TMI Blog2010 (1) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation, assessee's conduct cannot be said to be contumacious so as to entail levy of penalty under section 271(1)(c), Appeal allowed. - ITA No. 4256/Del/2009, - - - Dated:- 8-1-2010 - Rajpal Yadav, Shamim Yahya, JJ. V.K. Aggarwal, AR for the Appellant S.K. Bharati, Sr. DR for the Respondent ORDER Shamim Yahya, Accountant Member:- 1. This appeal by the assessee is directed against the orders of the ld. CIT(A) dated 07.05.2009 pertaining to assessment year 2003-04 confirming the penalty under section 271(1)(c) amounting to Rs. 4,69,365/-. 2. In this case the assessee company is in the business of manufacturin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for depreciation having been disallowed for want of manufacturing activity during the relevant year despite the fact that the plant and machinery were ready for use, there could be two opinions in the matter and, therefore, Tribunal was right in cancelling penalty proceedings under s. 271(1)(c)." 4.1 Ld. counsel further referred to Hon'ble Jurisdictional High Court decision in ITA No. 422/2007 in the case of CIT vs. M/s Panacea Biotech Ltd. vide order dated 27.7.2009, wherein it was held that the expression "used for the purpose of business" in the context of section 32 includes passive user of the assets in the business. In that case claim of depreciation was on office which was furnished and kept ready for use. AO had disallowed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act, or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed by the statute." 6. In the background of the afor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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