TMI Blog2000 (9) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... Penalty proceedings were initiated under section 271(1)(c) of the Act on the ground that the assessee had concealed the particulars relating to the income assessable for the assessment year 1989-90. The view taken by the Assessing Officer was that the assessee was making a false claim of depreciation on the vehicle as ill had not been put to use for the purpose of the business in the previous Year ending on 31-3-1989. The Assessing Officer noticed that the assessee had purchased the Van from M/s. Eicher Motor Ltd., Indore as per Invoice No. 006700 dated 30-3-1989 and that the vehicle was actually despatched from Indore only on 31-3-1989. As the assessee was carrying on business at Coimbatore the Assessing Officer concluded that in the previous year ending on 31-3-1989 the vehicle could not have been used for the purpose of the assessee's business and so, there could be no allowance of depreciation in computing the income for the assessment year 1989-90. Though the assessee had credited in the accounts for the year ending on 31-3-1989 a sum of Rs. 450 as Van hire receipt, the Assessing Officer found that there was no evidence to show that the vehicle had been actually hired out du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that it was difficult to accept the assessee's plea that the claim of depreciation was a bona fide claim. He further observed that Explanation I to section 271(1)(c) could not save the assessee from the penal provisions. It was the finding of the CIT(A) that the Assessing Officer was justified in levying the penalty in the circumstances of the case and so he confirmed the same. 4. On behalf of the assessee Sri R. Vijayaraghavan, Advocate submitted before us that the CIT (Appeals) was not justified in upholding the levy of penalty on the ground that it was not a bona fide claim of depreciation by the assessee on the vehicle newly purchased in the previous year ending on 31-3-1989. The Ld. counsel for the assessee pointed out that there was no dispute that the assessee had purchased the vehicle for the purpose of the business only and that the purchase had been made as per the invoice dated 30-3-1989. According to Sri Vijayaraghavan, the assessee became the owner of the vehicle on 30-3-1989 though it was despatched from Indore only on 31-3-1989. It was his contention that even though the vehicle arrived at Coimbatore only on 2-4-1989, when it was running from Indore to Coimbator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions governing the allowance, it would not be correct to hold that the assessee was concealing its income or furnishing inaccurate particulars. Sri. Vijayaraghavan urged us to reverse the order of the Revenue authorities and to cancel the penalty levied on the assessee. 5. Per contra Sri. V. Suryanarayanan, the Departmental Representative supported the order of the CIT(A) and submitted that the CIT(A) was justified in confirming the penalty as the assessee had been making a false claim of depreciation on an asset which had not been actually put to use in the previous year for the purpose of business. The Ld. D.R. pointed out that though the assessee had purchased the vehicle on 30-3-1989 it was despatched to Coimbatore from Indore only on 31-3-1989 and reached Coimbatore on 2-4-1989. According to him, there was no question of the asset having been put to use for the purpose of business before it had reached the assessee's business premises. He further stated that the assessee paid the vehicle tax for the first quarter only on 15-5-1989. Sri Suryanarayanan submitted that the vehicle was not kept even ready for use before the end of the previous year and so knowing fully well tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness in the previous year would go to show that it was a false claim of depreciation by the assessee to reduce the income liable to tax in the assessment year. Sri Suryanarayanan submitted that as there was concealment of income and also furnishing of wrong particulars regarding the running of the vehicle the Assessing Officer had rightly levied the penalty under section 271(1)(c) of the Act. The CIT(A) was fully justified in confirming the penalty, requiring no interference by the Tribunal at this stage. 6. We have given due consideration of the submissions on both sides and gone through the facts of the case. In this case penalty has been levied on the ground that the assessee was making a false claim of depreciation on a vehicle newly purchased during the previous year and thereby concealing the income liable to tax for the assessment year 1989-90. The assessee's claim was that the vehicle had been purchased during the previous year for the purpose of its business, and that from the time the vehicle was running from Indore to Coimbatore it was being used for the purpose of its business. Though there was the claim that during the trip from Indore to Coimbatore the goods belon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feree the sale is complete even before the transfer is effected in the registration certificate. The failure to report the same to the registering authority may entail levy of penalty prescribed under section 31 of the Motor Vehicles Act, 1939 or section 112 of the Act. Beyond that it does riot affect the passing of the title. Law is clear that registration is not necessary to pass title in the motor vehicle." It can be seen that the assessee became the owner of the van when it was purchased at Indore on 30-3-1989. When it was running from Indore to Coimbatore on 31-3-1989 the assessee was the owner and it was running for the assessee's purpose. The vehicle might have reached Coimbatore i.e. the business premises of the assessee only on 2-4-1989, but then as submitted by the ld. counsel for the assessee, there is no condition governing the allowance of depreciation that the asset must be used in the usual place of business of the assessee. Though there was the claim that some hire charges were collected during the trip from Indore to Coimbatore, the assessee could not substantiate that claim even though there was the sum of Rs. 450 credited as hire charges in the assessee's books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f penalty under section 271(1)(c) there should be conscious concealment of income on the part of the assessee. In that case the Court observed as under: "Penalty proceedings are penal in nature. The elementary principles of criminal law will apply. It is a quasi criminal proceeding. There should be a conscious concealment. The provisions should be construed strictly. Even after the addition of the Explanation to section 271(1)(c) of the Income-tax Act, 1961 conscious concealment is necessary and the presumption under Explanation to section 271(1)(c) can be displaced by the assessee proving that the failure to return the correct income did not arise from any fraud, or gross, or wilful neglect and the quantum of proof necessary would be that required in a civil case namely, preponderance of probabilities." In the circumstances of the present case we are not inclined to agree with the Ld. D.R. that the failure on the part of the assessee to return the correct income for the assessment year 1989-90 had arisen from any fraud, or gross, or wilful neglect. On the other hand, the facts clearly show that the assessee had furnished the particulars regarding the purchase of the vehicle an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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