(1)(c) that the addition/disallowed amount represent income in respect of which particulars have been concealed will not apply if the explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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