TMI Blog2018 (10) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... rance policy and why only copy was obtained from Mumbai. The discrepancy in the date of stamp paper was also pointed out. Thus, in our considered view three authorities have concurrently held on facts against the assessee. While examining the correctness of the order passed by the Tribunal under Section 260A of the Act, we cannot convert ourselves as a third appellate authority over the findings rendered by the Assessing Officer. - Decided against assessee. - T.C.(A)No.1522 of 2007 - - - Dated:- 20-9-2018 - Mr. T. S. Sivagnanam And Mrs. V. Bhavani Subbaroyan JJ. For the Appellant : M/s.Sree Lakshmi Valli For the Respondent : Mr.Karthik Ranganathan JUDGMENT V.BHAVANI SUBBAROYAN, J. The present tax appeal is filed against the order passed by the Income Tax Appellate Tribunal, Bench B , Chennai, in I.T.A.NO.642/Mds/2002 for the assessment year 1996-1997. 2. This appeal has been admitted on the following substantial question whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in confirming the levy of penalty of ₹ 5,31,800/- under Section 271(i)(c) of the Income tax Act? 3. The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant herein for the said lease transaction to be a bonafide transaction, as against which, the present tax appeal has been filed. 6. The learned counsel for the appellant submitted that the Tribunal has failed to appreciate the genuineness of the sale and lease back transactions which was substantiated by supporting documents and invoices. It was also further contended by the appellant that the lease denials have been exceeded to tax as revenue receipts and in the hands of the lessee. The sale of assets has been reduced from the WDV of the respective blocks of assets and lease rental paid by the appellant has been allowed as revenue deductions. In this context, the appellant bonafidely believed that the transaction was a genuine one. Further, it was contended that merely on suspicion and surmises, the depreciation cannot be denied. Even otherwise, the depreciation claimed under transaction even if it is disallowed, does not warrant levy of penalty. 7. The learned counsel appearing for the appellant, in support of her contention, has relied on the case reported in (2013) 359 ITR 0565 (Karnataka), Commissioner of Income Tax and Others Vs. Manjunadha Cotton and Gining fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dor had undertaken to pay the hire charges, cannot lead to the conclusion that the transaction is a sham one. It could be seen that the law recognises constructive delivery as an acceptable mode of delivery and possession. The fact that the assessee had not taken physical possession, per se, does not pronounce anything against the sale that took place between the assessee and the other M/s.Ponni Sugars and Chemical Limited. Thus, there are no material on record to show that the sale between the assessee and M/s.Ponni Sugars and Chemical Limited was a sham transaction. In the above circumstances, the genuineness of the said transaction cannot be questioned at all . 11. The learned counsel appearing for the Income Tax Department, vehemently contends that the sale cum lease back transaction referred by the appellant is nothing but simple financial transaction and it is a tailor made to suit the occasion for concealment of transaction, thereby, to claim depreciation. 12. The learned counsel would also argue that the quantum assessment cannot be challenged during the penalty proceedings. Further, the appellant seems to have filed certain documents regarding lease tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin the assessee's knowledge that the income from the lease was to be treated as income from finance transaction in respect of same party. The new plea taken by the appellant that consequent to disallowance of depreciation, the income should also be deleted, has no legs to stand, and the claim was not accepted and held that plea taken by the said appellant that consequent to disallowance of depreciation, the income should also be deleted has no legs to stand. 17. The learned counsel for the respondent also relied on the Judgment, reported in [2018] 93 taxmann.com 250 (Madras) , in the case of Sundram Finance Limited Vs. Assistant Commissioner of Income Tax, Co. Circle VI(4), Chennai , wherein, it has been observed that the authorities concurrently rejected the explanation offered by the assessee that the Court was in agreement with the factual findings rendered by the authorities since the petitioner is a leasing company as it is very hard to believe a case when the leasing company had made advances for leasing out a machinery, which was never in existence. That apart, the assessee therein had not mentioned either before the lower authorities or before this Court, as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome to the conclusion that the asset is considered integral part of the factory as a whole, which makes it very clear that the assets mentioned in the lease are permanently fixed as an integral part of the factory which cannot be used by anyone else other than New Sharrock Mills. This would lead to the conclusion that the assets are not capable of being sold and sale exists only on paper and not in the real sense. 21. The Income Tax Appellate Tribunal, while confirming the orders of the 1st Appellate Authority, has given categorical finding on the concealment of Income, thereby, attracting penalty under Section 271(1)(c) of the Income Tax Act, 1961. 22. On a careful perusal of the entire circumstances, leads to the only conclusion that the Assessing Officer, Appellate Authority, and the Appellate Tribunal, has rightly rejected the claim of the appellant. In terms of 271(1)(c) of the Income Tax Act, 1961, it empowers the Income Tax Authority, to levy penalty under the Act, if the Assessing Officer or Commissioner of Appeal, or the Principle Commissioner during the proceedings, is satisfied that the Assessee has concealed the particulars of Income or furnished inaccurate partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n true nature of the transaction and that it was of the bonafide view that it actually owned and leased computers on which it claimed depreciation. It was further held that even though the assessee might have furnished all particulars for a tripartite transaction, the fact that what it put up in its return was a sham and mere paper transaction leading to the inevitable conclusion that the explanation of the assessee on the question of its ownership and use of the computers is unsubstantiated and malafide. Accordingly, the order passed by the Assessee Officer was restored. 25.The Assessing Officer while imposing the order of penalty pointed out that on a holistic examination of the transaction, it is apparent that it is not in the nature of a normal sale and lease back transaction, rather a hurriedly planned act towards the end of the financial year to claim 100% depreciation benefit and in that process, the Assessee has prepared extensive documentation and the documents, by themselves, do not mean much unless they are vouched by authentic transaction. After examining the nature of transaction, the Assessing Officer held that the claim for depreciation is fraudulent. On ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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