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TMI Blog2020 (11) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... . 34,19,860/-. b). Your appellant prays that the said penalty imposed u/s 271(1)(c) may be deleted. Your appellant craves leave to add, alter, modify or amend any ground of appeal." 4. The brief facts of the case are that the assessee filed its return of income on 29.09.2011 declaring total income at loss in sum of Rs. 1,59,26,705/-. The return was processed u/s 143(1) of the I. T. Act. Subsequently, the case was selected for scrutiny. Notices u/s 143(2) & 142(1) of the I. T. Act, 1961 were issued and served upon the assessee. On verification, it was found that the assessee has claimed the depreciation @ 60% on the control room equipment and digital set top box details of which are hereby mentioned below.:- Asset Opening balance Purchase Depreciation Closing balance Control Room equipment 0 1,74,80,348 1,04,88,209 69,92,139 Digital Set top box 0 53,98,232 32,38,939 21,59,293 Total 0 2,28,78,580 1,37,27,148 91,51,432 The AO was of the view that the assessee was entitled to claim the depreciation @ 15% upon the said equipment, therefore, the depreciation claimed in sum of Rs. 1,02,95,361/- was declined and added to the income of the assessee and further the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Hon'ble Supreme Court's judgment in the case of Dharamendra Textile Processors (supra) on the legal framework relating to imposition of penalty under section 271(1)(c), we also had the benefit of arguments advanced by learned counsels, as also by the learned Departmental Representatives, in all those cases. We would like to place on record our deep appreciation to Shri Golvala as indeed to all the learned representatives for their valuable assistance in the lengthy hearing of these appeals which was spread over several sessions. We thus place on record our deep appreciation to Shri Golvala as also to Shri Chetan Karia, Shri D.P. Bapat, Shri K.A. Sathe, Shri Kishore Phadke, Shri M.N. Kulkarni, Shri Pramod Singte, Shri Rajan Vora, Shri Sunil Ganoo, Dr. Sunil Pathak, Shri S.P. Doshi, Shri S.P. Joshi, Shri S.R. Puranik, (in alphabetical order) appearing for other assessees; and - Shri R. Kaushal, Shri A.S. Singh, Shri K. Srinivasan, and Shri Santosh Kumar - appearing for the revenue. Secondly, no matter how politely Shri Kaushal puts it, which is his hallmark anyway, we were all along alive to his submission that, by resorting to a process of interpretation, we must not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rate of depreciation applicable to hospital equipments, other than "life saving devices", will be the general rate applicable to plant and machinery. 6. But, while computing and claiming depreciation, the assessee-hospital treated its entire equipments as "life saving devices" and claimed depreciation at 40 per cent. The assessee is not a factory or a manufacturing system so as to name its equipments as normal plant and machinery. The hospital has employed innumerable and different types of medical equipments and devices to run its various departments. The assessee took a plausible view that, speaking in a general way, all the medical equipment systems deployed in a hospital could be "life saving devices". On that loose interpretation of the term, the assessee claimed depreciation at the rate of 40 per cent. on the entire assets employed by it other than buildings, furniture, etc. It is to be seen that such a misunderstanding is plausible in this case, as no separate entry is available in Appendix-I to suggest the rate of depreciation applicable to general medical equipments deployed in a hospital. This unique situation moved the assessee to presume that, being a hospital, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Textile Processors [2008] 306 ITR 277/174 Taxman 571, wherein the hon'ble apex court has held that mens rea is not an essential ingredient for levying penalty under section 271(1)(c) of the Act, as it is in the nature of a civil liability. The present case does not reach to the point where the above decision should be considered by us. The above decision declares that mens rea need not be present in a case of concealment, provided it is found that the assessee has concealed the income or has furnished inaccurate particulars of income. In the present case, there is no concealment of income as such. There is no furnishing of inaccurate particulars. So it is not at all necessary even to mention the judgment of the hon'ble Supreme Court in the case of Dharamendra Textile Processors (supra). 11. This is a simple case where the Assessing Officer has for valid reasons disallowed a portion of the depreciation claimed by the assessee. The said disallowance was added to the income of the assessee. This is a normal exercise of any scrutiny assessment. This case cannot be stretched beyond this. This case cannot be made out as a case of concealment of income or furnishing of inaccur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in Union of India Vs. Dharamendra Textile Processors [2008(13) SCC 369], as also, the decision in Union of India Vs. Rajasthan Spg. & Wvg. Mills [2009(13) SCC 448] and reiterated in para 13 that:- "13. It goes without saying that for applicability of Section 271(1)(c), conditions stated therein must exist." 8. Therefore, it is obvious that it must be shown that the conditions under Section 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the Return filed because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. In Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. [2007(6) SCC 329], this Court explained the terms "concealment of income" and "furnishing inaccurate particulars". The Court went on to hold therein that in order to attract the penalty under Section 271(1)(c), mens rea was necessary, as according to the Court, the word "inaccurate" signified a deliberate act or omission on behalf of the assessee. It went on to hold that Clause (iii) of Section 271(1) provided for a discretion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax, Mumbai & Anr. (cited supra). However, it must be pointed out that in Union of India Vs. Dharamendra Textile Processors (cited supra), no fault was found with the reasoning in the decision in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. (cited supra), where the Court explained the meaning of the terms "conceal" and inaccurate". It was only the ultimate inference in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. (cited supra) to the effect that mens rea was an essential ingredient for the penalty under Section 271(1)(c) that the decision in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. (cited supra) was overruled. 9. We are not concerned in the present case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word "inaccurate" has been defined as:- "not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript". We have already seen the meaning of the word "particulars" in the earlier part of this judgment. Reading the words in conjunc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not accepted by Assessing Officer for any reason, the assessee will invite penalty under Section 271(1)(c). That is clearly not the intendment of the Legislature. 11. In this behalf the observations of this Court made in Sree Krishna Electricals v. State of Tamil Nadu & Anr. [(2009) 23VST 249 (SC)] as regards the penalty are apposite. In the aforementioned decision which pertained to the penalty proceedings in Tamil Nadu General Sales Tax Act, the Court had found that the authorities below had found that there were some incorrect statements made in the Return. However, the said transactions were reflected in the accounts of the assessee. This Court, therefore, observed: "So far as the question of penalty is concerned the items which were not included in the turnover were found incorporated in the appellant's account books. Where certain items which are not included in the turnover are disclosed in the dealer's own account books and the assessing authorities include these items in the dealer's turnover disallowing the exemption, penalty cannot be imposed. The penalty levied stands set aside." The situation in the present case is still better as no fault has been fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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