The Dy. Commr. Of Income Tax, Cir.-2, JAMNAGAR V. Khushbu Auto Finance Ltd., JAMNAGAR

ITA 170/RJT/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6685 (ITAT-RAJKOT)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 06-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANKIT GOKANI
• Assessee Lawyers: C P BHATIA DR
• Keywords: Depreciation; Question of law; Initiation of penalty proceedings; Wrong claim
• Section: 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AN D SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.170/RJT/2016 ( / ASSESSMENT YEAR : 2005-06) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2 JAMNAGAR / VS. KHUSHBU AUTO FINANCE LTD. C/O.NEW CHANDRA MOTOR CYCLE HOUSE OPP. TOWN HALL JAMNAGAR ./ ./ PAN/GIR NO. AACFK 3346 F ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI ANKIT GOKANI, AR ! / RESPONDENT BY : SHRI C.P. BHATIA, DR ' #$% ! & / DATE OF HEARING 10/02/2017 '( ! & / DATE OF PRONOUNCEMENT 23/02/2017 / O R D E R PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-JAMNAGAR [CIT(A) IN SHORT] DATED 26/02/2016 PERTAINING TO ASSESSMENT Y EAR (AY) 2005-06. ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 2 - 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LD.CIT(A) ERRED IN LAW AS WELL AS ON FACTS IN DELETING PENALTY OF RS.66,05,000/- LEVIED BY THE AO U/S.2719 1)(C) OF THE I.T.ACT, 1961. 2. ON THE BASIS OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF TH E ASSESSING OFFICER. 3. BRIEFLY STATED, THE ASSESSEE IS ENGAGED IN THE B USINESS OF FINANCING OF VEHICLES AND IS A NON-BANKING COMPANY. IT IS AL SO STATED TO BE ENGAGED IN THE ACTIVITY OF GENERATION OF ELECTRICITY. FOR AY 2005-06, THE ASSESSEE FILED RETURN OF INCOME AND DECLARED A LOSS OF RS.1 ,39,92,809/-. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT ORDER UNDE R SECTION 143(2) WAS PASSED. IN THE ASSESSMENT ORDER, DEPRECIATION OF R S.2,20,10,209/- WAS INTER ALIA DISALLOWED ON THE BASIS THAT WIND-WILL ON WHICH DE PRECIATION WAS CLAIMED WAS COMMISSIONED AFTER 30/09/2004. ACC ORDINGLY, DEPRECIATION ON WIND-MILL ASSETS WERE RESTRICTED TO 50% OF THE ELIGIBLE DEPRECIATION AS THE WIND-MILL WAS ALLEGED TO BE PUT TO USE FOR THE PURPOSE OF BUSINESS FOR A PERIOD OF LESS THAN 180 DAYS IN THE FINANCIAL YEAR (FY) RELEVANT TO AY 2005-06. IN CONSEQUENCE OF THE ASSE SSMENT, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) WAS INITIATED W ITH REFERENCE TO AFORESAID EXCESS CLAIM OF DEPRECIATION. THE ASSESS EE CHALLENGED THE ASSESSMENT ORDER BEFORE THE CIT(A). THE CIT(A) AF TER APPRECIATING THE FACTS OF THE CASE HELD IN FAVOUR OF THE ASSESSEE AN D ALLOWED THE ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 3 - DEPRECIATION FOR THE FULL YEAR AS CLAIMED. AGGRIEV ED THERETO, THE ASSESSING OFFICER (AO) WENT IN APPEAL BEFORE THE TR IBUNAL AGAINST THE ORDER OF THE CIT(A). THUS, THE ITAT DID NOT CONCUR WITH THE ORDER OF THE CIT(A) AND RESTORED THE ACTION OF THE AO AS PER THE ASSESSMENT ORDER. 4. PURSUANT THERETO, PENALTY ORDER UNDER S.271(1)(C ) OF THE ACT DATED 08/05/2015 WAS FRAMED WHEREBY PENALTY ON THE EXCESS DEPRECIATION CLAIMED OF RS.2,20,10,209/- QUANTIFIED AT RS.66,03, 063/- BEING 100% OF THE TAX ON CONCEALED INCOME WAS IMPOSED. THE RELEV ANT OPERATIVE PARA OF THE PENALTY ORDER OF THE AO IS EXTRACTED BELOW:- A. DISALLOWANCE OUT OF CLAIM OF DEPRECIATION ON WI ND MILL : DURING THE COURSE OF ASSESSMENT, IT WAS NOTICED THA T THE ASSESSEE HAD CLAIMED DEPRECIATION @ 80% IN RESPECT OF WIND MILL WHICH WAS PURCHASED FROM M/S. SUZLON ENERGY LTD. ITS ERECTION/INSTALLAT ION HAS BEEN MADE AT VILLAGE SODA IN THE JAISALMER DISTRICT OF RAJASTHAN . ON VERIFICATION OF THE PAPERS FILLED DURING THE COURSE OF ASSESSMENT PROCE EDINGS, IT WAS SEEN THAT THE INVOICE WAS PREPARED BY THE SAID M/S. SUZLON EN ERGY LTD. ON 25 TH SEPTEMBER 2004 AND AS PER THE SAID INVOICE, THE WIN D MILL I N QUESTION WAS TO BE DISPATCHED BY ROAD FROM DAMAN FACTORY TO THE SAID VILLAGE IN RAJASTHAN. AS PER ORDER INVOICE DATED 27 TH SEPTEMBER TO 30 TH SEPTEMBER 2004 THE SAID WIND MILL HAS BEEN TESTED AND COMMISS IONED ON 30 TH SEPTEMBER 2004. TO SUBSTANTIATE ITS CLAIM OF HAVING INSTALLED AND COMMISSIONED THE SAID WIND MILL ON OR BEFORE 30 TH SEPTEMBER 2004, THE ASSESSEE HAS PRODUCED ALSO A CERTIFICATE DATED 04 O CTOBER 2004 ISSUED BY THE EXECUTIVE ENGINEER-ILL (TCC-IV) R.V.P.N. BANNER . AS PER THE CERTIFICATE THE SAID WIND MILL WAS 'COMMISSIONED 'ON 30 TH SEPTEMBER 2004. ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 4 - ENQUIRIES WAS CONDUCTED BY THE DEPARTMENT REVEALED THAT THE WIND MILL IN QUESTION WAS INSTALLED ONLY ON 04/11/2004. THE THEN AO IN THE ASSESSMENT ORDER DATED 31/12/200 7 HELD THAT THE WIND MILL WAS NOT INSTALLED ON OR BEFORE THE 30 TH SEPTEMBER 2004. THEREFORE, THE DISALLOWANCE WAS RESTRICTED TO 40% INSTEAD OF 80% A S CLAIMED BY THE ASSESSEE. THE ASSESSEE AGGRIEVED BY THE ASSESSMENT ORDER DATE D 31/12/2007 WENT IN APPEAL BEFORE THE CIT(A), JAMNAGAR. THE CIT(A), JAM NAGAR ALLOWED THE APPEAL ON THIS ISSUE AND GRANTED RELIEF FOR GIVING 80% DEPRECIATION ON WIND MILL. THE APPEAL WAS FILLED BY THE DEPARTMENT AGAINST THE ORDER OF THE CIT(A), JAMNAGAR BEFORE THE ITAT, RAJKOT. THE HON'BLE ITAT, RAJKOT STATED THAT FROM THE COPIES OF INVOICES OF M/S. SUZLON ENERGY D ATED 25/09/2004 PLACED AT PAGE NO.39 IN THE PAPER BOOK, IT WAS SEEN THAT M ODE OF DISPATCH OF WIND MILL TURBINE GENERATOR WAS STATED TO BE BY ROAD AND FROM DAMAN TO VILLAGE SODA, TEHSIL FATEHGARH, DISTRICT JAISALMER, RAJASTH AN. FARTHER AS PER THE INVOICES, SUPPLY OF MACHINE IS EX-WORKS DAMAN. BEFO RE US NO MATERIAL IN THE FORM OF LORRY RECEIPT, OCTROI RECEIPTS OR ANY O THER PROOF OF TRANSPORTATION OF GOODS, WHICH WOULD EVIDENCE THAT THE MACHINERY WAS INDEED TRANSPORTED FROM DAMAN TO THE VILLAGE SODA A ND HAD REACHED THE SITE AND COMMISSIONED, HAS BEEN PLACED ON RECORD NO R THERE WAS ANY FINDING OF THE CIT(A) TO THE AFORESAID. FURTHER, AS PER THE INVOICE PLACED AT PAGE NO.39, THE INSURANCE WAS TO BE ARRANGED BY THE SUZLON ENERGY LTD., UP TO THE SITE. NO EVIDENCE HAS BEEN PLACED ON RECORD BY THE ASSESSEE TO DEMONSTRATE THAT THE INSURANCE WAS INDEED TAKEN FOR TRANSPORTATION OF THE MACHINERY. IN VIEW OF THE AFORESAID FACTS, THE HON' BLE ITAT, RAJKOT HELD THAT NO EVIDENCE /MATERIAL WAS ON RECORD WHICH COUL D PROVE THE MACHINERY WAS IN FACT TRANSPORTED FROM DAMAN TO VILLAGE SODA AND HAD REACHED VILLAGE SODA BEFORE 30/09/2004 AND WAS COMMISSIONED BEFORE 30/09/2004, THE AO WAS JUSTIFIED IN RESTRICTING THE DISALLOWANC E TO 50% OF THE PRESCRIBED RATE SINCE THE MACHINERY WAS NOT INSTALL ED BEFORE 30 TH SEPTEMBER, 2004. 5. THE ASSESSEE IN RESPONSE TO THE NOTICE DATED 20/ 03/2015 FILLED THE LETTER IN WHICH DEMANDED ADJOURNMENT AS THEY ARE PREPARING FOR FILLING THE ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 5 - APPEAL IN THE HIGH COURT. THE CASE WAS ADJOURNED UP TO 01/05/2015. THE ASSESSEE FILLED A LETTER ON 01/05/2015 ASKING FURTH ER ADJOURNMENT FOR 15 DAYS. IN VIEW OF THE TIME LIMIT FOR FINALIZING THE PENALTY PROCEEDING AND DESPITE AMPLE AND ADEQUATE OPPORTUNITY, THERE IS NO ALTERNATIVE LEFT THAN TO FINALIZE THE PENALTY PROCEEDING ON THE BASIS OF MAT ERIAL AVAILABLE ON RECORD. 6. HERE, IT IS TO BE NOTED THAT THE MATTER WOULD NO T HAVE COME TO LIGHT IF THE CASE HAD NOT BEEN COME UP FOR SCRUTINY ASSESSMENT. THE ASSESSEE HIMSELF HAS NOT FURNISHED ALL THE TRUE FACTS RELATING TO HI S INCOME. ACCORDINGLY, THE PENALTY PROCEEDING U/S 271(L)(C) OF THE ACT IS FULL Y JUSTIFIED. 7. IN VIEW OF THE PROVISION OF SECTION 271(1) (C) I T IS CLEAR THAT IT IS NOT LEVIED ON THE ABOVE GROUNDS ONLY. SECTION 271(L)(C) OF THE ACT IS VERY CLEAR IN WORDING AND IT STATES THAT- 271. (1) IF THE ASEESSING OFFICER OR THE COMMISSION ER (APPEAL) OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON- .. (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME . HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY,- . (III) IN THE CASES REFERRED TO CLAUSE (C) OR CLAUSE , (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LE SS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOU GHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INC OME OR FRINGE BENEFITS OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INC OME OR FRINGE BENEFITS. 8. THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILES PROCESSORES. 174 TAXM AN 571/306 ITR 277, WHEREIN THE HON'BLE SUPREME COURT HAS INTERPRE TED SECTION 271(1)(C) OF THE ACT, AS UNDER: ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 6 - 'THE EXPLANATIONS APPENDED TO SECTION 271(L)(C) OF THE INCOME TAX ACT ENTIRELY INDICATES THE ELEMENTS OF STRICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WH ILE FILING RETURN. OBJECT BEHIND THE ENACTMENT OF SECTION 271(L)(C) RE AD WITH THE EXPLANATION INDICATES THAT THE SAID SECTION HAS BEE N ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE. THE PENALTY UNDER SECTION 271(1) (C) IS A CIVIL LIABILITY. WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY. AS IN THE CASE IN THE MATTER OF PROSECUTION UNDER SECTION 276C OF THE INCOME TAX ACT.' 9. IN THE LIGHT OF THE ABOVE FACTS, AND ONGOING DIS CUSSION, IT IS CLEAR THAT THE ASSESSEE HAS NOT DISCLOSED FULLY AND CORRECTLY ALL THE FACTS RELATING TO HIS TOTAL INCOME. IN THIS CASE, RS.2,20,10,209/- IS THE INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAS BEEN FILED. I A M THEREFORE, SATISFIED THAT THE ASSESSEE HAS CONCEALED THE INCOME AND THER EBY COMMITTED A CLEAR DEFAULT PUNISHABLE TO PENALTY U/S 271(L)(C) O F THE ACT. THE MINIMUM PENALTY LEVY ABLE IN THE CASE IS RS.66,03,063/- BEING 100% OF TAX ON CONCEALED INCOME AND THE MAXIMUM PENALTY LEV Y ABLE IN THE CASE RS.1,98,09,188/- BEING 300% OF THE TAX ON CONCEALED INCOME. ACCORDINGLY, I LEVY A PENALTY OF RS.66,05,000/- U/S. 271(L)(C) OF THE I.T. ACT, 1961 WHICH IS THE MINIMUM. 