TMI Blog2014 (3) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... o expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked - Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not attract the penalty u/s 271(1)(c) of the Act. The facts clearly disclose that the contention raised by the assessee was not held to be not according to truth or inaccurate particulars furnished or with a view to conceal the actual income - The AO while completing the assessment proceedings, chose to adopt the WDV - by itself would not amount to furnishing inaccurate particulars or with a view to conceal the actual income – the order of the Tribunal upheld – Decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined that there was an element of claiming higher depreciation at an enhanced cost by the assessee, in terms of provisions of Explanation 3 to Section 43(1) of the Act. The Assessing Officer further stated that the assessee purchased the said assets at a much higher cost than the Written Down Value (WDV) in the books of the lessee, which was culled out from the details given by the assessee. Based on the said findings, penalty proceedings under Section 271 (1)(c) of the Act was initiated and show cause notice was issued to the assessee calling upon them to explain as to why the penalty should not be imposed for the said sale cum lease back transactions. The assessee by their reply dated 10.04.2000, stated that all the relevant documents, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost of acquisition on the assets at an enhanced rate to claim higher depreciation and this is precisely to reason for invoking Explanation 3 of Section 43(1) of the Act. On the above reasoning, the Assessing Officer imposed maximum penalty at 300% on the tax sought to be evaded. 3. Aggrieved by the same, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The first Appellate Authority by order dated 24.06.2002, allowed the appeal holding that the assessee has furnished full details of the transaction to the Assessing Officer and it has also given an explanation that the market value of the machinery need not be equivalent to the WDV of the machineries in the books of the seller. The first Appellate Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons made by the Assessing Officer in the penalty order dated 26.04.2000, submitted that it was clearly made out that the assessee has furnished inaccurate particulars in respect of the lease transaction and they failed completely to prove the authenticity of the lease transaction. Further, it is submitted that the Explanation 4 to Section 43(1) was never applied to the assessee's case and only Explanation 3 was applied and therefore, the order passed by the Tribunal is erroneous. Further, the learned counsel submitted that when the Assessing Officer clearly held that the claim for depreciation is more than what is the entitlement of the assessee, the provisions of Section 271(1)(c) of the Act could be invoked. 6. Mr.R.Vijayaraghavan, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court in the case of CIT vs. Reliance Petroproducts Pvt., Ltd., (SC), reported in [2010] 322 ITR 158, pointed out that 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. Further, it was pointed out that in order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By referring to the decisions in the case of Dilip N.Shroff vs. Joint CIT reported in [2007] 291 ITR 519 (SC), and in the case of Union of India vs. Dharmendra Textiles Processors reported in [2008] 306 ITR 277 (SC), the Hon'ble Supreme Court pointed out that the explanation must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .07.2012. 10. The facts of the case as narrated in the preceding paragraphs would clearly disclose that the contention raised by the assessee was not held to be not according to truth or an inaccurate particulars furnished or with a view to conceal the actual income. In fact, the Assessing Officer in the penalty order dated 26.04.2000, has not given any independent finding in support of his conclusion that there was a deliberate design on the part of the assessee to inflate the cost of acquisition. 11. As pointed out by the first Appellate Authority all the details of the transactions were placed before the Assessing Officer and an explanation was given as to why the market value of the property need not be equivalent to the WDV. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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