TMI Blog2020 (11) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... ald (DR) ORDER PER AMARJIT SINGH, JM: The assessee has filed the above mentioned appeals against the different order passed by the Commissioner of Income Tax (Appeals)-16, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Ys. 2011-12 2014-15 in which the penalty levied by the AO has been ordered to be confirmed. ITA. NO.3467/M/2019 2. The assessee has filed the present appeal against the order dated 28.03.2019 passed by the Commissioner of Income Tax (Appeals)-16, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Y. 2011-12 in which the penalty levied by the AO has been ordered to be confirmed. 3. The assessee has raised the following grounds: - (1) The Ld. CIT(A)-16 has erred in confirming levy of penalty under section 271(1)(c) of the Income tax Act 1961 amounting to ₹ 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 ₹ 1,59, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Vs. Reliance Petro Products (322 ITR 158 (SC)). It is also specifically argued that the Hon‟ble ITAT Chandigarh in the case of Fastway Transmission (P) Ltd. Vs. ACIT (ITA. No. 547/Chd/2017 dated 06.05.2020 has allowed the claim of depreciation on set top box @ 60% which means that the claim of the assessee was not false so the penalty is not justifiable in the interest of justice. However, on the other hand, the Ld. Representative of the revenue has strongly relying upon the order passed by the CIT(A) in question. The factual position is not in dispute that the assessee claimed the depreciation on set up box and on the control room equipment @ 60% which was disallowed and restricted to the extent of 15%. The ITAT Pune Bench in the case of Kanbay Software Enterprise Ltd. Vs. DCIT (122 TTJ 271 (ITAT Pune Bench) has given the following finding.:- 70. Before we part with the matter, we would like to make a couple of observations. Firstly, we may mention that, as we have stated earlier in this order as well, this appeal was taken up for hearing along with several other appeals relating to penalties under section 271(1)(c) of the Act. While deciding one aspect of this appeal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , by putting the words and expression used in the ruling in the right perspective and by taking a holistic legal view of the matter. Such an exercise is not to be viewed as diluting the law laid down in a ruling, but as a cerebral judicial exercise and a call of duty in judicial offices. We have highest respects for the rulings by the higher judicial forums, but it would indeed be inappropriate to use the words and expressions employed in these rulings, in isolation, as complete exposition of law and as a blind man's walking stick, rather than luminosity of judicial knowledge with the benefit of which we have to perform our duties of office. 71. The appeal is allowed. 6. In the case of DCIT Vs. Apollo Hospitals Enterprises Ltd. (supra) the Hon‟ble ITAT Chennai Bench has held as under.:- 5. The facts of the present case are very simple. In Appendix I provided under rule 5 of the Income-tax Rules, 1962, different rates of depreciation are provided for different classes of machineries and assets. In the case of life saving devices the depreciation suggested is 40 per cent. There is no separate rate available in the appendix for hospital equipments as such. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee on fact and in law on different issues are not acceptable to the Assessing Officer, the assessing authority will make disallowances and additions. Such disallowances and additions made by the assessing authority, per se, do not constitute instances of concealment of income or furnishing of inaccurate particulars. Such additions and disallowances are the logical results of a conscious assessment of an income-tax return filed by an assessee. 9. In the present case the assessee has furnished the entire details of the medical equipments deployed in its hospital. As far as that matter is concerned, there is no concealment and there is no furnishing of any inaccurate particulars. The assessee also has not claimed depreciation at a non existent rate. The assessee has not misrepresented any fact. Everything was open before the Assessing Officer. It is true that the assessee claimed depreciation at 40 per cent. on the entire medical equipment. That may be a wrong claim. But, that does not mean that the assessee has concealed its income or furnished inaccurate particulars. 10. The Revenue has relied on the decision of the hon'ble Supreme Court rendered in the case of Unio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he claim made. It is an admitted position in the present case that no information given in the Return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. The Learned Counsel argued that submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income . We do not think that such can be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In Commissioner of Income Tax, Delhi Vs. Atul Mohan Bindal [2009(9) SCC 589], where this Court was considering the same provision, the Court observed that the Assessing Officer has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income. This Court referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income Tax, Mumbai Anr. was upset. In Union of India Vs. Dharamendra Textile Processors (cited supra), after quoting from Section 271 extensively and also considering Section 271(1)(c), the Court came to the conclusion that since Section 271(1)(c) indicated the element of strict liability on the assessee for the concealment or for giving inaccurate particulars while filing Return, there was no necessity of mens rea. The Court went on to hold that the objective behind enactment of Section 271(1)(c) read with Explanations indicated with the said Section was for providing remedy for loss of revenue and such a penalty was a civil liability and, therefore, willful concealment is not an essential ingredient for attracting civil liability as was the case in the matter of prosecution under Section 276-C of the Act. The basic reason why decision in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai Anr. (cited supra) was overruled by this Court in Union of India Vs. Dharamendra Textile Processors (cited supra), was that according to this Court the effect and difference between Section 271(1)(c) and Section 276-C of the Act was lost sight of in case of Dilip N. Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deductions knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; (i) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its Return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was 1/28/2020 C.I.T., Ahmedabad vs Reliance Petro products Pvt. Ltd on 17 March, 2010 https://indiankanoon.org/doc/1030377/ 5/6 up to the authorities to accept its claim in the Return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under Section 271(1)(c). If we accept the contention of the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in the case of ACIT Vs. Janak Global Resources Pvt Ltd ITA No. 470/Chd/2018 order dated 16.10.2018, holding that that if the assessee is possessed of sufficient own interest free funds to meet the investments / interest free advances, then, under the circumstances, presumption will be that interest free advances / investments have been made by the assessee out of own funds / interest free funds. Reliance in this respect can also be placed on the decision of the Hon'ble Supreme Court in the case of Hero Cycles (P) Ltd Vs. CIT 379 ITR 347 (SC) and also on the latest decision of the Hon'ble Supreme Court in the case of CIT (LTU) Vs. Reliance Industries Ltd. *2019+ 410 ITR 466 (SC). Thus, as per the settled law no disallowance u/s 36(1)(iii) of the Act is warranted on this issue. This ground is accordingly allowed in favour of the assessee. 55. G round No . 9 : - Ground No. 9 is general in nature and does not require any specific adjudication. This appeal of the assessee stands partly allowed. 9. The factual position as well as the legal position are on record. It is quite clear that the declining of the claim of depreciation of the assessee nowhere come ..... X X X X Extracts X X X X X X X X Extracts X X X X
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