Parkash Industries Ltd., Hisar V. DCIT, Hisar

CO 153/DEL/2010

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 6977 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 09-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 14-11-2011
• Assessment Year: 1994-1995
• Appeal Filed On: 15-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: P L GUPTA
• Keywords: Depreciation; Rule of consistency; Wrong claim; Tax effect
• Section: 143(3); 133A; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.D. RANJAN ITA NO. 1420/DEL/2010 ASSTT. YR: 1994-95 DY. COMMISSIONER OF INCOME-TAX, VS. PARKASH INDUS TRIES LTD., HISAR. DELHI ROAD, HISAR. PAN/GIR NO. AABCP6765H C.O. NO. 153/DEL/10 ( IN ITA NO. 1420/DEL/2010 ) ASSTT. YR: 1994-95 PARKASH INDUSTRIES LTD., VS. DY. COMMISSIONER OF INCOME-TAX, DELHI ROAD, HISAR. HISAR. (APPELLANT) ( RESPONDENT ) REVENUE BY : MS. Y. KAKKAR SR. DR ASSESSEE BY : SHRI P.L. GUPTA CA O R D E R PER R.P. TOLANI, J.M : THESE ARE REVENUES APPEAL AND ASSESSEES CROSS-OBJ ECTION AGAINST CIT(A)S ORDER DATED 19-1-2010, RELATING TO A.Y. 19 94-95. RESPECTIVE GROUNDS ARE AS UNDER: REVENUES APPEAL ( ITA NO. 1420/DEL/10) : WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) WAS RIGHT IN DELETING THE PENALTY IMPOSE D U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 IN RESPECT OF EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE. ITA 1420/DEL/10 & CO 153/DEL/10 PRAKASH INDUSTRIES LTD. 2 ASSESSEES CROSS-OBJECTIONS (CO NO. 153/DEL/10 : 1. THAT ON FACTS & CIRCUMSTANCES OF THE CASE AND I N LAW, COMMISSIONER OF INCOME TAX (APPEALS), ROHTAK [BRIEF LY THE CIT(A)] ERRED IN CONFIRMING LEVY OF PENALTY U/S 27 1(1)(C) OF THE ACT, IN RESPECT OF ADDITION OF RS. 2,25,088/- M ADE ON ACCOUNT OF ALLEGED FUND TRANSFER FROM M/S R.K. VIDE O DISTRIBUTOR. 2. THAT ON FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) FAILED TO APPRECIATE THAT ADDITION OF RS. 2, 25,088/- ON ACCOUNT OF ALLEGED FUND TRANSFER FROM M/S R.K. VIDE O DISTRIBUTOR WAS ACCEPTED BECAUSE THERE WAS NO TAX E FFECT. IN FACT, EXCEPT FOR SUSPICION THERE WAS NOTHING TO TRE AT TRANSACTIONS WITH M/S R.K. VIDEO, A DISTRIBUTOR OF APPELLANT AS BOGUS. 2. BRIEF FACTS ARE: FOR A.Y. 1994-95 ASSESSEE FILED ITS RETURN ON 30-11- 1994, DECLARING LOSS OF RS. 58,56,48,200/-, WHICH W AS PROCESSED U/S 143(1)(A) ON 25-5-95 AT THE RETURNED LOSS. SUBSEQUE NTLY REGULAR ASSESSMENT WAS MADE U/S 143(3) ON 26-3-97 AT A LOSS OF RS. 58, 13,55,030/- AS AGAINST RETURNED LOSS OF RS. 58,56,48,200/-. 