TMI Blog2016 (8) TMI 1481X X X X Extracts X X X X X X X X Extracts X X X X ..... itiated. As per assessment order dated 6-11-2015 relating to assessment year 2013-14, the carry forward unabsorbed depreciation was more than ₹ 14.00 crores. The assessee has declared Short term capital gain on the sale of these trucks in the assessment year 2013-14 and capital gain has been calculated by taking depreciation @ 30%. All these facts suggest that there was an inadvertent mistake on the part of the assessee for claiming depreciation and same was rectified as soon as it was noticed. Direct to delete the penalty levied u/s 271(1)(C) - Decided in favour of assessee. - ITA No. 66/JP/2016 - - - Dated:- 16-8-2016 - SHRI BHAGCHAND, J. Appellant by: Shri P.C. Parwal, CA Respondent by :Shri R.A. Verma, Addl CIT-. DR ORDER BHAGCHAND, J. The assessee has filed an appeal against the order of the ld. CIT(A)-I, Jaipur dated 24-11-2015 for the assessment year 2010-11 raising therein following ground:- The ld. CIT(A) has erred on facts and in law in confirming the levy of penalty of ₹ 7.50 lacs u/s 271(1)(c) of the I.T. Act, 1961. 2.1 Brief facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation, on old trucks purchased by the assessee from NBI Finance, made by the AO during the course of assessment can never be exposed. 9. Further I do not find any merit in the submission of the assessee that the addition has been made only on account of difference of opinion as the A/R of the assessee during the course of assessment accepted the opinion of the AO and furnished a revised chart of depreciation. It is also to be mentioned here that in case any omission / error the assessee had option to revise his return of income u/s 139(5) but the same has not been opted by the assessee. 10. Further, it is also to be mentioned that mere acceptance of the tax evasion during assessment proceedings M/s. serve no purpose had the case not come under scrutiny, the undisclosed income would not have seen in the light of the day. In view of the above discussions and the facts of the case, it is clear that the assessee had concealed the true particulars of his income. Hence, the above mentioned concealment of income leads to attract penal provisions by virtue of Section 271(1) . Further, the explanation put forth by the assessee in his defence has not been found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as available to it. It is therefore held that the explanation put forth by the appellant in claiming depreciation at higher rate is not bonafide and the appellant failed to substantiate its explanation. It is difficult to imagine how an old thing could be treated as new in the hands of a new owner. It is therefore, held that the claim of depreciation on old trucks at higher rates was patently wrong. The appellant relied upon a number of case laws for cancellation of penalty imposed by the AO. In this regard, it is to be noted that these cases are distinguishable from the facts of the instant case under consideration. The Ld. CIT(A), thereafter in confirming the levy of penalty relied on the Rajasthan High Court decision in case of Punsumi Engineers Ltd. Vs. CIT (2014) 90 CCH 0262 [Page 8 of the order], Delhi High Court decision in case of CIT Vs. NG Technologies Ltd. (2015) 57 Taxman.com 389 [Page 9-11 of the order] and Supreme Court decision in case of MAK Data Pvt. Ltd. (2013) 38 taxman.com 448 (Page 11-13 of the order). 2.4 Now the assessee is before me with the prayer to delete the penalty as the ld. CIT(A) has wrongly confirmed the levy of penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in case of Punsumi Engineers Ltd. Vs. CIT (2014) 90 CCH 0262 [Page 8 of the order], Delhi High Court decision in case of CIT Vs. NG Technologies Ltd. (2015) 57 Taxman.com 389 [Page 9-11 of the order] and Supreme Court decision in case of MAK Data Pvt. Ltd. (2013) 38 taxman.com 448 (Page 11-13 of the order). 2.4 Now the assessee is before me with the prayer to delete the penalty as the ld. CIT(A) has wrongly confirmed the levy of penalty of ₹ 7.50 lacs u/s 271(1)(c) of the Act and the ld. AR of the assessee also filed following written submission to this effect. 1. At the outset, it may be noted that the AO has not specified in the assessment order as to for which charge penalty proceedings has been initiated. He has simply mentioned penalty notice u/s 271(1)(c) r.w.s. 274 of the IT Act, 1961 is issued . It is not stated whether the initiation is for concealment of income or for furnishing inaccurate particulars of income. Further, only printed notice has been issued along with the assessment order without mentioning as to the charge for which such notice is issued. While imposing the penalty also, in one Para it is mentioned that penalty is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be noted that in A.Y. 11-12 and A.Y. 12- 13 also, income is assessed at Nil with carry forward of unabsorbed depreciation but in A.Y. 11-12, when there was a reduction in the claim of depreciation by ₹ 4,33,600/- on this account, no penalty was initiated by the AO. Further, in A.Y. 13- 14, these trucks having original cost of ₹ 1,08,40,000/- having WDV of ₹ 37,18,120/- as on 31.03.2012 (after claiming depreciation @30% instead of 50%) was sold for ₹ 94,86,000/- and STCG of ₹ 57,67,880/- is offered for tax in A.Y. 13- 14. The working of depreciation/STCG in this connection is as under (PB 16-19):- Original cost of Trucks ₹ 1,08,40,000/- Less:- Depreciation @30% in A.Y. 10-11 ₹ 32,52,000/- WDV as 01.04.2010 ₹ 75,88,000/- Less:- Depreciation @30% for A.Y. 11-12 ₹ 22,76,400/- WDV as on 01.04.2011 ₹ 53,11,600/- Less:- Deprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r depreciation. There was no concealment involved nor this is a case of filing of inaccurate particulars as everything was disclosed in the deprecation chart attached with the Income-tax Return. This case is covered by the case of CIT Vs. Reliance Petro Product Pvt. Ltd. (2010) 322 ITR 158 and CIT Vs. Brahmputra Consortium Ltd. 348 ITR 0339 (Del.) (HC). In case of CIT Vs. Brahmputra Consortium Ltd., the assessee claimed depreciation at 40% on earth moving equipment which consisted of excavators and tippers. As per the rules, only tippers were eligible for higher rate of depreciation at 40% and not excavators. When the assessee was confronted with this, it revised its claim, claiming 25% of depreciation instead of 40%. This resulted in disallowance of excess depreciation. The AO imposed penalty u/s 271(1)(c) on the ground that the assessee revised its computation only when the wrong claim of depreciation was discovered by the AO, that too, when it could be discovered after proper enquiry and scrutiny of the details. On these facts, it was held that there cannot be dispute about the provisions allowing depreciation at 25 percent on excavators. However, the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aj.) (HC) is on different facts and situations in as much as in that case it was found that the acquisition of asset itself is not proved and the transaction was held to be a colourable transaction. Similarly the case of CIT Vs. NG Technologies Ltd. (2015) 370 ITR 0007 (Del.) (HC) is on a different footing. Further, the decision relied by CIT(A) in case of MAK Data Pvt. Ltd. (2013) 358 ITR 593 (SC) is not applicable on facts. In that case, the assessee filed its ROI for A.Y. 04-05 on 27.10.2004. During the course of assessment proceedings, the AO noticed that certain documents pertaining to share applications were found in the course of survey proceedings u/s 133A conducted on 16.12.2003 in the case of assessee s sister concern. The assessee with a view to avoid litigation, buy peace and to make amicable settlement with the department surrendered additional income. The AO imposed penalty u/s 271(1)(c). It was held that the AO should not be carried away by the plea of the assessee like voluntary disclosure , buy peace , avoid litigation , etc. to explain away its conduct. The statue does not recognize such defence under Expln. 1 to sec. 271(1)(c). It is a trite law that a volunta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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