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P.C. Snehal Engineers Pvt. Ltd. Versus ACIT (OSD) , Cir. 5, Ahmedabad.

2016 (7) TMI 742 - ITAT AHMEDABAD

Penalty u/s 271(1)(c) - claim of depreciation at the rate of 100% on centering material - Held that:- AO has demonstrated as to how the claim of the assessee was factually incorrect. In other words, he has demonstrated that it was a false claim. He made reference that originally the item was purchased by P.C. Snehal Construction Company and not the assessee. Thus, the disallowance was not made merely on the basis of difference of opinion between the assessee and the AO. - FAA has made refer .....

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1995 w.ef. 1.4.1996. Thus, there were two fallacies, viz. (i) in spite of non-availability of depreciation by virtue of amendment carried out in the Act, the assessee had made out a claim, and (ii) the AO has demonstrated that its claim was not factually admissible. The cases laws referred by the assessee are not applicable on the given facts of the case. Therefore, it is of the view that the ld.CIT(A) has rightly confirmed penalty upon the assessee - Decided against assessee. - ITA.No.2341/Ahd .....

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e gone though the record carefully. It emerges out from the record that the assessee has filed its return of income on 29.10.2007 showing total income at ₹ 16,63,938/- and assessment was finalized under section 143(3) on 4.12.2009, determining the total income at ₹ 26,33,040/-. The ld.AO has made addition of ₹ 9,69,102/- out of the claim of depreciation. It is pertinent to observe here that the assessee has claimed depreciation at the rate of 100% on centering material, because .....

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ciation is claimed @100%. On going through the bills for addition, made during first half of the year, it is seen that the same is in respect of M.S. Angles and Bars, HR Sheets & Plates as well as labour charges. There is also a JV entry towards loan account in the said addition of ₹ 2,16,002/- in the month of August 2006. This means that originally the item was purchased by P.C. Snehal Construction Co. and not the assessee. The items are above worth ₹ 5,000/-. The assessee appea .....

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owance - ₹ 9,69,102/-) 6. Dissatisfied with the addition, the assessee carried the matter before the ld.CIT(A), who in the first round of appeal, observed that the AO to verify the contentions of the assessee whether each steel plate consumed by the assessee for preparing centering plates was below ₹ 5,000/- and after verification of this fact, this issue be decided again. The ld.AO while giving effect to the order of the ld.CIT(A) passed an order under section 154 on 26.7.2013 and r .....

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to the ld.CIT(A) did not bring any relief to the assessee. 8. Before me, it has been pleaded by the assessee that its claim for grant of deprecation at the rate of 100% was not accepted by the AO, does not mean that the assessee deserves to be visited with penalty. In support of his contentions, he relied upon the judgment of the Hon ble Supreme Court in the case of CIT Vs. Reliance Petro Products, 322 ITR 158 (SC). According to the ld.counsel for the assessee it was only a difference of opinio .....

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e of Nalin P. Shah (HUF), Tax Appeal (LOD) 49 to 51 of 2013. Copy of this order also placed on record. 7. On the other hand, the ld.DR relied upon the orders of the Revenue authorities. 8. I have considered rival contentions and gone through the record carefully. Section 271(1)(c) of the Act has a direct bearing on the controversy, therefore, we take note relevant provision, which reads as under: "271. Failure to furnish returns, comply with notices, concealment of income, etc.- (1) The Ass .....

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hich shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefit the furnishing of inaccurate particulars of such income or fringe benefits: Explanation 1- Where in respect of any facts material to the computation of the total income of any person under this Act, (A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the CIT .....

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been concealed." 9. A bare perusal of this section would reveal that for visiting any assessee with the penalty, the Assessing Officer or the Learned CIT(Appeals) during the course of any proceedings before them should be satisfied, that the assessee has; (i) concealed his income or furnished inaccurate particulars of income. As far as the quantification of the penalty is concerned, the penalty imposed under this section can range in between 100% to 300% of the tax sought to be evaded by t .....

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planation-1 to section 271(1)(c) postulates two situations; (a) first whether in respect of any facts material to the computation of the total income under the provisions of the Act, the assessee fails to offer an explanation or the explanation offered by the assessee is found to be false by the Assessing Officer or Learned CIT(Appeal); and, (b) where in respect of any fact, material to the computation of total income under the provisions of the Act, the assessee is not able to substantiate the .....

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xplanation given by the assessee is false. In the second situation, the deeming fiction would come to play by the failure of the assessee to substantiate his explanation in respect of any fact material to the computation of total income and in addition to this the assessee is not able to prove that such explanation was given bona fide and all the facts relating to the same and material to the computation of the total income have been disclosed by the assessee. These two situations provided in Ex .....

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