TMI Blog2016 (3) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... partment has not been able to substantiate as to how there has been furnishing of inaccurate particulars of income and/or concealment by the assessee when the AO has himself not brought any cogent material on record, apart from the DVO’s report, to justify the imposition of penalty. The Hon’ble High Court of Madras in CIT vs Apsara Talkies (1981 (11) TMI 2 - MADRAS High Court ) has held that, “Penalty cannot be levied on the basis, merely of an estimate of cost of construction of a building built by an assessee with his funds. Thus the penalty imposed by the Assessing Officer under section 271(1)(c) was not sustainable - Decided in favour of assessee - ITA No. 6230/Del/2013 - - - Dated:- 19-2-2016 - SHRI G.D. AGRAWAL, VICE PRESIDENT AND ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and worked out the difference as per details given below:- Sl. No. Name of Division at Champa Cost of construction shown (Rs) Cost of construction as per DVO (Rs) Difference between cost shown cost assessed i) Sponge Iron Divison, Champa 12,95,399/- 31,60,000/- 18,64,601/- ii) Induction furnace Division, Champa 48,78,246/- 59,95,100/- 11,16,854/- iii) Rolling Mill Division 74,34,201/- 1,13,25,800/- 38,91,599/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve plea also before the undersigned that it be allowed depreciation on the addition made by the Assessing Officer in its assets i.e. factory building. The alternative plea is accepted and the Assessing Officer is directed to allow depreciation on the amounts added on account of unexplained investment on the assets and the WDV thus arrived at is to be taken into account in the succeeding assessment years also. The ground of appeal is allowed on the aforesaid lines i.e. additions in assets/factory building is confirmed but the depreciation is directed to be allowed on the same. The Assessing Officer has allowed depreciation in the assessment year under consideration, he is directed to allow depreciation in the succeeding assessment year also. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 8. The Ld. AR submitted that there was no material with the Assessing Officer to conclude that cost of construction shown by the assessee was not correct. He submitted that other than the DVO s report, there was nothing on record to hold that any undisclosed investment was made in cost of construction at Champa and Picture Tube Plant, Pithampur. He submitted that mere fact that the addition was sustained in appeal was not sufficient to draw adverse inference against the assessee in the penalty proceedings. He further submitted that it was the primary duty of the then Assessing Officer to prove, prior to referring to the DVO that there was understatement/ concealment of income and only after this burden was discharged, addition could h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst ST forms, which in fact was completely overlooked by the DVO. As the Raipur area of Chhattisgarh is the hub of steel and cement industries and the assessee has purchased the cement and steel directly from the manufacturers in bulk quantities at very competitive rates. Further, the assessee having purchased the material directly from the manufacturer carried out number of jobs on labour rate under the direct supervision of its civil engineers and thereby, saved contractors margin. Further, for certain items such as car shed, second quality pipe and steel of lower value were used whereas, the DVO had applied the rate of heavy structural material. Further, material having life of 30 years were used by the assessee, however, DVO taking t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the AO has relied only on the comments of the DVO in response to the assessee s objections but has failed to give a final finding on the issue. Thus he has not dealt with the assessee s objections properly. This might have served the Revenue s purpose in the quantum proceedings but when it comes to imposition of penalty for furnishing of inaccurate particulars and/or concealment, utmost caution has to be exercised. The Department has not been able to substantiate as to how there has been furnishing of inaccurate particulars of income and/or concealment by the assessee when the AO has himself not brought any cogent material on record, apart from the DVO s report, to justify the imposition of penalty. The Hon ble High Court of Madras in CI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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