TMI Blog2012 (11) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... , RAJENDRA, JJ. Farook Irani for the Appellant. Sanjeev Jain for the Respondent. ORDER Rajendra, Accountant Member Following Grounds of Appeal were filed by the appellant in the appeal preferred against the Order dt. 31-05-2010 of the CIT(A), Mumbai. "On the facts and circumstances of the appellant's case and in law, the learned Commissioner of Income Tax (Appeals) has erred in confirming penalty u/s. 271(1)(c) in respect of : ( i ) Addition u/s. 145A of the Act on account of Unutilised Modvat Credit of Rs. 1,16,83,933/-. ( ii ) Appellants claim of excess depreciation on motor vehicle of Rs. 13,75,810/-. ( iii ) Disallowance of capital expenditure of R D of Rs. 48,76,810/." 2. In this matter, assessment was completed u/s. 143(3) of the Act on 24-03-2006 and Assessing Officer (AO) made addition on account of (i) unutilised Modvat Credit, (ii) depreciation on motor car (iii) expenditure incurred on Research and Development (iv) transfer price adjustment. During the appellate proceedings, CIT(A) upheld the additions made by the AO. Assessee preferred an appeal before the ITAT against the order of the CIT(A). Tribunal vide its Order (ITA No. 1227/M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. Reliance Petro Product (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322 (SC), Addl. CIT v. Jay Engg. Works Ltd. [1978] 113 ITR 389 (Delhi) and Sree Krishna Electricals v. State of Tamil Nadu [2009] 23 VST 249 (SC). Departmental Representative (DR) on the other hand supported the Orders of the AO and the CIT(A). He submitted that assessee did not file any evidence about R D expenditure in spite of many opportunities, that details of payments made by cheques/cash were not filed at any stage. He relied upon judgment of the Hon'ble Delhi High Court in CIT v. Zoom Communication (P.) Ltd. [2010] 327 ITR 510/191 Taxman 179. 6. We have heard the rival submissions. As far as addition on account of depreciation on motor car is concerned, issue has already been decided in favour of the assessee by the ITAT in quantum appeal. Once addition itself has been deleted, there is no justification for imposing penalty. As the matter regarding Modvat has been sent back to the file or the AO by the Tribunal, so we are of the opinion that is a debatable issue. Penalty u/s. 271(1)(c) cannot be imposed for debatable issues. Hence, penalty imposed for unutilised Modvat Credit is also de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urate particulars." Hon'ble SC mentioned facts about the case as under: "The assessee is a company and the relevant assessment year is 2001-02. The return was filed on January 31, 2001, declaring loss of Rs. 26,54,554/-. This assessment was finalized under section 143(3) of the Act on November 25, 2003, whereby the total income was determined at Rs. 2,22,688/-. In this assessment the addition in respect of interest expenditure was made. Simultaneously penalty proceedings under section 271(1)(c) of the Act were also initiated on account of concealment of income/furnishing of inaccurate particulars of income. The said expenditure was claimed by the assessee on the basis of expenditure made for paying the interest on the loans incurred by it by which amount the assessee purchased some IPL shares by way of its business policies. However, admittedly, the assessee did not earn any income by way of dividend from those shares. The company in its return claimed disallowance of the amount of expenditure for Rs. 28,77,242/- under section 14A of the Act. By way of response to the show-cause notice regarding the penalty in its reply dated March 22, 2006, the assessee claimed that all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court had decided the issue as whether the report of the auditors can be considered immaterial for the assessment in the absence of account books destroyed by fire? After discussing the provisions of Sec. 34 of the Evidence Act and Sec. 142(1) and 143(3) of the IT Act, 1961, the Hon'ble HC held: "The question arises, therefore, whether the reports of the auditors could be said to be "material" on which reliance could be placed by the income-tax authorities. Unlike the proof required of such reports as also of the account books under the Indian Evidence Act, it is quite competent for the income tax authorities not only to accept the auditors' report, but also to draw the proper inference from the same. The income tax authorities could, therefore, come to the conclusion that since the auditors were required by the status to find out if the deductions claimed by the assessee in their balance sheets and profit and loss accounts were supported by the relevant entries in their account books, the auditors must have done so and must have found that the account books supported the claims for deductions, when the deductions were disallowed, by the Income Tax Officer on the ground that det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se to be produced such documents or accounts that AO require for making an assessment. He can conduct "necessary inquiry" for obtaining 'full information' in respect of the income or loss of a person. Under Section 143(3), the AO is empowered to pass an Order allowing or rejecting the claim made by the assessee. Assessee is also entitled to produce particulars during the assessment proceedings. As early as 26-09-2005, AO directed the assessee to furnish full details of fixed assets with supporting documents. Till the finalisation of assessment on 24-03-2006, assessee did not produce document required by the AO except three bills. AO's observations on pg. 19 of his order clearly establish the fact that assessee did not produce details in support of the claim that was made in the return of income. AO held as under: " explanation of the assessee has been gone through and the same is not accepted as spite of giving sufficient opportunities to the assessee to file the details on number of occasions and also after giving final opportunity to the assessee on 20.03.2006, the assessee so far, could not file or produce the proof in respect of the aforesaid addition. At that time of hearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 271(1) (c) two facts should co-exit-first that amount in question is part and parcel of the income of the assessee. Secondly, the assessee has filed inaccurate particulars or has concealed particulars of such income. - Section 271(1)(c) has to be strictly applied in the larger interest of discipline in filing correct returns by the assessees. - Tax-exemptions, tax-concessions, tax-rebates and tax-deduction find place in the tax-laws for the assesses who make bona fide claims, and not for those who make false declaration for the purpose of benefit in terms of the statute. So, making a false declaration with regard to exemption/concession/deduction is a prima facie proof of furnishing of inaccurate particulars - Non-disclosure of receipt/showing lower receipt of income in return is a prima facie evidence of concealing particulars of income. - Once the amount claimed to be gift is discovered to be bogus, penalty for furnishing inaccurate particulars can be levied. - When a revised return is filed after detection of concealed income and such return shows higher income, imposition of penalty for concealment or filing inaccurate particulars is considered to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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