TMI Blog2014 (5) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the CIT (A) is that it was a legal claim and even if it is ultimately found to be legally unacceptable, it cannot amount to furnishing of inaccurate particulars. It was not a legal claim - Claim of depreciation @ 100% is purely based on facts as it depends on type of structure - It is purely a case of ex-facie untenable claim of depreciation @ 100% which cannot be said to be a legal claim - the CIT (A)'s findings with regard to the claim on temporary buildings were not correct – thus, there was no merits in the CIT (A) for deleting the penalty on the issue of depreciation of temporary buildings in both the Assessment Years 2002-03 and 2003-04 - with regard to the claim of depreciation on boundry wall and disallowance of PF/ESI u/s 36(1)(va) read with section 2(24)(x) of Income-tax Act, 1961 in Assessment Year 2002- 03 - no penalty u/s 271(1)(c) of the Act can be levied on the assessee – Decided partly in favour of Assessee. - ITA Nos.1882 & 1883/Del/2011 - - - Dated:- 6-12-2013 - I C Sudhir And B C Meena, JJ. For the Appellant : Shri A K Garg, Adv. For the Respondent : Shri D K Mishra, CIT-DR PER: B C Meena Both these appeals filed by the assessee e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following additions/disallowances:- a) Depreciation on temporary erections to the extent of Rs.2,00,47,230/- and Rs.90,76,020/- in assessment years 2002- 03 2003-04 respectively.; b) Depreciation on boundary wall to the extent of Rs.8,02,847/- in assessment year 2002-03; c) Disallowance of Rs.6,97,024/- received from the employees but credited to their PF ESI Accounts after the prescribed due dates in terms of section 36(1)(va) read with section 2(24)(x) of the Act in assessment year 2002-03 4.1 There is no dispute to the well-settled legal proposition that the penalty proceedings are distinct and different from assessment proceedings. Findings in the assessment proceedings are not conclusive. The entire material available should be considered afresh by the Assessing Officer before imposing penalty u/s 271(1)(c). The Explanation to section 271(1)(c) provides a rule of evidence raising a rebuttable presumption in certain circumstances. No substantive right is created or annulled thereby. The substantive law relating to levy of the penalty is preserved. The initial burden of proof is cast on the assessee to establish the presumption arising in certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onable conclusion that the amount does represent the assessee's income. It is not enough for 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. However, Explanation 1 to section 271(1)(c) has been inserted w.e.f. 1-4-1976 by the Finance (No.1) Act, 1975. By this Explanation a fiction has been created for deeming the concealment of particulars of income, if in respect of any facts material to the computation to the total income any person has failed to offer an explanation or the explanation has found to be false or where such person has offered an explanation which he is unable to substantiate. Wherein an explanation is furnished which the assessee is unable to substantiate but the assessee establishes that the explanation furnished was bonafide and all the facts relating to the same and material to the computation of his total income has been disclosed by him, explanation 1(B) will not be applicable. 4.4 Now whether a particular case falls within the ambit of the Explanation or not would depen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of CIT v. Sivananda Steels (2002) 256 ITR 683(Mad) and in Burmah-Shell Oil Storage Distributing Co. of India Ltd. v. ITO (1978) 112 ITR 592 (Cal) that question of penalty should not arise in cases where there are two different views available. If an assessee gives an explanation which is unproved but not disproved i.e., it is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee's case is false, the Explanation cannot help the AO because there will be no material to show that the amount in question was concealed by the assessee or inaccurate particulars of the said amount were furnished by the assessee. Therefore, the assessee's case does not fall within the ambit of Part A of the Explanation. So far as Part B is concerned, I find that the assessee offered an explanation and was able to prove that the explanation was bona fide and all the facts relating to the same had been disclosed. Therefore, Part B is also not applicable. In this case, during the assessment proceedings it was noticed by the Assessing Officer that the assessee company had claimed 100% depreciation on various concrete built-up constructions used for office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , even if it is ultimately found to be legally unacceptable, cannot amount to furnishing of inaccurate particulars of income, I hold that there is no case of concealment or furnishing of inaccurate particulars of its income in respect of the following additions/disallowances:- a) Depreciation on temporary erections to the extent of Rs.2,00,47,230/- and Rs.90,76,020/- in assessment years 2002- 03 2003-04 respectively.; b) Depreciation on boundary wall to the extent of Rs.8,02,847/- in assessment year 2002-03; c) Disallowance of Rs.6,97,024/- received from the employees but credited to their PF ESI Accounts after the prescribed due dates in terms of section 36(1)(va) read with section 2(24)(x) of the Act in assessment year 2002-03 Therefore, it is held that A.O. was not justified in imposing penalty u/s 271(1) (c) amounting to Rs.76,93,000/- Rs.33,35,500/- in assessment years 2002-03 2003-04 respectively. Accordingly, the same are deleted. Against this order of the CIT (A), the revenue is in appeal by taking the following grounds :- 01. The order of the learned CIT (APPEALS) is erroneous contrary to facts law. 02. On the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not justified in deleting the penalty by holding that assessee has not filed inaccurate particulars of income. He relied on the decision of Hon'ble jurisdictional High Court in the case of CIT vs. Export Finance Limited reported in 328 ITR 44 and CIT vs. Zoom Communication Pvt. Ltd. - 327 ITR 510. 4. On the other hand, ld. AR relied on the order of CIT (A) and submitted that the claim was made of depreciation @ 100% as the structures were temporary and it was made under bonafide and good faith by a reasoned view that such category falls as per old Appendix I of the Income-tax Rules, 1962. All the primary facts pertaining to the structure were duly disclosed in the return and accompanying statement of accounts. There was good reason to believe that temporary tin roof structures erected on leased land for a limited period specifically permitted by the authorities constituted purely temporary structures where 100% depreciation are applicable. He further submitted that by not accepting the view taken by the assessee and these structures were held to be of different category entitled from lower rate of depreciation shall not be sufficient for levying the penalty for concealment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A Sub-Station, Landscape Plan Golf Area, Cottages, Health Club, Internal Roads, Extension of Pro-Shop and Extension of Club House, Camp Facilities, Club House, Labour Camp, Labour Office and Main Store. Prima facie, these structures were definitely not pure temporary erections, such as, wooden structures. The assessee has made a claim of 100% depreciation on these temporary buildings and it was pleaded before us that the claim has been made under bonafide and good faith by reasoned view. On this issue, we note that assessee is a concern of a big industrial group which has team of tax expert and auditors at its disposal. Very few cases are selected for scrutiny, others are accepted as these are filed by the assessee. Had there been no scrutiny of the assessment, this claim which was ex-facie not tenable could have been allowed on these items and assessee could have got the benefit of 100% depreciation for the year where it does not deserve. Further, we do not agree with the finding of the CIT (A) that the assessee has disclosed all material facts. The assessee has rather claimed depreciation on these structures which are not covered by the table of rates at which the depreciation is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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