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2016 (8) TMI 863 - ITAT DELHI

2016 (8) TMI 863 - ITAT DELHI - TMI - Penalty under section 271(1)(c) - write off of capital work in progress - Held that:- Assessee has duly disclosed the fact of write off of capital work in progress in the audited financial statements by way of a note and hence, there cannot be any allegation of furnishing of inaccurate particulars. It is not the case that the write off has been found to be bogus. The AO has himself accepted that it was a loss, albeit a capital loss, rather than a revenue los .....

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tion given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. A mere making of claim, which is not sustainable in law, by itself, will not amount to furnishing of inaccurate par .....

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as been preferred by the assessee against the order of the CIT(A)-X, New Delhi dated 30.4.2013 for assessment year 2009-10 on the following grounds of appeal:- 1. That the Learned Commissioner of Income Tax (Appeals) X, New Delhi, has erred in law as well as on facts and in circumstances of the case by wrongly appreciating the facts on the ground of opportunity to the assessee. 2. That the Learned Commissioner of Income Tax (Appeals) XIX, New Delhi, has erred in law as well as on facts and in ci .....

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lty levied by the Assessing Officer under section 271(1 )(c). Briefly stated, facts of the case are that primary business of the assessee company was to manufacture black & white picture tubes for the televisions. As the market for black & white televisions declined sharply, the assessee was forced to shut down the manufacture of black and white picture tubes in financial year 2005-06. During the Financial Year 2007-08, in order to continue in the business, the assessee company decided t .....

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to write off the project was disclosed in the Annual Accounts of the company which got approval of the directors and shareholders in the Annual General Meeting (AGM). During the course of assessment and appellate proceedings, it was submitted by the assessee that the capital work in progress was written off during the year as Metal Part Project had became un-viable. The machinery purchased for metal project had not been capitalized and was shown under the head Fixed Assets as capital work in pro .....

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earing for 24- 04-2012 which was received by the assessee on 24th itself. Vide Letter dated 27-04- 2012, the assessee sought time for filing a reply but the AO proceeded to pass the penalty order without affording further time to the assessee and imposed a penalty of ₹ 1,02,53,238/- for making a wrong claim in the return of income. 6. Aggrieved, the assessee approached the First Appellate Authority who confirmed the penalty by holding that on the facts of the case it was clear that the cla .....

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ion to Page 40 of the Paper Book and submitted that it is also clearly evident from Point no. 3 of the Notes to the Accounts of the audited Balance Sheet that the assessee company had disclosed the same fact by way of note also that the management has decided to write off the expenditure in the Capital work in progress amounting to ₹ 329.4 lacs and in the preoperative account of ₹ 2.42 lacs. It was further submitted that the AO, while framing original assessment, has not recorded any .....

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mposable. He submitted that the penalty ought to be deleted. 8. The Ld. DR supported the orders of the authorities below and emphasized that since the assessee was not pressing for addition in the quantum appeal before the ITAT, it was obvious that the assessee accepted that it had furnished inaccurate particulars of income and, therefore, the penalty order ought to be upheld. 9. We have heard the rival submissions and perused the material on record.We find that section 271(1)(c) postulates impo .....

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statements by way of a note and hence, there cannot be any allegation of furnishing of inaccurate particulars. It is not the case that the write off has been found to be bogus. The AO has himself accepted that it was a loss, albeit a capital loss, rather than a revenue loss as claimed by the assessee. In the case of CIT vs. Vamchampigons & Agro Produce (2006) 200 CTR (Del) 259, Hon ble Jurisdictional High Court held that Assessee having shown the income from sale of debentures as capital ga .....

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