2.1. AGGRIEVED, ASSESSEE FILED APPEAL BEFORE THE CI T(A), WHO VIDE ORDER DATED 16-8-2000 SET ASIDE THE ISSUES TO THE AO FO R RE-ADJUDICATION. IN SECOND ROUND I.E. SET ASIDE PROCEEDINGS, THE AO VI DE ORDER DATED 27-3-2002 ASSESSED THE NET LOSS AT RS. 56,34,39,618/-, BY MAK ING FOLLOWING ADDITIONS: A. ADDITION ON A/C OF LEASE RENTAL RS. 73,00,185/ - B. ADDITION ON A/C OF DEPRECIATION RS. 93,75,645/ - C. ADDITION ON A/C OF FUND TRANSFER: I. M/S R.K. VIDEO DISTRIBUTOR: 2,50,000 II. M/S SAHIB ENGG. WORKS : 29,54,126 32,04,126/- RS. 32,04,126/- 2.2. AO ALSO INITIATED PENALTY PROCEEDINGS U/S 271( 1)(C) IN RESPECT OF AFOREMENTIONED ADDITIONS. ITA 1420/DEL/10 & CO 153/DEL/10 PRAKASH INDUSTRIES LTD. 3 2.2. IN PENALTY PROCEEDINGS, THE AO OBSERVED THAT IN FIRST QUANTUM APPEAL, THE CIT(A), VIDE ORDER DATED 14-10-2005 HAD PASSED AN ORDER, DELETING THE ADDITION OF RS. 73,00,185/- MADE ON A/C OF LEASE RE NTAL; AND CONFIRMED THE FOLLOWING ADDITIONS (I) RS. 93,75,645/- MADE ON A/C OF EXCESS DEPRECIATION; AND (II) (II) RS. 31,79,214/- AS AGAINST RS. 32,04,126/- MA DE ON A/C OF FUND TRANSFER (RS. 2,25,088/- OUT OF RS. 2,50,000/- IN THE A/C OF M/S R.K. VIDEO DISTRIBUTOR; & 29,54,126/- IN THE A/C OF M/S SAHIB ENGG. WORKS). 2.3. ASSESSEE REQUESTED FOR KEEPING THE PENALTY PRO CEEDINGS IN ABEYANCE. AO, HOWEVER, VIDE PENALTY ORDER DATED 28-3-2007, IM POSED A PENALTY OF RS. 62,77,400/- (ON A LOSS ASSESSMENT) QUA RETAINED ADD ITIONS @ 100% OF THE TAX SOUGHT TO BE EVADED FOR FURNISHING OF CONCEALED PAR TICULARS OR INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF RS. 1,25,54, 859/- (31,79,214 + 93,75,645). 2.4. IN PENALTY APPEAL, THE CIT(A) VIDE ORDER DATED 19-1-2010 DELETED SUBSTANTIAL PART OF PENALTY AND RETAINED THE PART B Y FOLLOWING OBSERVATIONS: 4.1. THE ISSUE INVOLVED AND THE SUBMISSIONS MADE B Y THE APPELLANT HAVE BEEN CONSIDERED. AS REGARDS DEPRECIA TION, THE APPELLANT HAS SHOWN ITS PARTICULARS OF INCOME AND H A NOT CONCEALED ANY INCOME AS SUCH. THERE IS ONLY DIFFERE NCE OF OPINION AS TO THE RATES OF DEPRECIATION, BETWEEN TH E DEPARTMENT AND THE APPELLANT. IN THESE FACTS AND CIRCUMSTANCES NO PENALTY U/S 271(1)(C) CAN BEHELD AS IMPOSABLE. THEREFORE TH E PENALTY LEVIED BY THE ASSESSING OFFICER IS DELETED ON THIS ACCOUNT. AS REGARDS THE PENALTY ON ACCOUNT OF TRANSACTION PE RTAINING TO M/S SAHIB ENGG. WORKS, WHICH HAVE BEEN HELD AS NOT BOGUS ITA 1420/DEL/10 & CO 153/DEL/10 PRAKASH INDUSTRIES LTD. 4 BY THE ITAT IN THE APPEAL ORDER FOR THE AY 1994-95, THE PENALTY IMPOSED IS DELETED. IN SO FAR AS THE PENALTY IMPOSED ON ACCOUNT OF TRAN SACTIONS PERTAINING TO M/S R.K. VIDEO AGGREGATING TO RS. 2,2 5,088/- IS CONCERNED, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS HELD THE TRANSACTION AS BOGUS, THE APPELLANT HAS NO T FILED APPEAL AGAINST THIS FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND HAS ACCEPTED THE SAME. THEREFORE THE PENALTY IMPOSED BY THE ASSESSING OFFICER ON ACCOUNT OF RS. 2,25,088/- IS CONFIRMED; IT IS DIFFERENT MATTER THAT IN THE SU BSEQUENT ASSESSMENT YEARS PERTAINING TO M/S R.K. VIDEO WERE NOT QUESTIONED; APART FROM THIS THERE IS NO PROOF THAT THE SAME HAD BEEN CONSIDERED BY THE ASSESSING OFFICER AT ALL IN THE SUBSEQUENT ASSESSMENT YEARS. THEREFORE, THE GROUND OF APPEAL PERTAINING TO THIS ITEM IS DISMISSED. 2.5. IT SHALL BE PERTINENT HERE TO MENTION THAT THE AO LEVIED THE PENALTY ON THE BASIS OF CIT(A)S ORDER IN QUANTUM APPEAL. HOWE VER, WHEN THE CIT(A) DECIDED THE PENALTY APPEAL, ITAT ORDER ON QUANTUM W AS ALREADY DELIVERED ON 18-6-2009, WHICH IS CONSIDERED BY CIT(A). 2.6. AGGRIEVED. BOTH THE PARTIES ARE BEFORE US ON R ESPECTIVE GRIEVANCES. 3. LD. DR CONTENDS THAT THE AO FROM THE PERUSAL OF DETAILS OF DEPRECIATION WAS OF THE VIEW THAT ASSESSEE HAD WRON GLY CLAIMED 100% DEPRECIATION AT RS. 1,25,00,861/- IN VIDEO TAPE DIV ISION, KASHIPUR FOR SOLVENT RECOVERY PLANT. AS PER ASSESSEES CHART, IT WAS ELIGIBLE FOR 100% DEPRECIATION ON SOLVENT RECOVERY PLANT IN VIEW OF S CHEDULE 111(3)(III) G(A). ACCORDING TO AO, IN ITEM 3(III) G OF SCHEDULE ON DE PRECIATION TABLE THERE WAS NO MENTION OF SOLVENT RECOVERY PLANT AS CLAIM ED BY THE ASSESSEE TO BE ELIGIBLE FOR 100% DEPRECIATION. THE SOLVENT RECO VERY PLANT WAS ELIGIBLE FOR NORMAL DEPRECIATION @ 25% AND NOT 100%. ACCORDI NG TO AO, THE ITA 1420/DEL/10 & CO 153/DEL/10 PRAKASH INDUSTRIES LTD. 5 ASSESSEE DELIBERATELY CLAIMED EXCESS DEPRECIATION OF RS. 93,75,645/- AND IT WAS HELD THAT ASSESSEE HAD FURNISHED INACCURATE PAR TICULARS. 3.1. LD. DR CONTENDS THAT THE ASSESSEE ALONG WITH I TS RETURN OF INCOME, DID NOT FILE CORRECT DETAILS OF ASSETS ELIGIBLE FOR DEP RECIATION @ 100% IN ASSESSMENT PROCEEDINGS AND WHILE MAKING THE CLAIM A LSO JUSTIFIABLE REASONS WERE NOT GIVEN. CONSEQUENT TO SURVEY U/S 133A AT TH E ASSESSEES BUSINESS PREMISES, IT WAS NOTICED THAT THE EXISTENCE OF RELE VANT MACHINERY CARRYING 100% DEPRECIATION WAS NOT IDENTIFIABLE. THUS, THE A SSESSEES CLAIM WAS FOUND TO BE NOT GENUINE, CONSEQUENT TO INQUIRIES D URING THE COURSE OF SURVEY. BUT FOR SURVEY THESE FACTS WOULD NOT HAVE B EEN UNEARTHED, THEREFORE, ASSESSEE HAD FURNISHED INACCURATE PARTICULARS IN TH E RETURN OF INCOME DELIBERATELY TO CLAIM HIGHER DEPRECIATION. 3.2. LD. DR EMPHASIZED THAT THE ASSESSEE IN THE QUA NTUM PROCEEDINGS DID NOT EVEN PRESS THE GROUND IN RESPECT OF CLAIM OF DE PRECIATION @ 100% BEFORE ITAT. BEFORE LOWER AUTHORITIES, IT HAD NOT ADVANCE D ANY JUSTIFICATION AS TO HOW ASSESSEES SOLVENT RECOVERY PLANT CONSTITUTED W ET AIR OXIDATION EQUIPMENT FOR RECOVERY OF CHEMICALS AND HEAT AS MEN TIONED IN SCHEDULE III (3)(III)G(A). THE ASSESSEE TOOK A VAGUE STAND THAT IN EARLIER YEAR DEPRECIATION ON SOLVENT RECOVERY PLANT WAS ALLOWED @ 40% AND THE RATE OF DEPRECIATION ON AIR AND WATER POLLUTION CONTROL EQUIPMENT WAS IN CREASED FROM 40% TO 100%, THEREFORE, ON THIS WRONG ANALOGY THE ASSESSEE CLAIMED 100% DEPRECIATION ON SOLVENT RECOVERY PLANT. THERE IS N O JUSTIFICATION WHAT SO EVER AND THE RULE OF CONSISTENCY CLAIMED BY THE ASS ESSEE, IS AN EYE WASH. IN EARLIER YEARS I.E. A.Y. 1992-93 AND 1993-94 THE ASS ESSEE CLAIMED DEPRECIATION IN THE CATEGORY OF POLLUTION CONTROL E QUIPMENT WHEREAS IN A.Y. 1994-95 IT HAS BEEN CLAIMED UNDER WET AIR OXIDATION EQUIPMENT. THE ASSESSEES CLAIM IS NEITHER JUSTIFIED NOR BONA FIDE ON DETECTION OF AND A ITA 1420/DEL/10 & CO 153/DEL/10 PRAKASH INDUSTRIES LTD. 6 DELIBERATELY WRONG CLAIM FOR HIGHER DEPRECIATION, THE PENALTY HAS BEEN RIGHTLY IMPOSED. 3.4. IN RESPECT OF PENALTY ON OTHER ISSUE, AOS PEN ALTY ORDER IS RELIED ON. 4. LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND V EHEMENTLY ARGUES THAT THE ENTIRE ARGUMENTS OF THE REVENUE ARE BASELESS. THE ASSESSEE HAS HUGE LOSSES AND ALLOWANCE OF MORE THAN 58 CRORES TO ITS TAX RETURN, THEREFORE, IT IS NOT JUSTIFIABLE TO ASSUME THAT ASSESSEE WILL DELIBE RATELY CLAIM WRONG HIGHER DEPRECIATION, WHICH HAD NO TAX ADVANTAGES IN THIS YEAR AS WELL AS NEAR FUTURE AS IT AT THE MOST WOULD HAVE INCREASED CLAIM OF UNA BSORBED DEPRECIATION. 4.1. COMING TO THE FACTS, ASSESSEE WAS ALLOWED DEPR ECIATION @ 40% ON SOLVENT RECOVERY PLANT COMING UNDER POLLUTION CONTR OL EQUIPMENT. FROM A.Y. 1994-95, THE DEPRECIATION RATES WERE CHANGED, ON WATER POLLUTION CONTROL EQUIPMENT THEY WERE INCREASED FROM 40% TO 1 00% BY WAY OF LEGISLATIVE AMENDMENT. THE ASSESSEE HAD WDV OF RS. 1,25,00,861/- OF SOLVENT RECOVERY PLANT. ASSESSEE BONA FIDE BELIEVE D THE ENTIRE WDV COME UNDER THE CATEGORY OF WET AIR OXIDATION EQUIPMENT UNDER ITEM (3)(III)G(A) AND THIS LEGISLATIVE AMENDMENT WAS ELIGIBLE DEPREC IATION @ 100% WAS APPLICABLE TO IT. 4.2. BY WAY OF INCOME-TAX (7 TH AMENDMENT) RULES 1993, W.E.F. 1-4-1994, THE RATE OF DEPRECIATION IN RESPECT OF AIR AND WATE R POLLUTION CONTROL EQUIPMENTS WERE INCREASED FROM 40% TO 100%. SINCE T HE AO WAS NOT AGREEABLE TO THE VIEW THAT SOLVENT RECOVERY PLANT F ALLS IN AIR POLLUTION CONTROL EQUIPMENT, THEREFORE, THE ASSESSEE IN THE A LTERNATIVE ARGUED THAT THE SOLVENT RECOVERY PLANT FALLS UNDER THE ITEM (3)(II I)G(A) WET AIR OXIDATION EQUIPMENT FOR RECOVERY OF CHEMICALS AND HEAT. IT W AS ON ACCOUNT OF PREVIOUS HISTORY OF CLAIM OF DEPRECIATION THAT THE AO REFERRED TO AIR POLLUTION ITA 1420/DEL/10 & CO 153/DEL/10 PRAKASH INDUSTRIES LTD. 7 CONTROL EQUIPMENT, WATER POLLUTION CONTROL EQUIPMEN T AND ITEM (3)(III)G(A) OF DEPRECIATION SCHEDULE. 4.3. SINCE TWO DIFFERENT VIEWS HAVE BEEN TAKEN IN R ESPECT OF CLAIM OF DEPRECIATION ON SOLVENT RECOVERY PLANT, THEREFORE, IT IS NOT A CASE THAT WARRANT LEVY OF PENALTY. CIT V. JAGABANDHU PRASANNA KUMAR R UPLAL SEN PODDAR (1982) 133 ITR 156, CIT V. CALCUTTA CREDIT CORPORAT ION )(1987) 166 ITR 29 (CAL) AND MAHAVIR IRRIGATION PVT. LTD. V. CIT (2009 ) 314 ITR (AT) 150 @ 171. 4.4. THE ASSESSEES CASE MAY FALL IN THE CATEGORY O F WRONG CLAIM WITH NO IMMEDIATE TAX EFFECT, BUT IN THE GIVEN FACTS AND C IRCUMSTANCES, BY NO STRETCH OF IMAGINATION IT CAN BE HELD A DELIBERATELY BOGUS CLAIM. THIS BEING SO, THE PARTICULARS FILED IN THE RETURN OF INCOME ARE NOT I NCORRECT BUT THEY WERE HELD TO BE DIFFERENT BY INTERPRETATION OF THE RELEVANT ENTRY. RELIANCE IS PLACED ON HONBLE SUPREME COURT JUDGMENT IN THE CASE OF RELIA NCE PETRO PRODUCTS PVT. LTD. 322 ITR 158. 4.5. RELIANCE IS PLACED ON HONBLE DELHI HIGH JUDGM ENT IN THE CASE OF BRAHAMPUTRA CONSORTIUM LTD. (ITA NO. 1582 OF 2010), IN WHICH ASSESSEE CLAIMED 40% DEPRECIATION ON EARTH MOVING EQUIPMENT, WHEREAS THE CORRECT RATE OF DEPRECIATION ALLOWABLE WAS AT 25%. PENALTY WAS IMPOSED ON THE ASSESSEE QUA THE EXCESS DEPRECIATION CLAIMED. RELYI NG ON HONBLE DELHI HIGH COURT JUDGMENT IN THE CASE OF CIT VS. ESCORTS FINANCE LTD. (2010) 328 44, ITAT DELETED THE PENALTY. BY THIS JUDGMENT THE HONBLE DELHI HIGH COURT UPHELD THE DELETION OF THE PENALTY. 4.6. ACCORDING TO LD. COUNSEL, THE ASSESSEES CASE OF EXCESS CLAIM OF DEPRECIATION IS SIMILAR TO HONBLE DELHI HIGH COURT JUDGMENT. 4.7. APROPOS THE OTHER ISSUE, THE LD. COUNSEL CONTE NDS THAT ITAT DELHI BENCH D VIDE ORDER DATED 18-6-2009 IN QUANTUM APP EAL (ITA NO. ITA 1420/DEL/10 & CO 153/DEL/10 PRAKASH INDUSTRIES LTD. 8 4610/DEL/2005) HAS DELETED ADDITION ON A/C OF FUND TRANSFER FROM THE A/C OF M/S SAHIB ENGG. WORKS, HOLDING AS UNDER: 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL PLACED ON RECORD. RESPECTFULLY FOLLOWING T HE TRIBUNAL JUDGMENT IN PRECEDING YEAR, IT HAS TO BE HELD THAT M/S SAHIB ENGINEERING IS NOT A BOGUS ENTITY, IN VIEW THEREOF, THE ADDITION MADE BY LOWER AUTHORITIES IN THIS RESPECT HAS TO BE DELETED. CONSEQUENTLY, THE CIT(A) RIGHTLY DELETED THE PENAL TY. 4.8. APROPOS ASSESSEES CROSS OBJECTIONS, IT IS CON TENDED THAT ASSESSEE IN RESPECT OF R.K. VIDEO DISTRIBUTORS CATEGORICALLY SU BMITTED THAT THIS CONCERN WAS A REGULAR SELLING AGENT OF THE ASSESSEE BY FOLL OWING OBSERVATIONS: M/S R.K. VIDEOS WAS THE SELLING AGENT FOR THE SALE OF MAGNETIC VIDEO TAPES AND BLANK CASSETTES PRODUCED BY THE ASS ESSEE IN ITS VIDEO TAPE DIVISION AT KASHIPUR. THE PRODUCTION DETAILS OF VIDEO TAPE DIVISION ARE AS UNDER:- 1990-91 1991-92 1992-93 1993-94 MAGNETIC TAPES FOR VIDEO CASSETTES (MILLION RUNNING MTRS.) 1,396 1,423 1,617 1,354 BLANK VIDEO CASSETTES (NOS.) 6,49,440 1,140 550 2,9 9,970 FROM THE ABOVE DETAILS, IT IS QUITE CLEAR THAT THE MAGNETIC TAPE FOR VIDEO CASSETTES AND BLANK VIDEO CASSETTES WERE MANUFACTURING BY THE ASSESSEE AND R.K. VIDEO DISTRI BUTORS WAS ONE OF THE SELLING AGENT OF THE ASSESSEE TO WHOM TH E ASSESSEE WAS SELLING VIDEO TAPES AND CASSETTES AND RECEIVING MONEY. A SUM OF RS. 2,50,000/- BEING THE PEAK AMOUNT IN THE ACCOUNT OF R.K. VIDEO WAS ADDED WHEREAS THE R.P. VIDEO IS A SE LLING AGENT. THE DEPARTMENT HAD NOT PROVED ANY THING WRON G AGAINST R.K. VIDEO, THEN WHY THE FUND TRANSFERRED FROM THAT ACCOUNT WAS UNDER QUESTION MARK. ITA 1420/DEL/10 & CO 153/DEL/10 PRAKASH INDUSTRIES LTD. 9 4.9. NONE OF THE LOWER AUTHORITIES HAS ADVERTED TO THE CONTENTIONS OF THE ASSESSEE AND THE ASSESSEE DID NOT PRESS THIS GROUND IN QUANTUM PROCEEDINGS AS THE AMOUNT WAS SMALL AND ASSESSEE HAD HUGE CARRI ED OVER LOSSES AND DEPRECIATION; THIS ADDITION DID NOT HAVE ANY DIFFE RENCE TO THE ASSESSEES TAX LIABILITY. IT IS HIGHLY UNJUSTIFIED THAT WITHOUT CO NTROVERTING TO THE ASSESSEES CLAIM AND REJECTING THE BOOKS OF ACCOUNTS, THE PEAK AMOUNT OF SELLING AGENT IS BEING HELD AGAINST ASSESSEE WHILE LEVYING THE PE NALTY U/S 271(1)(C), IGNORING THE FACT THAT THE CONCERN IS GENUINE; ASSE SSEE HAD DEALINGS IN EARLIER YEARS AND MERELY BECAUSE THE ASSESSEE COULD NOT FIL E SOME CONFIRMATION, THE PENALTY IS UNJUSTIFIED. ASSESSEE DID NOT FURNISH AN Y INACCURATE PARTICULARS OF ITS INCOME. ONLY BECAUSE AN ENTRY COULD NOT BE PRO VED BY THE STANDARDS DEMANDED BY AO, IT CANNOT RESULT IN IMPOSITION OF PENALTY U/S 271(1)(C), THE SAME MAY BE DELETED. 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. COMING TO THE IMPOSITION OF PENALTY U/S 271 (1)(C) QUA THE EXCESS CLAIM OF DEPRECIATION, WE HAVE TO KEEP IN MIND TWO IMPORTANT FACTS (I) THE ASSESSEE IS BEING ASSESSED AT A LOSS OF ABOUT 5 8 CRORES. (II) THE CLAIM OF DEPRECIATION IS NOT MADE FOR THE FIRST TIME IN THIS YEAR AND THE ASSETS IN QUESTION WERE ACQUIRED IN EARLIER YEARS. 5.1. IN ASSESSEES CASE IN A.Y. 1992-93 & 1993-94, DEPRECIATION ON EFFLUENT TREATMENT AND SOLVENT RECOVERY PLANT WAS C LAIMED AT 40% ( AT PAR WITH POLLUTION CONTROL EQUIPMENT). FROM 1-4-1994 RE LEVANT TO A.Y. 1994-95, DEPRECIATION ON POLLUTION CONTROL EQUIPMENTS WAS I NCREASED FROM 40% TO 100%). AO UNDER A BELIEF THAT THE SOLVENT RECOVERY PLANT WAS IN THE CATEGORY OF POLLUTION CONTROL EQUIPMENT, IN ITS RET URN FOR A.Y. 1994-95 CLAIMED DEPRECIATION @ 100%. AO DID NOT AGREE WITH ITEM OF SCHEDULE OF ITA 1420/DEL/10 & CO 153/DEL/10 PRAKASH INDUSTRIES LTD. 10 DEPRECIATION AS CLAIMED BY THE ASSESSEE AND HELD TH AT IT WAS NOT ELIGIBLE FOR 100% DEPRECIATION. THE ISSUE IS WHETHER IT IS A MAL A FIDE EXPLANATION AND AMOUNTS TO FALSE EXPLANATION OR CONCEALING OR FURNI SHING PG INACCURATE PARTICULARS OF ITS INCOME. 5.2. HONBLE DELHI HIGH COURT IN THE CASE OF BRAH AMPUTRA CONSORTIUM LTD. (SUPRA) HAS HELD AS UNDER: 1. THERE CANNOT BE DISPUTE ABOUT THE AFORESAID PR OVISIONS ALLOWING DEPRECIATION @ 25% ON EXCAVATORS. HOWEVER, THE CIRCUMSTANCES UNDER WHICH THE CLAIM WAS MADE AT 40% , SHOWS THAT IT WAS A GENUINE AND BONA FIDE WHICH WAS DIREC TED BY THE ASSESSEE. IN THIS YEAR, THE ASSESSEE HAD ACQUIRED N EW EXCAVATORS AND TIPPERS FOR A TOTAL SUM OF RS. 1,78,75,260/- AN D 6,36,88,865/- RESPECTIVELY. ALL BLOCK OF ASSETS WER E TERMED AS EARTH MOVING EQUIPMENTS AND TAKEN IN THE PROFIT A ND LOSS ACCOUNT UNDER THE FORESAID HEAD. THE COST ON TIPPER S WAS MUCH HIGHER ON WHICH DEPRECIATION WAS RIGHTLY CLAIMED AT 40%. HOWEVER, SINCE THE ENTIRE BLOCK CONSISTING OF EXCAV ATORS AND TIPPERS WAS TAKEN UNDER THE HEAD EARTH MOVING EQUI PMENT, THE EXPLANATION GIVEN BY THE ASSESSEE WAS THAT INADVERT ENTLY, IN RESPECT OF EXCAVATORS ARE THE DEPRECIATION WAS CLAI MED AT 40% INSTEAD OF 25%. THIS EXPLANATION HAS BEEN ACCEPTED AS GENUINE AND BONA FIDE BY THE TRIBUNAL WHICH IS THE FINAL FA CT FINDING AUTHORITY. IN CIT VS. ESCORTS FINANCE LTD. (2010) 3 28 ITR 44 THIS COURT HAS HELD THAT DELETION OF PENALTY ON THE GROUND OF INADVERTENT ERROR IS A FINDING OF FACT. IN FACT, TH E ASSESSING OFFICER DID NOT EVEN CONTRADICT THE PLEA OF THE ASS ESSEE THAT EXCESS CLAIM OF DEPRECIATION WAS NOT AN INADVERTENT ERROR. 11. THAT APART, OTHER ELEMENT PRESENT IN THIS CASE GIVES A STRONG INDICATION THAT THE ERROR WAS GENUINE AND BO NA FIDE. RETURN FOR THE ASSESSMENT YEAR IN QUESTION WAS FILE D DECLARING LOSS OF RS. 93,74,724. ASSESSMENT WAS ALSO COMPLETE D AT A LOSS OF RS. 23,33,321/-. THEREFORE, EXCESS CLAIM OF DEPR ECIATION WAS NOT ADVANTAGEOUS TO THE ASSESSEE. HAD DEPRECIATION BEEN CLAIMED @ 25%, IT WOULD HAVE RESULTED IN HIGHER DEP RECIATION IN THE SUCCEEDING YEARS WHICH WOULD HAVE CONSEQUENT LY REDUCED THE TOTAL INCOME OF SUCCEEDING YEARS. IT IN DICATES THAT ITA 1420/DEL/10 & CO 153/DEL/10 PRAKASH INDUSTRIES LTD. 11 EXCESS CLAIM OF DEPRECIATION WAS NOT A DEVICE, RATH ER IT WAS AN INADVERTENT ERROR. 5.3. THUS, ADDITION ON ACCOUNT OF ALLOWING LESSER R ATE OF DEPRECIATION CANNOT BE A BASIS FOR IMPOSITION OF PENALTY U/S 271 (1)(C). THERE IS NO APPARENT ADVANTAGE OR AVOIDANCE IN THIS YEAR AND WO RKING AT THE LOSS OF 58 CRORES, IT MAY NOT BE SET OFF VERY SOON. WE FIND FO RCE IN THE ARGUMENT OF LD. COUNSEL THAT ASSESSEE HAS BEEN INCURRING LOSSES AND FOR THE ASSESSMENT YEAR IN QUESTION IS ASSESSED AT A HUGE LOSS FIGURE OF A BOUT 58 CRORES AND IN SUCH CIRCUMSTANCE IT CANNOT BE ASSUMED THAT ASSESSEE WOU LD DELIBERATELY CLAIM WRONG HIGHER DEPRECIATION TO EVADE OR AVOID ANY TAX . IT HAD NO TAX ADVANTAGE IN THIS YEAR OR IMMEDIATELY SUCCEEDING YEARS. 5.4. ASSESSEE HAVING DISCLOSED ALL PARTICULAR REGAR DING CLAIM OF DEPRECIATION ON SOLVENT RECOVERY PLANT IN ITS RETUR N, IT CANNOT BE SAID THAT THE IT HAD CONCEALED OR FURNISHED INACCURATE PARTICULAR S. SINCE PARTICULARS FURNISHED IN THE RETURN ARE NOT QUESTIONED EXCEPT T HE RATE OF DEPRECIATION, IN OUR CONSIDERED VIEW, THIS DOES NOT AMOUNT TO FURNIS HING WRONG PARTICULARS. BESIDES, WE HOLD THAT THE EXPLANATION FURNISHED BY ASSESSEE IS BONA FIDE. FOR SUCH CONCLUSION WE FIND SUPPORT FROM THE HONBLE DE LHI HIGH COURT JUDGMENT IN BRAHAMPUTRA CONSORTIUM LTD. (SUPRA) AND THAT OF HONBLE SUPREME COURT JUDGMENT IN CIT VS. RELIANCE PETROPRO DUCTS PVT. LTD. (2010) 322 ITR 158 (SC), HOLDING THAT MERE MAKING OF A CL AIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTI CULARS. 5.5. THUS, ON THIS COUNT WE UPHOLD THE ORDER OF CIT (A) IN DELETING THE PENALTY, QUA EXCESS DEPRECIATION ON SOLVENT RECOVER Y PLANT. ITA 1420/DEL/10 & CO 153/DEL/10 PRAKASH INDUSTRIES LTD. 12 5.6. COMING TO ASSESSEES OBJECTION REGARDING SUSTE NANCE OF PENALTY ABOUT ADDITION IN RESPECT OF RS. 2,25,088/- ON ACCOUNT OF ALLEGED FUND TRANSFER FROM M/S R.K. VIDEO DISTRIBUTOR, IT IS NOT DISPUTED THAT R.K. VIDEO DISTRIBUTORS WAS SELLING AGENT OF ASSESSEE THROUGH WHOM THE ASSE SSEE WAS SELLING VIDEO TAPES AND CASSETTES AND RECEIVING MONEY. WE AGREE W ITH THE ARGUMENT OF LD. COUNSEL THAT THE CONCERN BEING GENUINE, HAVING DEAL INGS IN EARLIER YEARS, MERELY BECAUSE THE ASSESSEE COULD NOT FILE CONFIRMA TIONS AS REQUIRED BY THE AO, CANNOT BE A GROUND FOR PENALTY. MERELY BECAUSE THE GROUND WAS NOT PRESSED WOULD NOT AUTOMATICALLY RESULT INTO CONCEAL MENT PENALTY, THE SAME MAY NOT BE PRESSED LOOKING HUGE LOSSES/ UNABSORBED ALLOWANCE. ACCORDINGLY, WE DELETE THE PENALTY ON THIS COUNT. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED AND THE CROSS-OBJECTION FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 09-03-2012. SD/- SD/- ( K.D. RANJAN ) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 09-03-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR