TMI Blog1993 (11) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to as "the assessee") is a company registered under the Companies Act, 1956, and carries on the business of manufacture of ferro silicon. A second unit was established by it, consisting of 24,000 KVA furnace for manufacture of ferro silicon. Plant and machinery were installed by September 11, 1973. The actual electric connections were provided on December 27, 1973. For the assessment year 1974-75, corresponding to the accounting year ending December 31, 1973, the assessee made a claim that it had started production in the calendar year but due to some minor rectifications and delay in supply of electric power, there was no commercial production. The necessary power supply was started from January 19, 1974, and commercial production was commenced on and from February 7, 1974. For the assessment year 1974-75, the assessee filed its return of income on August 1, 1974, showing a loss of Rs. 79,54,164. Subsequently, a revised return was filed on March 30, 1976, disclosing a loss of Rs.86,27,350. It was indicated that the filing of the revised return was necessary because an additional claim of Rs. 6,59,172 was by mistake included in the statement for the subsequent year ending on Dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was made on December 27, 1973. This was also reflected in the annual general report of the company, the statements, etc., accompanying the return of income. The Revenue's stand, however, was that the assessee had not commenced production before February, 1974. The assertions made by the assessee were scrutinised by the Inspecting Assistant Commissioner, who found that there was neither consumption of electricity nor raw materials as seen from the meter readings, raw materials consumption register and the furnace log book. It was concluded that the new unit had not been put to either commercial production or trial production during the concerned assessment year. The production register and the raw material consumption register were examined and it was found that 5 tonnes of quartz and 1 tonne coke were fed into the furnace only on January 19, 1974, i.e., 19 days after the close of the accounting period. Considering the explanation, the Inspecting Assistant Commissioner held that the material facts were not correctly disclosed. The electricity meter readings obtained right from its inception, i.e., December 12, 1973 to March 31, 1974, showed that even on January 1, 1974, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the assessee even got the electric connection. The assessee pleaded that the plant was used partially and this fact was indicated even in the directors' report. The said report was based upon consumption of power of 14.4 MW. Once the plant was put to use, the assessee was entitled for depreciation and development rebate. The claim made by the assessee was based upon the use of the plant in December, 1973. The claim did not indicate that the assessee was entitled for depreciation and development rebate, but only indicated that it was a mere claim before the Inspecting Assistant Commissioner (Assistant), who was to decide whether the claim of the assessee was entertainable or not. The fact that it was open for the decision of the Assessing Officer could not be said to be false when the assessee got the electric connection during the previous year and some power was also consumed by it. The assessee was conscious of the legal position that in the above circumstances it cannot claim relief under section 80J because no manufacturing took place during the previous year and, consequently, it withdrew its claim under section 80J which was claimed in the original return by it. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee was bona fide. It was pleaded that even if the assessee made a legal claim, however foolish it may be, penalty cannot be sustained on making such a claim. The claim was a legal one. The assessee was of the opinion that the plant and machinery had been put to use during the year and it had liability for guarantee commission and interest on that very plant which was imported from Norway. The assessee made this claim before the Assessing Officer and by merely putting the claim it cannot be said that the assessee made a false claim. Reliance was placed on several decisions. The Tribunal held that it would suffice to refer to the decision of the Supreme Court in Cement Marketing Co. of India Ltd. v. Assistant Commissioner of Sales Tax, Indore, [1980] 124 ITR 15, wherein a distinction was made between a false return and a bona fide return. The assessee's case was also highly debatable as to whether it could be allowed development rebate and depreciation during the year under consideration. If depreciation and development rebate was allowable on the plant and machinery, the assessee was entitled to deduction for guarantee commission and interest. Therefore, it cannot be said that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly prayed that it be modified. In our view, the following question reflects the true essence of the dispute : " Whether, the Tribunal was justified in concluding that the assessee's claim was bona fide and, therefore, notwithstanding disallowance of the claims during assessment, penalty was not imposable ?" Coming to the claim made by the assessee it is to be noted that the claim for depreciation and development rebate was made relying on sections 32 and 33 of the Act. Depreciation is allowable on machinery even if it is used at any time, however short during the accounting year. The word "used" embraces passive as well as active user. Depreciation can also be allowed in certain cases, even if the machinery has not been actually worked during the accounting year. Under section 33 of the Act, development rebate can be allowed in a previous year in which the machinery or plant was installed or when the machinery or plant was first put to use in the immediately succeeding year, then, in that previous year. Thus, law allows for making an election by the assessee. In the present case, the assessee claimed depreciation and development rebate in the year of installation. The word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, namely, keeping off a certain portion of income. The former is direct and the latter may be indirect in its execution. The word "conceal" is derived from the latin concelare which implies to hide. Webster in his New International Dictionary equates its meaning "to hide or withdraw from observation, to cover or keep from sight ; to prevent the discovery of ; to withhold knowledge of". The offence of concealment is thus a direct attempt to hide an item of income or a portion thereof from the knowledge of the income-tax authorities. In furnishing its return of income, an assessee is required to furnish particulars and accounts on which such return income has been arrived at. These may be particulars as per its books of account, if it has maintained them, or any other basis upon which it had arrived at the returned figure of income. Any inaccuracy made in such books of account or otherwise which resulted in keeping off or hiding a portion of its income is punishable as furnishing inaccurate particulars of its income. Whether the burden of proof in a given case has been discharged on a set of facts is a question of fact. A finding of fact arrived at by the Tribunal will not be distu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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