10. THE ORDER IS PASSED AFTER OBTAINING THE NECESSA RY APPROVAL FROM THE JOINT COMMISSIONER OF INCOME TAX, RANGE-1, JAMNAGAR . 5. THE CIT(A) HOWEVER, FOUND MERIT IN THE CASE OF T HE ASSESSEE FOR NON-IMPOSITION OF PENALTY AND ACCORDINGLY STRUCK DO WN THE PENALTY IMPOSED BY THE AO. THE RELEVANT PORTION OF THE ORD ER OF THE CIT(A) READS AS UNDER:- 6.2. GROUND NO.3 OF THE APPEAL IS THAT LD.AO ERRE D IN HOLDING THAT APPELLANT HAS SUBMITTED INACCURATE PARTICULARS OF I NCOME BY CLAIMING HIGHER DEPRECIATION I.E. 80% ON THE WINDMILL THAN T HE ALLOWABLE DEPRECIATION I.E. 40%. ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 7 - I HAVE ALSO GONE THROUGH THE ORDERS PASSED BY ASSES SING OFFICER, CIT (A) AND THE HON'BLE TRIBUNAL IN THE QUANTUM APPEAL. APPELLANT HAD ACQUIRED A WINDMILL FOR RS. 5,50,25,522/- FROM M/S. SUZION ENERGY LTD ERECTED AND INSTALLED AT VILLAGE SODA, JAISALMER, R AJASTHAN. APPELLANT CLAIMED DEPRECIATION @ 80% FOR THE YEAR ON IT AS WI NDMILL HAS BEEN TESTED AND COMMISSIONED ON 30.09.2004 AS PER WIND P ROJECT COMMISSIONING CERTIFICATE ISSUED BY EXECUTIVE ENGIN EER, BARMER RAJASTHAN. ASSESSING OFFICER RESTRICTED THE CLAIM O F DEPRECIATION @ 40% INSTEAD OF 80% CLAIMED BY THE APPELLANT ON THE BASIS OF SOME DOCUMENT FOUND AT THE MAINTENANCE DEPARTMENT OF SUZ LON INDUSTRIES AT TIME OF SURVEY ON THAT COMPANY U/S 133A OF THE ACT AND REPORT PREPARED BY THE ADIT (INV.). IT WAS ALLEGED IN THAT REPORT A S NOTED BY AO THAT THE CERTIFICATES OF COMMISSIONING ARE ISSUED IN ROUTINE MANNER WITHOUT PHYSICAL VERIFICATION OF SITE. FURTHER, IN THE STAT EMENT PREPARED BY MIS OPERATOR OF SUZLON & VERIFIED BY O & M MANAGER OF S UZLON IT IS MENTIONED THAT DATE OF INSTALLATION OF WINDMILL IN CASE OF ASSESSEE COMPANY IS 05.11.2004 AND NOT 30.09.2004 AS STATED BY THE ASSESSEE COMPANY. HENCE, AO DISALLOWED THE CLAIM OF APPELLAN T. CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE. ON APPEAL BY AO BEFORE ITAT DISALLOWANCE OF DEPRECIATION HAS BEEN UPHELD IN THE QUANTUM APPEAL BY THE TRIBUNAL ON THE GROUND THAT NO MATERIAL IN THE FORM OF LORRY RECEIPTS, OCTROI RECEIPTS OR ANY OTHER PROOF OF TRA NSPORTATION OF GOODS WHICH WOULD-EVIDENCE THAT THE MACHINERY WAS INDEED TRANSPORTED FROM DAMAN TO VILLAGE SODA AND HAD REACHED THE SITE AND COMMISSIONED HAS BEEN PLACED ON RECORD. FURTHER, NO EVIDENCE HAS BEE N PLACED ON RECORD BY THE ASSESSEE TO DEMONSTRATE THAT THE INSURANCE W AS INDEED TAKEN FOR TRANSPORTATION OF MACHINERY. IN PENALTY O RDER AO HAS ALLEGED THAT THE ASSESSEE HIMSELF HAS NOT FURNISHED ALL THE TRUE FACTS RELATING TO HIS INCOME AND RS. 2,20,10,209/- IS THE INCOME IN R ESPECT OF WHICH INACCURATE PARTICULARS HAS BEEN FILED AND HAS CONCE ALED THE INCOME. APPELLANT HAS FURNISHED BEFORE ME EVIDENCES IN THE FORM OF COMMISSIONING CERTIFICATE, ENERGY GENERATION REPORT OF THE MONTH OF SEPTEMBER 2004, JOINT INSPECTION REPORT OF VARIOUS OFFICIALS, COPY OF POWER PURCHASE AGREEMENT, DATE WISE SALE OF ELECTRI CITY FROM THE DATE OF COMMERCIAL OPERATION, INVOICES FOR SUPPLY OF WINDMI LL, COPY OF DELIVERY ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 8 - CHALLANS WITH LORRY RECEIPTS OF VARIOUS TRANSPORTER S FOR SUPPLY OF PARTS OF WINDMILL, COMMUNICATION IN THE FORM OF LETTERS B ETWEEN VARIOUS OFFICIALS AND APPELLANT, MINUTES OF MEETING BY OFFI CIALS OF SUZLON AND RAJASTHAN RENEWABLE ENERGY CORP. LTD. IN PAPER BOOK PAGE NO. 47 TO 115. ON PERUSAL OF THE PAPER BOOK IT IS EVIDENT THA T ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS SUBMITTED AT P AGE NO. 60 TO 78 WHICH ARE LORRY RECEIPTS AND DELIVERY CHAILANS FOR MATERIAL SUPPLIED BY SUZLON ENERGY LTD. APPELLANT'S CONTENTION WAS THAT IT WAS NEVER THE ISSUES RAISED BY AO AS WELL AS CIT (A) THAT MACHINE HAS NEVER REACHED THE SITE SO THAT IT COULD HAVE BEEN INSTALLED BEFOR E 30.9.2004. FURTHER, THE INVOICE SUBMITTED BY THE APPELLANT WHEREIN FACT OF INSURANCE IS REQUIRED TO BE ARRANGED BY SUZLON ENERGY LTD. WAS M ENTIONED, HENCE IT CANNOT BE SAID THAT NO INSURANCE WAS ARRANGED FOR T RANSPORTATION OF MACHINERY. HENCE IT WAS SUBMITTED THAT THESE TWO IS SUES WERE ALREADY EXAMINED BY THE AO AT THE TIME OF VERIFICATION OF C LAIM OF THE DEPRECIATION. THE OWNERSHIP OF THE WINDMILL IS NOT DOUBTED BY ANY OF THE AUTHORITIES. ONLY THE MATTER OF DISPUTE IS THE DATE OF INSTALLATION. AS PER APPELLANT IT IS BEFORE 30.09.2004 AND AS PER DEPART MENT IT IS AFTER 30.09.2004. IT IS ALSO CONTENDED BY THE ASSESSEE TH AT THE COMMISSIONING CERTIFICATES ISSUED BY THE COMMITTEE OF MANY PERSON S INCLUDING THE GOVERNMENT OFFICIALS IT CANNOT BE SAID THAT INSTALL ATION CERTIFICATE IS ISSUED WITHOUT DUE CARE. FURTHER INSTALLATION CERTI FICATE ALSO SUBSTANTIATED BY THE GENERATION OF ELECTRICITY UNIT S WHICH IS ALSO CERTIFIED BY THESE PERSONS. WHILE SUPPORTING THE CL AIM ASSESSEE RELIED UPON THREE DECISION OF HIGH COURTS WHERE THE INSTAL LATION AND COMMISSIONING CERTIFICATES ISSUED BY THE GOVERNMENT OFFICIALS IS CONSIDERED AS THE CORRECT DATE OF THE INSTALLATION. MERELY BECAUSE THE CLAIM OF THE ASSESSEE WAS FOUND TO BE ON INSTALLATI ON AND COMMISSIONING CERTIFICATE ISSUED BY THE COMMITTEE OF VARIOUS PERS ONS INCLUDING GOVERNMENT OFFICIALS, WHICH WAS PREFERRED BY AO OVE R THE STATEMENT FOUND FROM ONE OF THE MAINTENANCE ENGINEER OF SUZL ON LIMITED AND DISALLOWED THE CLAIM, IT CANNOT BE SAID THAT CLAIM OF ASSESSEE WAS FALSE. IT IS JUST A MATTER OF PREFERRING OVER ONE EVIDENCE SUBMITTED BY AO OVER ANOTHER EVIDENCE RELIED UPON BY AO. ACCORDING TO ME IT WAS A BONA FIDE CLAIM OF THE ASSESSEE WHICH WAS REJECTED. THEREFORE IT CANNOT BE SAID THAT IT WAS THE FALSE CLAIM MADE BY THE ASSESSEE. A R HAS RELIED ON THE DECISION OF DECISION OF HON'BIE PUNJAB & HARYANA HI GH COURT IN THE ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 9 - CASE OF COMMISSIONER OF INCOME-TAX V. HINDUSTAN HYD RAULICS [2015] 56 TAXMANN.COM 430, WHICH SQUARELY APPLIES TO THE CASE OF THE ASSESSEE. HENCE PENALTY U/S 271(1) (C) OF THE ACT IS NOT SUST AINABLE ON THIS ISSUE. THE CLAIM OF THE ASSESSEE IS ALSO SUPPORTED BY THE THREE DECISIONS OF HIGH COURT AS STATED IN HIS SUBMISSION. IN ALL T HE CASES IT IS HELD THAT CERTIFICATE ISSUED BY THE GOVERNMENT AGENCIES SHA LL BE ACCEPTABLE AS FINAL. HOWEVER IN THE CASE OF THE ASSESSEE SAME PRO POSITION IS NOT ACCEPTED. THEREFORE THE CLAIM OF THE ASSESSEE CAN B E SAID TO BE NOT DEBATABLE. FURTHER WHEN THE CLAIM IS SUPPORTED BY H IGH COURT DECISIONS AND NO DECISION OF ANY COURT AGAINST THE ASSESSEE. IN MY VIEW THE DISALLOWANCE WHICH IS REJECTED BY AO AND HON. ITAT CANNOT PUT THE ASSESSEE SUBJECT TO PENALTY U/S 271(1) (C) OF THE A CT. FURTHER IN THE CASE OF THE ASSESSEE AO HAS DISALLOWED THE CLAIM OF DEPR ECIATION PARTIALLY ON ONE ASPECT WHICH HAS BEEN DELETED BY CIT (A). HON I TAT HAS SUSTAINED THE DISALLOWANCE ON ALTOGETHER ON ANOTHER POINT WHI CH ITSELF PROVES THAT ISSUE IS DEBATABLE. THEREFORE IN MY VIEW THE DISALL OWANCE WHICH IS REJECTED BY AO AND HON. ITAT AND WHICH IS SUPPORTED BY THE DECISION OF THE HIGH COURT AND ADMITTED BY THE JURISDICTIONAL H IGH COURT MAKES THE ISSUE HIGHLY DEBATABLE AND CANNOT PUT THE ASSESSEE SUBJECT TO PENALTY U/S 271(1) (C) OF THE ACT. CLAIM OF THE ASSESSEE IS BASED ON THE CERTIFICATE O F THE GOVERNMENT AGENCIES AND CLAIM OF THE ASSESSEE IS DISALLOWED DI SBELIEVING THAT CERTIFICATE. HONOURABLE SUPREME COURT IN CASE OF RE LIANCE PETRO PRODUCTS V CIT 322 ITR 178 (SC) HAS HELD THAT 'MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPEND ITURE, 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(L)(C). IF WE ACCEPT THE C ONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAI M MADE IS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON, T HE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(L)(C). THAT I S CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE.' ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 10 - THEREFORE MERELY BECAUSE THE CLAIM OF THE DEPRECIAT ION MADE BY ASSESSEE IS CONFIRMED, IT CANNOT INVITE PENALTY U/S 271(1)(C) OF THE ACT. THEREFORE FOLLOWING: THE SUPREME COURT DECISION ALS O THE ORDER OF PENALTY CANNOT BE SUSTAINED. FURTHER THE ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE IN VIEW OF DECISION OF HONOURABLE SUPREME COURT IN CASE OF PRI CE WATER HOUSE COOPERS PVT. LTD. V CIT [2012] 25 TAXMANN.COM 400 A S ALL-THE DOCUMENTS WERE FURNISHED AND AVAILABLE AND EVEN IN AUDIT FINANCIAL STATEMENTS AND RETURN OF INCOME THE DATE OF ADDITIO N WAS 30.09.2004. THE CONTENTS OF THE TAX AUDIT REPORT SUGGEST THAT T HERE IS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOME. IT, IS NOT CONC EALING BUT SUBMITTING THE COMPLETE EVIDENCE INCLUDING THE DOCUMENTS WHICH ARE NOT THE RESPONSIBILITY OF THE ASSESSEE IN THE FORM OF TRANS PORT VOUCHERS AND DELIVERY CHALLANS OF THE SUPPLIER'S TRANSPORTERS AN D INSURANCE DETAILS WHICH WAS TO BE OBTAINED BY THE SUPPLIER. HENCE, NO PENALTY CAN BE LEVIED U/S 271(1) (C) FOR A BONAFIDE CLAIM. AO HAS LEVIED PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND ALSO FOR CONCEALMENT OF INCOME. APPELLANT HAS F URNISHED COMMISSIONING CERTIFICATE FROM EXECUTIVE ENGINEER I II (TCC-IV) RRVPNL BARMER, RAJASTHAN IN WHICH DATE OF COMMISSIO NING IS MENTIONED AS 30.09.2004 AT PAGE NO. 84 OF PAPER BOO K. APPELLANT HAS ALSO SUBMITTED MONTHLY GENERATION RECORD FOR THE MO NTH OF SEPTEMBER AND JOINT METER READING REPORT AT PAGE NO. 98 AND 9 9 OF THE PAPER BOOK, APPELLANT HAS ALSO PRODUCED COPY OF LETTER DATED 29 .09.2004 AT PAGE NO. 93 TO 95 OF PAPER BOOK WHICH WAS FROM SUPERINTENDIN G ENGINEERING, RAJASTHAN RAJYA VIDHUT PRASARAN NIGAM LTD. ADDRESSE D TO THE MD RAJASTHAN RENEWABLE ENERGY CORP LTD., JAIPUR INTIMA TING THAT AMONGST OTHERS THE WIND POWER PROJECT OF THE APPELLANT IS R EADY TO BE COMMISSIONED BY 30.09.2004. BY THIS LETTER IS WAS R EQUESTED TO DEPUTE RESPECTIVE OFFICERS OF VARIOUS CORPORATIONS TO WITN ESS PARALLEL OPERATIONS OF COMMISSIONING OF WIND POWER PLANTS WI TH THE GRID OF RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD ON 30.09. 2004. IN RESPONSE TO THIS, SEVERAL OFFICERS ATTENDED MEETING ON 30.09.2004 AND MINUTES OF WHICH IS SIGNED BY TWO REPRESENTATIVES O F SUZION ENERGY LTD., EXECUTIVE ENGINEER OF JODBPUR VIDYUT VITRAN NIGAM L TD., PROJECT ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 11 - OFFICER OF RAJASTHAN RENEWAL ENERGY CORP LTD., EXEC UTIVE ENGINEER III (TCC-IV), THIS MINUTES COPY IS FURNISHED AT PAGE NO . 96-97 OF PAPER BOOK. APPELLANT HAS ALSO SUBMITTED INVOICES OF WIND MILL PURCHASED AT PAGE NO. 75 TO 83 OF PAPER BOOK. COPY OF DELIVERY C HALLANS AND LORRY RECEIPTS FOR PARTS OF WINDMILL SUPPLIED FROM 03.09. 2004 TO 09.09.2004 ARE ALSO SUBMITTED AT PAGE NO. 60 TO 74. APPELLANT HAD ALSO ENTERED INTO POWER PURCHASE AGREEMENT FOR SUPPLY OF POWER WITH J ODHPUR VIDYUT VITRAN NIGARN LIMITED. AS PER THIS AGREEMENT IT IS CONFIRMED THAT POWER PLANT HAS BEEN COMMISSIONED IN THE MONTH OF SEPTEMB ER 2004. HOWEVER, CHARGEABILITY OF THE POWER WOULD BE APPLIC ABLE FROM THE COMMERCIAL OPERATION DATE WHEN PERFORMANCE ACCEPTAN CE IS COMPLETED. 1 TILL THEN IT WAS AGREED THAT POWER WOULD BE SUPPLI ED FREE OF COST BY THESE UNITS. APPELLANT HAS SUBMITTED ALL TH ESE DOCUMENTS WHICH SHOWS THAT DATE OF COMMISSIONING IS 30.09..2004. HO WEVER, THE STATEMENT PREPARED BY OFFICIALS OF SUZION ENERGY LT D. OBTAINED BY AO FROM ADIT (INV.) SUGGEST THAT DATE OF COMMISSIONING IS 05.11.2004. NONE OF THE EVIDENCES WHICH IS OVERWHELMINGLY SUPPO RT THE CLAIM OF THE ASSESSEE WAS FOUND TO BE FALSE. DECISION RELIED BY THE AR OF HONOURABLE MADRAS HIGH COURT AND VARIOUS DECISION OF ITAT DEPR ECIATION IS ALLOWABLE TO THE ASSESSEE AS THE ELECTRICITY BOARD HAS CERTIFIED THE DATE OF COMMISSION OF THE WINDMILL OR STATING THAT COMMI SSIONING CERTIFICATE ISSUED BY GOVT. AUTHORITIES SHALL BE CONCLUSIVE EVI DENCE OF INSTALLATION AND COMMISSIONING OF WINDMILL. THOUGH DISALLOWANCE OF DEPRECIATION IS CONFIRMED BY HON. ITAT IN APPELLANT'S CASE BUT IT I S NO WHERE ALLEGED BY ANY AUTHORITY THAT DOCUMENTS SUBMITTED BY APPELLANT ARE FALSE OR MISLEADING. AS REGARDS THE FURNISHING OF INACCURATE PARTICULARS, NO INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE INC ORRECT OR INACCURATE. THE WORDS 'INACCURATE PARTICULARS' MEAN THAT THE DE TAILS SUPPLIED IN THE RETURN ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. IN THE ABSENCE OF A FINDING BY THE AO TH AT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND T O BE INCORRECT OR ERRONEOUS OR FALSE, THERE WOULD BE NO QUESTION OF I NVITING PENALTY U/S 271(L)(C). BY NO STRETCH OF IMAGINATION CAN THE MAK ING OF AN INCORRECT CLAIM IN LAW TANTAMOUNT TO FURNISHING INACCURATE PA RTICULARS. THEREFORE ON THIS SCORE ALSO THE PENALTY ORDER DOES NOT STAND . ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 12 - FURTHER, THE PURCHASE OF WINDMILL IN QUESTION AND D EPRECIATION CLAIMED THEREON IS VERY MUCH PART OF FINANCIAL STATEMENTS A ND RETURN OF INCOME FURNISHED BY THE APPELLANT WHERE DATE OF INSTALLATI ON IS STATED TO BE 30.9.2004 WHICH IS SUPPORTED BY THE EVIDENCES MENTI ONED HEREIN ABOVE. CONTENTION OF ASSESSING OFFICER THAT THE CLAIM WAS NOT BONA FIDE AND ASSESSEE COULD HAVE CLAIMED THE DEPRECIATION IN THE SUBSEQUENT YEARS. THIS ITSELF PROVES THAT IN FACT WINDMILL IS INSTALL ED WHICH IS USED FOR THE PURPOSES OF THE BUSINESS DEPRECIATION IS ALLOWABLE ON IT. RELIANCE OF ASSESSING OFFICER ON STATEMENT PREPARED BY OFFICIAL S OF THE SUZLON WAS NOT EXAMINED BY DEPARTMENT NOR WAS ANY OPPORTUNITY GRANTED TO APPELLANT FOR CROSS EXAMINATION. EVEN FOR MAKING AN ADDITION BASED ON STATEMENT OF THIRD PARTIES, AO IS DUTY BOUND TO GIV E CROSS EXAMINATION OF THAT PARTY OTHERWISE THE ADDITION IS ALSO NOT SU STAINABLE. THEREFORE THE PENALTY U/S 271(1) (C) IS DEFINITELY CANNOT BE SUSTAINED IN ABSENCE OF CROSS EXAMINATION. LD. AR OF THE ASSESSEE HAS ALSO CONTENDED THAT ALON G WITH ASSESSMENT ORDER, NOTICE U/S 274 RWS 271(1) (C) DATED 31.12.20 07 REGARDING INITIATION OF PENALTY PROCEEDINGS FOR FURNISHING IN ACCURATE PARTICULARS AND CONCEALMENT OF INCOME WAS ISSUED. NOTICE IS STA NDARD PROFORMA WITHOUT STRIKING OFF THE RELEVANT CLAUSES WILL LEAD TO INFERENCE AS TO NON- APPLICATION OF MIND BY LD. AO. THEREFORE SHE RELIED ON THE DECISION OF GET V MANJUNATHA COTTON & GINNING FACTORY [2013] 35 TAXMANN.COM 250 (KARNATAKA). IT IS APPARENT THAT HAS ISSUED NOT ICE WITHOUT STRIKING OFF ANY OF THE ALTERNATIVES OF THE ''FURNISHING OF INACCURATE PARTICULARS' OR 'CONCEALMENT OF INCOME'. HON. KARNATAKA HIGH COU RT IN THAT DECISION HAS LAID DOWN A PROPOSITION THAT NOTICE UNDER SECTI ON 274 SHOULD SPECIFICALLY, STATE THE GROUNDS MENTIONED IN SECTIO N 271(L)(C), I.E., WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURN ISHING OF INCORRECT PARTICULARS OF INCOME. SENDING PRINTED FORM, WHERE ALL THE GROUNDS MENTIONED IN SECTION 271 ARE MENTIONED, WOULD NOT S ATISFY REQUIREMENT OF LAW. THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUST ICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPO SED TO THE ASSESSEE. TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AND FI NDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. HENCE RELYING ON THAT DECISION ALSO THE PENALTY ORDER PASSED BY AO IS NOT SUSTAINABLE. ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 13 - APPELLANT HAS CONTENDED THAT NO PENALTY SHOULD BE L EVIED AS THE APPEAL IS ADMITTED BY HIGH COURT AND SUBSTANTIAL QUESTION OF LAW IS FRAMED WHICH MAKES THE ISSUE DEBATABLE. AR OF THE APPELLAN T HAS BROUGHT BEFORE ME THE DECISION OF HONOURABLE GUJARAT HIGH C OURT WHICH SAYS THAT MERELY ON ADMISSION OF THE APPEAL OF THE ASSES SEE IT CANNOT BE SAID THAT ISSUE IS DEBATABLE AND PENALTY U/S 271(1) (C) IS NOT SUSTAINABLE. THE ARGUMENT RAISED BEFORE ME IS THAT IT IS NOT THE MER E ADMISSION OF THE APPEAL BUT THE SUBSTANTIAL QUESTION ADMITTED BY THE HONOURABLE HIGH COURT A AND ALSO THE SECOND ISSUES ADMITTED BY THE HONOURABLE HIGH COURT ON THE PERUSAL OF EVIDENCE BY HON ITAT COUPLE D WITH THE ISSUES OF THE DEPRECIATION BOTH THE ISSUE MAKES THAT THE ISSU E IS DEBATABLE. I HAVE CAREFULLY PERUSED THAT DECISION OF HONOURABLE HIGH COURT AND HERE IT IS NOT THE CASE THAT ONLY ARGUMENT OF THE ASSESSEE IS THAT AS THE APPEAL OF THE ASSESSEE IS ADMITTED BEFORE HIGH COURT NO PENAL TY SHALL BE LEVIED FURTHER, AGAINST THE ORDER OF TRIBUNAL APPELLANT HA S PREFERRED AN APPEAL BEFORE HON'BLE HIGH COURT OF GUJARAT AND THE SAME IS ADMITTED WHEREIN SUBSTANTIAL QUESTION OF LAW HAS BEEN FRAMED . ACCORDING TO THE ORDER OF ADMISSION OF HONOURABLE HIGH COURT THE FOL LOWING TWO SUBSTANTIAL QUESTIONS OF LAWS WERE ADMITTED AS UNDE R :- 1. WHETHER ON FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE INCOME TAX APPELLATE TRIBUNAL WAS RIGHT IN LAW IN C ONFIRMING THE ORDER PASSED BY THE ASSESSING OFFICER REDUCING THE CLAIM OF DEPRECIATION OF RS. 2,2 0,10,209/- ON WINDMILL FROM 80% TO 40% AS CLAIMED BY THE ASSESSEE? 2. WHETHER ON FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL I S PERVERSE TO THE RECORD OF THE CASE? IN VIEW OF THE ABOVE FACTS AND ALSO FOLLOWING THE T WO DECISION OF HONOURABLE SUPREME COURT IN CASE OF RELIANCE PETRO PRODUCTS LIMITED V CIT (SUPRA) AND PRICE WATER HOUSE COPPERS LTD V CIT (SUPRA), DECISION OF KARNATAKA HIGH COURT ON SECTION 274 OF THE ACT AND ON THE ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 14 - FACTS THE DECISION OF PUNJAB AND HARYANA HIGH COURT IN CASE OF COMMISSIONER OF INCOME-TAX V. HINDUSTAN HYDRAULICS (SUPRA), I AM OF THE VIEW THAT THE PENALTY LEVIED U/S 271(1)(C) OF T HE ACT OF RS. 66,05,000/- ON DISALLOWANCE OF PARTIAL DEPRECIA TION ON WINDMILL, THE PENALTY LEVIED U/S 271(L)(C) OF THE ACT OF RS. 66,0 5,000/- IS HEREBY CANCELLED. 6. DISSATISFIED BY THE ORDER OF THE CIT(A) DROPPING THE PENALTY, THE AO HAS PREFERRED APPEAL BEFORE THE TRIBUNAL. 7. THE LD.DR RELIED UPON THE ORDER OF THE AO IN QU ANTUM ASSESSMENT AND THE PENALTY PROCEEDINGS ORDER AS WEL L AS THE ORDER OF THE ITAT IN QUANTUM ASSESSMENT. THE LD.DR SUBMITTED TH AT THE ITAT IN THE COURSE OF FACT FINDING IN QUANTUM APPEAL REVERSED T HE ORDER OF THE CIT(A) AND CONFIRMED THE ACTION OF THE AO. THUS, THE ITAT FOUND ON FACTS THAT THE DEPRECIATION IS ALLOWABLE ONLY FOR A PART OF TH E YEAR AS AGAINST CLAIMED BY THE ASSESSEE FOR FULL YEAR. THE LD.DR RELIED UP ON THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF N.G. TECHNOLOG IES VS. CIT REPORTED AT (2016) 7 TAXMANN.COM 37 (SC) AND SUBMIT TED THAT THE WRONG CLAIM OF THE ASSESSEE HAS RESULTED IN ESCAPEMENT OF INCOME TO THE EXTENT OF DEPRECIATION DISALLOWED BY THE AO AND SUSTAINED BY THE ITAT. THE LD.DR ACCORDINGLY SUBMITTED THAT THE PENALTY ORDER OF THE AO OUGHT TO HAVE BEEN CONFIRMED BY THE CIT(A) IN THE LIGHT OF T HE ORDER OF THE ITAT IN QUANTUM ASSESSMENT. HE THEREFORE URGED THAT THE ORDER OF THE CIT(A) ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 15 - IS REQUIRED TO BE REVERSED AND PENALTY ORDER PASSED BY THE AO IS REQUIRED TO BE UPHELD. 8. THE LD.AR FOR THE ASSESSEE MR.ANKIT GOKANI, ON T HE OTHER HAND, SUBMITTED THAT THE THRUST OF THE ARGUMENT ON BEHALF OF THE REVENUE HINGES AROUND THE ORDER OF THE ITAT IN QUANTUM ASSESSMENT. THE LD.AR SUBMITTED THAT THE ASSESSEE HAS CLAIMED DEPRECIATIO N ON WIND-MILLS. THE IMPUGNED WIND-WILL WAS COMMISSIONED ON 30/09/2004 W HICH WAS SUBSTANTIATED BY A CERTIFICATE DATED 04/10/2004 ISS UED BY THE EXECUTIVE ENGINEER. THE ACQUISITION OF WIND-WILL IS SUPPORTE D BY THE INVOICE OF THE SELLER M/S.SUZLON ENERGY LTD. ON 25/09/2004 AND SO ME OTHER INVOICES DATED BETWEEN 27/09/2004 TO 30/09/2004. AS PER OTH ER INVOICES DATED BETWEEN 27/09/2004 TO 30/09/2004, THE SAID WIND-WIL L HAS BEEN TESTED AND COMMISSIONED ON 30/09/2004. THE ASSET WAS FOUN D TO BE PHYSICALLY EXISTING. THE COPY OF POWER PURCHASE AGREEMENT AND DATE-WISE SALE OF ELECTRICITY ALONGWITH SUPPORTING ETC. WERE ALSO PRO DUCED. THE LD.AR ALSO ADVERTED OUR ATTENTION TO A REPORT RECEIVED BY THE ASSESSEE FROM THE SELLER WHICH WAS ALSO SURVEYED BY THE ASSISTANT ENG INEER JODHPUR VITHRAN NIGAM LTD. BEING MONTHLY SUMMARY OF GENERAT ION OF ELECTRICITY FOR THE MONTH OF SEPTEMBER-2004. REFERRING TO THE AFORESAID REPORT, THE LD.AR CONTENDED THAT THE SELLER HAS CERTIFIED THAT WIND-MILL OF THE ASSESSEE HAS GENERATED 402 UNITS IN THE MONTH OF SE PTEMBER-2004. THE ASSESSEE FINALLY STARTED SALE OF POWER IN THE MONTH OF JANUARY-2005 FOR ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 16 - ELECTRICITY GENERATED IN THE MONTH OF DECEMBER. TH E LD.AR NEXT SUBMITTED THAT WHILE THE ITAT HAS DISCARDED THE PLE AS OF THE ASSESSEE TOWARDS CLAIM OF INSTALLATION OF WIND-WILL ON 30/09 /2004, THIS BY ITSELF IS NOT SUFFICIENT TO IMPOSE ONEROUS PENALTY UNDER S.27 1(1)(C) PARTICULARLY WHEN THE ASSESSEE HAS FILED TANGIBLE EVIDENCES WHIC H SUPPORTS THE CASE OF THE ASSESSEE ON MERITS. AN ADVERSE VIEW BY THE ITA T SHOULD NOT BE SEEN ON A STAND ALONE BASIS TO UPHOLD THE ACTION OF IMPO SING PENALTY. THE LD.AR FURTHER SUBMITTED THAT IT IS NOBODYS CASE TH AT THE WIND-MILL HAS NOT BEEN INSTALLED. THE DISPUTE IS WITH RESPECT T O THE TIME OF INSTALLATION OF WIND-MILL ONLY. THE DEPRECIATION DISALLOWED DUR ING THE YEAR HAS TO BE EVENTUALLY ALLOWED IN THE SUBSEQUENT ASSESSMENT YEA R. THEREFORE THE DISALLOWANCE MADE IN ONE YEAR IS ALLOWABLE IN SUBSE QUENT ASSESSMENT YEAR. THUS, THE ENTIRE ACTION OF THE AO IS REVENUE NEUTRAL AND DOES NOT CALL FOR HARSH ACTION OF PENALTY. THE LD.AR ADVERT ED OUR ATTENTION TO THE ORDER OF THE CIT(A) IN QUANTUM ASSESSMENT AND CONTE NDED THAT RELIEF WAS GRANTED TO THE ASSESSEE BY A SUPERIOR AUTHORITY OF THE REVENUE AT SOME POINT OF TIME WHICH INDICATES THAT THE ISSUE INVOLV ED IS NOT ENTIRELY FREE FROM DOUBT. THEREFORE, THE ORDER OF THE CIT(A) IN QUANTUM ASSESSMENT IS ALSO ENTITLED TO GREAT WEIGHT WHILE DETERMINING THE GRIEVANCE. THE LD.AR ADVERTED OUR ATTENTION TO THE ORDER OF THE ITAT IN QUANTUM ASSESSMENT AND SUBMITTED THAT THE BASIS OF CONCLUSION BY THE I TAT AGAINST THE ASSESSEE WAS ON THE GROUND THAT LORRY RECEIPTS, OCT ROI RECEIPTS, OR OTHER PROOF OF TRANSPORTATION OF GOODS WAS NOT PRODUCED B EFORE THE CIT(A) OR ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 17 - BEFORE THE ITAT. IN DEFENCE, THE LD.AR SUBMITTED T HAT THE SELLER WAS UNDER OBLIGATION FOR TRANSPORTATION AND INSURANCE O F THE WIND-MILL. THE LD.AR ALSO SUBMITTED THAT THE AO HEAVILY RELIED UPO N THE STATEMENT OBTAINED FROM THE OFFICIAL OF THE SELLER COMPANY IN THE COURSE OF SURVEY PROCEEDINGS. SUCH STATEMENT USED AGAINST THE ASSE SSEE WAS NOT PROVIDED TO THE ASSESSEE FOR THE APPRECIATING OF THE NATURE OF ALLEGATION AND CROSS- EXAMINATION THEREOF. THEREFORE, IN THE ABSENCE OF CROSS-EXAMINATION THE STATEMENT OF THE OFFICIALS OF THE SELLER OUGHT NOT TO HAVE BEEN UTILIZED AGAINST THE ASSESSEE IN BREACH OF PRINCIPLE OF NATU RAL JUSTICE. THE LD.AR FINALLY SUBMITTED THAT THE JUDGEMENT OF HONBLE MAD RAS HIGH COURT IN THE CASE OF KENCES FOUNDATION REPORTED IN 289 ITR 5 09 (MAD.) IS DIRECTLY ON THE POINT. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMI SSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW IN QUANTUM ASSESSME NT AND PENALTY PROCEEDINGS. THE LIMITED ISSUE THAT ARISES FOR DET ERMINATION IS WHETHER IN THE FACTS OF THE CASE, REDUCTION OF CLAIM OF DEPREC IATION BY 50% ON WIND- MILL CALLS FOR IMPOSITION OF PENALTY TOWARDS SUCH E XCESSIVE CLAIM OR NOT. AS NOTED IN THE EARLIER PARAS, THE CLAIM OF DEPRECI ATION OF THE ASSESSEE WAS SCALED DOWN TO 50% BY AO ON THE GROUND THAT THE WIND-MILL HAS BEEN INSTALLED AFTER 30/09/2004 AND ACCORDINGLY WAS PUT TO USE FOR LESS THAN 180 DAYS. THE CIT(A) ALLOWED THE FULL CLAIM OF THE ASSESSEE IN QUANTUM APPEAL. THE ITAT AGAIN RESTORED THE ORDER OF THE AO. ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 18 - OSTENSIBLY, THE ISSUE INVOLVES SOME TRACES OF UNCER TAINTIES AND DEBATE ON APPRECIATION OF FACTS. WHILE THE QUANTUM ASSESSMEN T HAS BEEN DECIDED AGAINST THE ASSESSEE ON PREPONDERANCE OF EVIDENCE, IT IS PERMISSIBLE FOR THE ASSESSEE IN THE PENALTY PROCEEDINGS TO SHOW AND PROVE BONAFIDES ON EXISTING MATERIAL ITSELF, THE PRESUMPTIONS OF CONC EALMENT CONTEMPLATED IN EXPLANATION-1 TO SECTION 271(1)(C) STANDS REBUTT ED. THE ASSESSEE HAS TO ONLY SHOW THAT HIS PLEA STANDS THE TEST OF PREPO NDERANCE OF PROBABILITIES. IN THE INSTANT CASE, THE ASSESSE E HAS NOTABLY FILED A LOSS RETURN WHICH WAS FINALLY ASSESSED AT POSITIVE INCOM E OWING TO THE AFORESAID ADDITIONS DUE TO REJECTION IN DEPRECIATIO N ALLOWANCES. THIS ALSO GIVES A PLAUSIBLE IMPRESSION THAT THERE WAS NO DESI RE ON THE PART OF THE ASSESSEE TO HIDE OR CONCEAL ITS INCOME SO AS TO AVO ID PAYMENT OF TAXES BY A POSITIVE DESIGN TO MISLEAD. IT IS NOBODYS CASE THAT THE WIND-MILL HAS NOT BEEN ACQUIRED AND INSTALLED AT ALL. THE LIMIT ED DISPUTE IS THE DATE ON WHICH THE WIND-MILL HAS BEEN PUT TO USE. IF THE AS SET IS PUT TO USE FOR LESS THAN 180 DAYS AS CLAIMED BY THE REVENUE, THE ASSESS EE IS ENTITLED TO HALF OF THE ELIGIBLE DEPRECIATION ALLOWANCE ON THE CAPIT AL ASSET. THE DEPRECIATION DISALLOWED DURING THE YEAR IS EVENTUAL LY ELIGIBLE FOR DEPRECIATION IN THE NEXT YEAR. WE SIMULTANEOUSLY NOTE THAT THE CIT(A) IN THE QUANTUM ASSESSMENT HAS APPROVED THE PLEA TAK EN BY THE ASSESSEE ON MERITS AND DISLODGED THE ASSESSMENT ORDER. THUS , THE BONAFIDES OF THE CLAIM OF THE ASSESSEE CANNOT BE ENTIRELY DISPROVED MERELY ON THE GROUND THAT ITAT IN QUANTUM ASSESSMENT HAS AGREED WITH THE ACTION OF THE AO. ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 19 - THE ORDER OF THE CIT(A) ON FACTS IN QUANTUM ASSESSM ENT, IN OUR VIEW, IS A STRONG MITIGATING CIRCUMSTANCE IN FAVOUR OF THE A SSESSEE. WE SIMULTANEOUSLY NOTE THAT THE ASSESSEE HAS SOUGHT TO EXPLAIN BY WAY OF EVIDENCES AS NOTED IN AFORESAID PARAS THAT ACTUAL G ENERATION OF ELECTRICITY OF 402 UNITS HAS BEEN SHOWN FOR THE MONTH OF SEPTEM BER-2004. THE INVOICES OF THE SUPPLIER OF THE MACHINERY IS ALSO P RIOR TO THE PURPORTED DATE OF INSTALLATION ON 30/09/2004. THE ASSESSEE H AS OFFERED SOME EXPLANATION ON DEFICIT NOTED BY THE ITAT TOWARDS TR ANSPORTATION AND INSURANCE. THE EXPLANATION OFFERED BY THE ASSESSEE IS SOMEWHAT PLAUSIBLE PARTICULARLY IN THE CONTEXT OF PENAL PROV ISIONS OF SECTION 271(1)(C) OF THE ACT. NEEDLESS TO SAY, PENALTY PRO CEEDINGS ARE INDEPENDENT OF ASSESSMENT PROCEEDINGS AND IT IS WEL L SETTLED THAT CONCEALMENT OF INCOME CANNOT BE AUTOMATICALLY INFER RED ON THE BASIS OF ADDITIONS/DISALLOWANCE IN THE QUANTUM ASSESSMENT W ITHOUT BEING PROVED OTHERWISE. IN OTHER WORDS, IMPOSITION OF PENALTY I S NOT AN AUTOMATIC CONSEQUENCE OF THE ASSESSMENT PROCEEDINGS. THE PEN ALTY CANNOT BE LEVIED AS A MATTER OF COURSE ON THE GROUND THAT QUA NTUM ADDITIONS HAVE BEEN CONFIRMED BY THE SUPERIOR AUTHORITY. THE ASSE SSEE IN THE INSTANT CASE HAS PROVIDED PLAUSIBLE EVIDENCE WHICH ARE NOT TOTALLY BEREFT OF MERITS. THE REVENUE ON ITS PART IS ALSO REQUIRED T O SHARE THE BLAME BY NOT GIVING CROSS-EXAMINATION OF THE STATEMENTS RECORDED IN SURVEY PROCEEDINGS ON THE SUPPLIER. ON THE TOTALITY OF TH E CIRCUMSTANCES, WE FAIL TO SEE CULPABILITY ON THE PART OF THE ASSESSEE. TH E FACTS HAVE BEEN ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 20 - ADEQUATELY DISCLOSED AND THE ASSESSEE HAS TENDERED EXPLANATION THEREON WHICH WERE NOT FOUND TO BE FALSE PER SE . THE ULTIMATE ELIGIBILITY OF DEPRECIATION IN ONE YEAR OR THE OTHER ALSO LEANS IN FAVOUR OF THE ASSESSEE. THUS, ON A CONSPECTUS ALL THE FACTS AND CIRCUMST ANCES, THERE IS A COMPELLING CASE FOR DELETING THE PENALTY. THUS, IN OUR VIEW, THE CIT(A) WAS RIGHT IN STRIKING DOWN THE PENALTY IMPOSED BY T HE AO. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 23 /02/2 017 AT AHMEDABAD. SD/- SD/- ( RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER A CCOUNTANT MEMBER AHMEDABAD ; DATED 23/02/2017 ..#, $.,#../ T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. - & ' .& / CONCERNED CIT 4. ' .& ( ) / THE CIT(A)-JAMNAGAR 5. 2$34 ,&,# , , /DR,ITAT, RAJKOT 6. 4?@ A% / GUARD FILE. / BY ORDER, 2& ,& //TRUE COPY// / ( DY./ASSTT.REGISTRAR) %&, / ITAT, RAJKOT ITA NO.170 /RJT /2016 DY.CIT VS. KHUSHBU AUTO FINANCE LTD. ASST.YEAR 2005-06 - 21 - 1. DATE OF DICTATION .. 15.3.17 (DICTATION-PAD 30- PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 16.2.17 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 23.2.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23.2.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER