Kirloskar Ferrous Industries Ltd., Pune V. Deputy Commissioner of Income-tax,

ITA 1721/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0845 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 11-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SABHANA PARVEEN
• Keywords: Depreciation; Additional depreciation; Wrong claim
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO , AM . / IT A NO. 1 721 /P U N/201 6 / ASSESSMENT YEAR : 20 08 - 09 KIRLOSKAR FERROUS INDUSTRIES LTD., LAXMANRAO KIRLOSKAR RD., KHADKI, PUNE 411003 . / APPELLANT PAN: A AACK7297E VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE . / RESPONDENT / APPELLANT BY : SHRI C.H. NANIWADEKAR / RESPONDENT BY : MS. SABHANA PARVEEN / DATE OF HEARING : 26 . 1 1 .201 8 / DATE OF PRONOUNCEMEN T: 30 . 1 1 .201 8 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY ASSESSEE IS AGAINST ORDER OF CIT (A) - 7 , PUNE , DATED 0 2 . 0 5 .201 6 RELATING TO ASSESSMENT YEAR 20 08 - 09 AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT , 1961 (I N SHORT THE ACT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL: - 1. PENALTY PROCEEDINGS U/S 271(1)(C) THE CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING PENALTY OF RS.36,02,334/ - U/S 271(1)(C) FOR ALLEGED FURNISHING OF INACCURATE PARTICULA RS IN RESPECT OF ADDITIONAL DEPRECIATION ON PLANT & MACHINERY, WHEN IN FACT ALL THE MATERIAL FACTS WERE FURNISHED ACCURATELY. IT A NO. 1721 /P U N/20 1 6 KIRLOSKAR FERROUS INDUSTRIES LTD. 2 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF GRAY IRON CASTING & PIG IRON. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAD PURCHASED SECOND HAND GENERATOR SET FROM KIRLOSKAR OIL ENGINES LTD. FOR CON SIDERATION OF 5,27,95,285/ - . THE ASSESSEE HAD CLAIMED ADDITIONAL DEPRECIATION OF 1,05,98,2017/ - ON THE SAID GENERATOR. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ADDITIONAL DEPRECIATION WAS ALL OWABLE ONLY FOR NEW MACHINERY. SINCE THE MACHINERY PURCHASED BY T HE ASSESSEE WAS SECOND HAND, THE ASSESSING OFFICER HELD THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM ADDITIONAL DEPRECIATION AND THE SAME HAS BEEN DISALLOWED IN THE HANDS OF ASSESSEE. THE ASSESSING OFFICER FURTHER HELD THAT SINCE THE WRONG CLAIM WAS MADE B Y THE ASSESSEE, P ENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE TO BE INITIATED FOR THE ABOVE DEFAULT. 5. THE CIT(A) HAS CONFIRMED THE LEVY OF PENALTY. 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 7. WE HAVE HEARD THE RIVAL CONT ENTIONS AND PERUSED THE RECORD. THE PRELIMINARY ISSUE RAISED IN THE PRESENT APPEAL IS THE LACK OF RECORDING OF PROPER SATISFACTION FOR INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER WHILE RECORDING SATISFACTION H AS NOT MENTIONED ANY OF THE LIMBS OF SECTION 271(1)(C) OF THE ACT AND HAS ONLY INITIATED PENALTY PROCEEDINGS. FURTHER, WHILE PASSING PENALTY ORDER, THE ASSESSING OFFICER HAS FAILED TO COME TO CONCLUSION AS TO WHICH LIMB OF SECTION 271(1)(C) OF THE ACT IS ATTRACTED IN THE IT A NO. 1721 /P U N/20 1 6 KIRLOSKAR FERROUS INDUSTRIES LTD. 3 FACTS OF THE PRESENT CASE AND HAS LEVIED PENALTY FOR CONCEALMENT BY OBSERVING THE ASSESSEE TO HAVE CONCEALED THE INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME. THE SAID LEVY OF PENALTY HAS BEEN CONFIRMED BY THE CIT(A). THE A SSESSEE IS IN APPEAL AGAINST THE SAME. 8. THE HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY (2017) 392 ITR 4 (BOM) HAVE HELD THAT WHERE THERE IS NO PROPER SATISFACTION FOR LEVY OF PENALTY AND IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO THE ASSESSEE, THERE IS NO MERIT IN LEVY OF PENALTY. 9. APPLYING THE SAID RATIO, WHERE THE ASSESSING OFFICER HAS FAILED TO RECORD PROPER SATISFACTION WHILE INITIATING PENALTY PROCEEDINGS AND THEN PASSING PENALTY ORDER HOLDING THE ASSESSEE TO HAVE CONCEALED TH E INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME I.E. ON BOTH THE LIMBS OF SECTION , SUFFERS FROM INFIRMITY, IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT (SUPRA) . ACCORDINGLY, WE HOLD THAT PENALTY ORDER PASSED IN THE PRESENT CASE IS BOTH INVALID AND BAD IN LAW. THE GROUND OF APPEAL RAISED BY ASSESSEE IS THUS, ALLOWED. 10 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 30 TH DAY OF NOVEMBER , 201 8 . SD/ - SD/ - ( D.KARUNAKARA RAO ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 30 TH NOVEMBER , 201 8 . GCVSR IT A NO. 1721 /P U N/20 1 6 KIRLOSKAR FERROUS INDUSTRIES LTD. 4 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 7 , PUNE ; 4. THE PR. CIT - 6 , PUNE ; 5. 6. , , / DR A , ITAT, PUNE ; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE