A.C.I.T.-20(1), MUMBAI V. M/S. HINDUSTAN RUBBER (SILVASSA), MUMBAI

ITA 6471/MUM/2008

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6203 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 25-10-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 07-11-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: BHAVESH SHAH
• Keywords: Depreciation; Bonafide belief; Retrospective amendment; Additional evidence; Difference of opinion; Revised return
• Section: 133A; 80IB; 32; 27; 148

Judgement Text

1 ITA 6471 TO 6473/M/08, HINDUSTAN RUBBER (SILVASA) IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H BEFORE SHRI P.M. JAGTAP, A.M. AND SMT. ASHA VIJAYAR AGHAVAN, JM ITA NO. 6471 TO 6473/MUM/08 ASSESSMENT YEARS 2003-04, 2004-05 & 2005-06 A.C.I.T. 20(1), ROOM NO. 603, 6 TH FLOOR, PIRAMAL CHAMBER, PAREL, MUMBAI 12. PAN AABFH7112D VS. M/S HINDUSTAN RUBBER (SILVASA), 1, JANKI CENTRE, OFF. VEERA DESAI ROAD, ANDHERI (W), MUMBAI. 53 APPELLANT RESPONDENT APPELLANT BY SHRI SURENDRA KUMAR RESPONDENT BY SHRI BHAVESH SHAH ORDER PER P.M. JAGTAP, A.M. THESE APPEALS ARE PREFERRED BY THE REVENUE AGAINST THE COMPOSITE ORDER PASSED BY THE LD. CIT(A) XX, MUMBAI DATED 22.04.2008 WHEREBY HE CONFIRMED THE PENALTIES OF ` 14,08,092/-, ` 10,44,659/- AND ` 7,90,178/- IMPOSED BY THE A.O. U/S 271(1)(C) FOR A .Y. 2003-04, 2004-05 & 2005-06 RESPECTIVELY. 2. THE RELEVANT FACTS OF THE CASE GIVING RISE T O THESE APPEALS ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM WHICH IS ENGAGED IN THE BUSINESS O F MANUFACTURING OF RUBBER BELTS, V. BELTS ETC. THE RETURNS OF INCOME FOR THE YEARS UND ER CONSIDERATION WERE ORIGINALLY FILED BY THE ASSESSEE DECLARING TOTAL INCOME OF ` 26,95,730/-, ` 17,46,810 & ` 42,69,022/-. THE SAID RETURNS WERE INITIALLY PROCESSED BY THE A.O. U /S 143(1). THEREAFTER A SURVEY U/S 133A WAS CARRIED OUT IN THE BUSINESS PREMISES OF TH E ASSESSEE ON 17.2.06. DURING THE COURSE OF SURVEY, IT WAS FOUND THAT THE ASSESSEE FI RM HAD NOT CLAIMED DEPRECIATION ON FIXED ASSETS FOR A.Y. 2000-01 TO 2002-03 IN WHICH Y EARS IT WAS ENTITLED TO CLAIM 2 ITA 6471 TO 6473/M/08, HINDUSTAN RUBBER (SILVASA) DEDUCTION U/S 80IB. IT WAS ALSO NOTICED THAT AS A RESULT OF NOT CLAIMING THE DEPRECIATION ON FIXED ASSETS FOR THE SAID YEARS, THE WRITTEN DOW N VALUE (WDV) OF THE FIXED ASSETS OF THE ASSESSEE FIRM WAS OVERSTATED AND DEPRECIATION C LAIMED BY IT ON SUCH WDV OF FIXED ASSETS FOR THE YEARS UNDER CONSIDERATION WAS HIGHER . IMMEDIATELY AFTER SURVEY, THE ASSESSEE FILED REVISED RETURNS OF INCOME WITHDRAWIN G SUCH HIGHER CLAIM OF DEPRECIATION ON 27.3.06, 3.4.06 AND 21.4.06 FOR A.Y. 2003-04, 20 04-05 & 2005-06 DECLARING REVISED TOTAL INCOME AT ` 66,90,910, ` 46,99,676 AND ` 64,90,605/- RESPECTIVELY. SUBSEQUENTLY, NOTICES U/S 148 WERE ISSUED BY THE A.O. ON 18.5.06 FOR A.Y. 2003-04 & 2004-05 IN REPLY TO WHICH A LETTER DATED 25.5.06 WAS FILED BY THE AS SESSEE STATING THAT THE REVISED RETURNS ALREADY FILED ON 27.3.06 AND 3.4.06 FOR A.Y. 2003-0 4 AND 2004-05 MAY BE TREATED AS FILED IN RESPONSE TO NOTICE U/S 148. IN THE ASSESSMENTS COMPLETED FOR THESE TWO YEARS I.E. 2003- 04 & 2004-05 VIDE ORDER DATED 8.10.07 PASSED U/S 14 3(3) R.W.S. 147, THE TOTAL INCOME OF THE ASSESSEE WAS COMPUTED BY THE A.O. AT ` 67,18,850/- AND ` 47,31,550/- RESPECTIVELY AFTER MAKING SOME SMALL ADDITIONS BESIDES THE WITHD RAWAL OF ITS CLAIM FOR HIGHER DEPRECIATION BY THE ASSESSEE. SIMILARLY IN THE ASS ESSMENT COMPLETED FOR A.Y. 2005-06 BY AN ORDER DATED 25.10.07 PASSED U/S 143(3), THE TOTA L INCOME OF THE ASSESSEE WAS COMPUTED BY THE A.O. AT ` 65,26,670/-. THEREAFTER THE PENALTY PROCEEDINGS U /S 271(1)(C) WERE INITIATED BY THE A.O. IN RESPECT OF EXCESS CLAIM OF DEPRECIATION MADE BY THE ASSESSEE IN THE RETURNS OF INCOME ORIGINALLY FILED FOR ALL THE THREE YEARS UNDER CONSIDERATION. ACCORDING TO THE A.O., THE SAID EXCESSIVE CLAIM FOR DEPRECIATION WAS WITHDRAWN BY THE ASSESSEE BY FILING THE REVISED RETURNS ONLY AFTER I T WAS DETECTED DURING THE COURSE OF SURVEY CARRIED OUT U/S 133A. HE ALLEGED THAT THE A SSESSEE OUGHT TO HAVE CLAIMED THE DEPRECIATION ON FIXED ASSETS IN A.Y. 2000-01 TO 200 2-03 WHILE COMPUTING ITS INCOME FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 80IB AS HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF INDIAN RAYON REPORTED IN 261 ITR 98 AND BY NOT CLAIMING SUCH DEPRECIATION DELIBERATELY, THE ASSESSEE HAD OVERSTATED THE WDV O F FIXED ASSETS AND CLAIMED HIGHER DEPRECIATION IN ALL THE THREE YEARS UNDER CONSIDERA TION. IN REPLY TO THE SHOW CAUSE NOTICES ISSUED BY THE A.O. DURING THE COURSE OF PENALTY PRO CEEDINGS, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THERE WAS NO MALAFIDE INTENTIO N IN NOT CLAIMING THE DEPRECIATION ON 3 ITA 6471 TO 6473/M/08, HINDUSTAN RUBBER (SILVASA) FIXED ASSETS IN A.Y. 2000-01 TO 2002-03 AND IMMEDIA TELY AFTER THIS MISTAKE WAS POINTED OUT IN THE SURVEY OPERATION, THE ASSESSEE FILED ITS REVISED RETURNS WITHDRAWING THE HIGHER DEPRECIATION CLAIMED ON FIXED ASSETS IN THE YEARS U NDER CONSIDERATION BY OVERSTATING THE WDV. IT WAS ALSO SUBMITTED THAT THE TAX AND INTERE ST DUE THEREON WERE ALSO DULY PAID BY THE ASSESSEE WHILE REVISING ITS RETURNS OF INCOME F OR ALL THE THREE YEARS UNDER CONSIDERATION. IT WAS CONTENDED THAT KEEPING IN VIE W OF THIS CONDUCT OF THE ASSESSEE WHICH WAS BONAFIDE AND HAVING REGARD TO THE FACTS T HAT THE ASSESSEE HAD DISCLOSED ALL THE MATERIAL FACTS RELEVANT TO ITS CLAIM FOR DEPRECIATI ON IN THE RELEVANT RETURNS OF INCOME ITSELF, THERE WAS NO CASE TO IMPOSE PENALTY U/S 271(1)(C) F OR ALL THE THREE YEARS UNDER CONSIDERATION. THE SUBMISSIONS MADE ON BEHALF OF TH E ASSESSEE WERE NOT FOUND ACCEPTABLE BY THE A.O. ON THE GROUND THAT THE EXCESSIVE CLAIM OF DEPRECIATION MADE BY THE ASSESSEE FOR ALL THE THREE YEARS UNDER CONSIDERATION WAS DET ECTED ONLY DURING THE COURSE OF SURVEY OPERATION AND THE REVISED RETURNS WERE FILED BY THE ASSESSEE WITHDRAWING THE EXCESSIVE CLAIM OF DEPRECIATION NOT VOLUNTARILY BUT ONLY AS A RESULT OF SURVEY ACTION. THE A.O. HELD THAT THE ASSESSEE THUS HAD FURNISHED INACCURATE PAR TICULARS OF ITS INCOME BY CLAIMING EXCESSIVE DEPRECIATION ON FIXED ASSETS IN THE RETUR NS OF INCOME FILED ORIGINALLY FOR THE YEARS UNDER CONSIDERATION AND PROCEEDED TO IMPOSE P ENALTIES OF ` 14,08,092, ` 10,44,659 AND ` 7,90,178/- U/S 271(1)(C) FOR A.Y. 2003-04, 2004-05 & 2005-06 RESPECTIVELY. THE PENALTIES IMPOSED BY THE A.O. U/S 271(1)(C) FOR ALL THE THREE YEARS UNDER CONSIDERATION WERE CHALLENGED BY THE ASSESSEE IN THE APPEALS FILE D BEFORE THE LD. CIT(A). 3. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E THE LD. CIT(A), A DETAILED SUBMISSION WAS FILED BY THE ASSESSEE WHICH AS REPRO DUCED BY THE LD. CIT(A) ON PAGE NO. 3 TO 5 OF HIS IMPUGNED ORDER IS EXTRACTED BELOW: WE WERE CLAIMING SINCE THE BEGINNING DEDUCTION U/S 80IB OF I.T. ACT, 1961. WE WERE NOT CLAIMING DEPRECIATION. EVEN THEN OUR ASSE SSMENT WAS REOPENED FROM A.Y. 2002-03 AND ONWARD ONLY ALTHOUGH WHILE REVISING RET URN OF INCOME FOR A.Y. 2002- 03. WE HAD PROVIDED DEPRECIATION FOR ALL THE YEARS AND TAKEN W.D.V. OF ALL ASSETS VALUE AS ON DT. 01.04.2002. WE ENCLOSE HEREWITH COP IES OF DEPRECIATION SCHEDULE. WE HAVE PROVIDED/CLAIMED IN THE REVISED RETURN OF I NCOME TAX FILED BY US SCHEDULE RELATES TO THE TOTAL DEPRECIATION CLAIMED BY US FRO M A.Y. 1998-99 TO 2005-06. WE ARE 4 ITA 6471 TO 6473/M/08, HINDUSTAN RUBBER (SILVASA) ENCLOSING HEREWITH STATEMENT SHOWING RETURNED/REVIS ED/ASSESSED INCOME. DEPRECIATION/DEDUCTION U/S 80IB TOTAL CLAIMED BY US . WE ENCLOSE HEREWITH A COPY OF LETTER DT. 27.03.2006 FILED WITH THE DEPT. IN RESPO NSE TO SURVEY OPERATION IN OUR BUSINESS PREMISES. WE ALSO ENCLOSE HEREWITH A COPY OF ASSESSMENT ORDER PASSED BY ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 20(1), MUMBAI ACCEPTING OUR INCOME AS PER REVISED RETURN OF INCOME FILED BY US FOR THE A.Y. 2002-03. THE THEN ASSESSING OFFICER HAD NOT INITIATED/LEVY PENALTY U/S 271(1)(C ) OF I.T. ACT, 1961. THERE IS A AMENDMENT AND EXPLANATION 5 IS INSERTED TO SECTION 32(I)(II) OF I.T. ACT, 1961 W.E.F. DT. 01.04.2002 I.E. A.Y. 200203 WHERE IT HAS BEEN STATED THAT FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT THE PROVISION O F THIS SUB-SECTION SHALL APPLY WHETHER OR NOT THE ASSESSEE HAS CLAIMED THE DEDUCTI ON IN RESPECT OF DEPRECIATION IN COMPUTING HIS TOTAL INCOME. SECTION 32(1)(II). EXP LANATION 5 OF I.T. ACT, 1961 WAS AMENDED. W.E.F. 01.04.2002 I.E. ON AND FROM A.Y. 20 02-03. IT IS NOT APPLICABLE FROM EARLIER YEARS. IT WAS NOT GIVEN RETROSPECTIVE OPER ATION OF PROVISION. IT HAS HELD THAT WHENEVER THE LEGISLATURE WANTED TO CONVEY ITS INTE NTION TO GIVE RETROSPECTIVE EFFECT TO AS PROVISION EITHER BY ENFORCING COMMENCEMENT OR BY USING LANGUAGE OR EXPRESSION CONVEYING SUCH A MEANING. IT HAS ALWAYS DONE SO CLEARLY. THE HONBLE HIGH COURT ALSO REFERRED TO THE A SUPREME COURTS D ECISION IN THE CASE OF CIT VS. MAHENDRA MILLS (2000) 243 ITR 56 (SC) WHICH LAID D OWN THAT UNLESS ASSESSEE ASKED THE DEPRECIATION ALLOWANCE. AS MENTIONED ABO VE WE HAD NEITHER PROVIDED NOR CLAIMED ANY DEPRECIATION IN THE ORIGINAL RETURN OF INCOME FILED BY US WE ENCLOSE HEREWITH A COPY OF ORDER PASSED BY CIT(A) XXVI IN T HE CASE OF M/S KETAN PLASTICS INDS. PVT. LTD. DT. 21.10.2003. WE HAVE TO FURTHER BRING TO YOUR KIND NOTICE THAT DURING THE PREVIOUS YEARS I.E A.YS. 200-01, 2001-02 AND 2002-03 IN WHICH WE HAD NEITHER PROVIDED NOR CLAIMED ANY DEPRECIATION ON AN Y OF OUR FIXED ASSETS BUT WE HAD DULY MENTIONED IN AUDIT REPORT SUBMITTED U/S 44AB OF I.T. ACT, 1961 THAT NONPROVISION OF THE DEPRECIATION ON THE FIXED ASSET S OF THE CURRENT YEAR. WE ENCLOSE HEREWITH THE COPY OF AUDI T REPORT FOR YOUR PERUSAL. FOR ALL THE THREE YEARS AS MENTIONED ABOVE WE HAD D ULY CLAIMED DEDUCTION U/S 80IB OF I.T. ACT, 1961. FROM THE ABOVE , IT IS CLEAR TH AT ASSESSING OFFICER HAS TO CONSIDER THE DEDUCTION IN RESPECT OF DEPRECIATION WHILE PROC ESSING AND PASSING THE ASSESSMENT ORDER WHETHER OR NOT WE HAVE CLAIMED OR NOT IN THE RETURN OF INCOME FILED BY US. THE THEN ASSESSING OFFICER IS OBLIGED TO VERIFY THE RETURN OF INCOME FILED BY US CORRECTLY AS PER THE LAW AND HE SHOULD HAVE M ADE ENQUIRY AND SHOULD FOUND OUT THE REASON FOR NOT CLAIMING THE DEPRECIATION BY US BEFORE PASSING/ACCEPTING THE RETURN OF INCOME FILE BY US. WE HAD EITHER PROVIDED OR CLAIMED DEPRECIATION FOR THE ASSESSMENT YEARS 2000-01, 2001-02, 2002-03 THOUGH I T WAS MADE MANDATORY W.E.F. A.Y. 2002-03. OUR ORIGINAL RETURN OF INCOME FILED BY US WAS ACCEPTED U/S 143(1) OF I.T. ACT, 1961. ALL THE FACTS WERE SHOWN IN RETURN OF INCOME FILED BY US, THEREFORE, THERE IS NO CONCEALMENT OF INCOME OR MATERIAL FACTS BY US. NON CLAIMING OF DEDUCTION IN RESPECT OF DEPRECIATION DOES NOT ATTRA CT PENAL ACTION. THE PROVISION OF DEPRECIATION I.E SECTION 32 OF I.,T. ACT, 1961 IS D IRECTION TO THE ASSESSING OFFICER TO RECTIFY THE DEFECTS IN THE RETURN OF INCOME AND NO T TO PROCEED TO INITIATE PENALTY PROCEEDINGS AND TO LEVY PENALTY U/S 271(1)(C) OF I. T. ACT 1961. AS MENTIONED ABOVE THERE IS NO RETROSPECTIVE EFFECT OF SECTION 32910(I I) EXPLANATION 5 OF I.T. ACT, 1961 THE AMENDED SECTION IS EFFECTIVE FROM A.Y. 2002-03 ONLY IT WAS AT ALL NOT NECESSARY TO REVISING RETURN OF INCOME DUE TO NON CLAIMING DEPRE CIATION ON THE FIXED ASSETS BEFORE DT. 02.04.2002 PERIOD. AS WE HAVE ON THE ADVICE OF THE DEPARTMENT WE DULY HAVE CLAIMED DEPRECIATION AND FILED REVISED RETURN. WE PAID TAXES ALSO ACCORDINGLY. THERE IS NO CONCEALMENT OF INCOME AND THEREFORE PEN ALTY LEVIED U/S 271(1)(C) OF THE I.T. ACT 1961 MAY BE DROPPED. THERE IS NO BAD OR M ALAFIDE INTENTION NOT TO CLAIM 5 ITA 6471 TO 6473/M/08, HINDUSTAN RUBBER (SILVASA) DEPRECIATION AND TO EVADE TAX. WE ARE REGULAR AND NEVER DEFAULTED IN PAYMENT OF TAXES. WE ARE REGULARLY ASSESSED TO INCOME-TAX AND WE ARE CO-OPERATIVE WITH THE DEPARTMENT AND EXPEDITE COMPLETION OF ASSESSMENTS. MORE IMPORTANT FACTOR TO DECIDE THAT WHETHER OR NOT THE ASSESSEE IS LIABLE T O LEVY A PENALTY U/S 271(1)(C) OF I.T. ACT 1961 AND WHETHER THE CONDUCT OF ASSESSEE I S BONAFIDE OR NOT AND WHETHER THE ASSESSEE HAS DISCLOSED THE MATERIAL FACTS RELEVANT FOR THE ASSESSMENT BEFORE THE VARIOUS AUTHORITIES. OUR SUBMISSION IS ALSO ACCEPTE D BY THE THEN ASSESSING OFFICER FOR THE A.Y. 2002-03 AND PENALTY PROCEEDINGS U/S 27 1(1)(C) OF I.T. AT, 1961 WAS NOT INITIATED. IN SUPPORT OF OUR CLAIM WE CITE THE DEC ISION OF ITAT MUMBAI BENCH (1) IN THE CASE OF TELEBUILD CONSTRUCTION (P) LTD. VS. ASS T. COMMISSIONER OF INCOME TAX (9)(3) MUMBAI DECIDED ON 12.10.2006 WHEREIN PENALT Y U/S 271(1)(C) OF THE I.T. ACT 1961 WAS DROPPED. WE ENCLOSE HEREWITH THE COPY OF THE DECISION FOR YOUR REFERENCE. WE ALSO ENCLOSE HEREWITH THE COPY OF OUR REPLY/SU BMISSION DATED 03.03.2008 AND 15.03.2008 SUBMITTED TO THE ASSESSING OFFICER, CIRC LE- 20(1), MUMBAI TO CONSIDER OUR REQUEST AND DROP THE PENALTY PROCEEDINGS U/S 27 1(1)(C) OF I.T. ACT, 1961. WE HOPE OUR SUBMISSION IS IN ORDER AND WE ONCE AGAIN A S REQUEST YOU THE PENALTY LEVIED U/S 271(1)(C) OF I.T. ACT, 1961 AMOUNTING TO ` . 14,08,092/- MAY BE DROPPED. 4. AFTER TAKING INTO CONSIDERATION THE WRITTEN SUBM ISSION FILED BY THE ASSESSEE AND AFTER TAKING NOTE OF THE RELEVANT FACTS FROM THE RE CORD AVAILABLE BEFORE HIM, THE LD. CIT(A) CANCELLED THE PENALTIES IMPOSED BY THE A.O. U/S 271 (1)(C) FOR ALL THE THREE YEARS UNDER CONSIDERATION FOR THE FOLLOWING REASONS GIVEN IN PA RA NO. 4.3 OF HIS IMPUGNED ORDER: AFTER GIVING A CAREFUL CONSIDERATION TO THE SUBMISS IONS OF THE AR AND FACTS AVAILABLE ON RECORD, I AM IN AGREEMENT WI TH THE OPINION OF THE APPELLANT THAT IT IS NOT A FIT CASE FOR LEVY OF PEN ALTY U/S 271(1)(C) OF THE I.T. ACT, 1961. THE FACTS NOTED ABOVE SHOW THAT IT IS NO T A CASE OF CONCEALMENT OF INCOME NOR IT IS A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. ALL THE MATERIAL FACTS REQUIRED FOR THIS PURPOSE I.E. F OR ALLOWING DEPRECIATION ARE AVAILABLE IN THE RETURN OF INCOME FILED BY THE APPE LLANT RIGHT FROM THE BEGINNING. NOTHING EXTRA OR ADDITIONAL EVIDENCE IS FOUND DURING THE SURVEY, WHICH LEAD TO THE CONCLUSION THAT THE APPELLANT HAS CONCEALED ITS TAXABLE INCOME OR FURNISHED INACCURATE PARTICULARS OF ITS I NCOME. THE AUDIT REPORT FILED ALONG WITH ORIGINAL RETURNS FOR ALL THE ASSES SMENT YEARS 2000-01 TO 2002-03, SPECIFICALLY NOTING THAT NO PROVISION FOR DEPRECIATION IS MADE ON FIXED ASSETS IN THE CURRENT YEARS CLEARLY THROWS LI GHT ON THE INTENTION OF THE APPELLANT BEING BONAFIDE ON THIS ISSUE. THE CASE L AWS RELIED ON BY THE ASSESSING OFFICER ARE EASILY DISTINGUISHABLE IF WE ANALYSE THE SAME, ON THE PECULIAR FACTS OF THIS, AS MENTIONED ABOVE. HOWEVE R, I FIND THE FACTS OF THIS CASE ARE MORE IDENTICAL TO THE FACTS NOTED IN THE C ASE OF TELEBUILD CONSTRUCTION PVT. LTD. 13 SOT 218(MUM) RELIED ON BY THE AR. IN THAT CASE ALTHOUGH ALL THE PARTICULARS WERE NOT DISCLOSED IN THE ORIGINAL RETURN OF INCOME (AS DISCLOSED IN THE PRESENT CASE), BUT BASE D ON A LETTER OF THE APPELLANT SEEKING ADVISE OF THE ASSESSING OFFICER B EFORE FILING THE RETURN OF INCOME, THE HONOURABLE ITAT HAS HELD THAT INTENTION S BEING BONAFIDE, PENALTY U/S 271(1)(C) IS NOT LEVIABLE. IN THE INST ANCE CASE THE AUDIT REPORT CLEARLY REVEALS THE INTENTION OF THE APPELLANT BEIN G BONAFIDE IS NOT ONLY FILED 6 ITA 6471 TO 6473/M/08, HINDUSTAN RUBBER (SILVASA) ALONG WITH THE ORIGINAL RETURN OF INCOME BUT ALL OT HER MATERIAL FACTS VIZ. DEPRECIATION CHART/SCHEDULE OF FIXED ASSETS AND COM PUTATION OF INCOME REQUIRED DISCLOSING COMPLETE DETAILS FOR THIS PURPO SE ARE ALREADY AVAILABLE IN THE RETURNS OF INCOME. THEREFORE, IT CANNOT BE CON STRUED THIS AS A CASE OF CONCEALMENT, NOR A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME, ATTRACTING PENALTY U/S 271(1)(C) OF THE I.T. ACT. IT IS NOT A CASE OF APPELLANT CLAIMING DEPRECIATION IN ITS P&L A/C BUT NOT CLAIM ING THE SAME IN ITS WORKING OF INCOME ELIGIBLE FOR DEDUCTION U/S 80IB O F THE ACT. IT HAS NOT CLAIMED DEPRECIATION FOR ALL THESE ASSESSMENT YEARS (I.E. FOR A.Y.S 2000-01 TO 2002-03) WITH A BONAFIDE BELIEF THAT IT HAS THE RIGHT OF CHOICE FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF MAHENDRA MILLS (SUPRA). THE SAID BELIEF OF THE APPELLANT IS FOUND TO BE A BONAFIDE BELIEF, SINCE, THE APPELLANT HAD ALL ALONG FURNISHED NOT ON LY COMPLETE DETAILS OR MATERIAL FACTS REQUIRED FOR THIS PURPOSE, BUT ALSO ENCLOSED A QUALIFYING REPORT OF THE TAX AUDITORS, THAT IT HAS NOT CLAIMED DEPREC IATION IN ITS RELEVANT RETURN OF INCOME. THEREFORE, BASED ON THE ABOVE, THE PRES UMPTION CASE ON THE APPELLANT AS PER EXPLANATION TO SECTION 271(1)(C) O F THE ACT IS DULY REBUTTED AND THE EXPLANATION SO OFFERED IS FOUND TO BE AN AC CEPTABLE BONAFIDE EXPLANATION. THE ASSESSING OFFICER HAS NOT DISPROV ED THE SAID EXPLANATION OF THE APPELLANT. ALL THE FACTS AVAILABLE ON RECOR D SHOWS THAT THERE IS NO FAILURE ON THE PART OF THE APPELLANT TO FURNISH INA CCURATE PARTICULARS OF INCOME LEADING TO DEFRAUD THE REVENUE. THE HONBLE SUPREME COURT IN THE CASE OF K.C. BUILDERS VS. CIT 135 TAXMAN 461 HAS HE LD THAT UNTIL THERE IS SOME EVIDENCE TO SHOW OR SOME CIRCUMSTANCES FOUND F ROM WHICH IT CAN BE GATHERED THAT THE OMISSION WAS ATTRIBUTABLE TO AN I NTENTION OR DESIRE ON THE PART OF THE APPELLANT TO HIDE OR CONCEAL THE INCOME SO AS TO AVOID THE IMPOSITION OF TAX THEREON, PENALTY CANNOT BE LEVIED . IT IS FURTHER HELD THAT IN ORDER TO LEVY PENALTY U/S 271(1)(III) OF THE ACT, I T HAS TO PROVE THAT THE APPELLANT HAS DELIBERATELY OR CONSCIOUSLY FURNISHED INACCURATE PARTICULARS OF ITS INCOME. IN THE INSTANT CASE, AS NOTED ABOVE, I T IS FOUND THAT THE APPELLANT HAS DISCLOSED OR FURNISHED ALL THE MATERIAL FACTS R EQUIRED FOR THIS PURPOSE OF ITS OWN MUCH BEFORE THE OMISSION WAS NOTICED BY TH E A.O. DURING THE SURVEY PROCEEDINGS. THERE IS NO ILL-WILL OR WRONG INTENTION TO HIDE ANY MATERIAL FACTS, ON THE PART OF THE APPELLANT. SIMI LARLY IN THE CASE OF SHRI DILIP N. SHROFF VS. CIT 161 TAXMAN 122, THE HONBLE APEX COURT HAS AGAIN HELD THAT CONCEALMENT OF INCOME OR FURNISHING OF IN ACCURATE PARTICULARS OF INCOME REFER TO DELIBERATE ACT ON THE PART OF THE A PPELLANT. A MERE OMISSION OR NEGLIGENCE WOULD NOT CONSTITUTE A DELIBERATE ACT OF SUPPRESSION VERY OR SUGGESTION FALSI. IN THE CASE OF T. ASHOK PAI VS . CIT 161 TAXMAN 342, THE HONBLE SUPREME COURT HAS HELD THAT THOUGH THE WORD DELIBERATE HAD BEEN OMITTED BY THE FINANCE ACT, 1964, FROM THE LANGUAGE OF THE SECTION 271(1)(C), YET THE WORD CONCEAL IMPLIES TO HIDE OR WITHDRAW FROM OBSERVATION, TO COVER OR KEEP AWAY FROM SIGHT, TO P REVENT THE DISCOVERY OF TO WITHDRAW KNOWLEDGE OF. EVEN IN THE CASE OF K.P. MA DHUSUDAN VS. CIT 251 ITR 99, THE HONBLE APEX COURT HAS HELD THAT THE SA TISFACTORY REBUTTAL ON THE PART OF THE APPELLANT TO EXPLAIN OR PROVE THAT INCO RRECT INCOME RETURNED IS NOT DUE TO FRAUD OR NEGLECT ON THE PART OF THE APPELLAN T, ABSOLVES IT FROM THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IN THE INSTA NT CASE, THE PRESUMPTION PUT ON THE APPELLANT IS DULY REBUTTED WHICH THE ASSESSI NG OFFICER HAS NOT DISPROVED OR HELD TO BE FALSE. IT MAY FURTHER BE N OTED THAT UNDER SIMILAR FACTS AND CIRCUMSTANCES, THE HONBLE ITAT, DELHI IN THE CASE OF SIAL SBEC 7 ITA 6471 TO 6473/M/08, HINDUSTAN RUBBER (SILVASA) BIOENERGY LTD. VS. DCIT 83 TTJ 866, RELEVANT FOR TH E ASSESSMENT YEAR 2000-01, HAS HELD THAT IT IS ENTIRELY AT THE OPTION OF THE APPELLANT TO CLAIM DEPRECIATION OR NOT AND IT CANNOT BE FORCED ON THE APPELLANT. IN THE CASE OF TELEBUILD CONSTRUCTIONS PVT. LTD. (SUPRA) THE HON BLE ITAT MUMBAI HELD THAT MERELY BECAUSE THE CLAIM OF DEDUCTION CLAIMED BY THE ASSESSEE IS FOUND TO BE NOT ADMISSIBLE UNDER THE PROVISION OF THE ACT SHALL NOT BY ITSELF MAKE LIABLE THE ASSESSEE TO THE PROVISION OF PENALTY FOR CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTICULARS OF INCOME U/S 271( 1)(C) OF THE ACT. MORE IMPORTANT FACTOR TO DECIDE THAT WHETHER THE ASSESSE E IS LIABLE TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, IS THAT WHETHER T HE CONDUCT OF THE ASSESSEE IS BONAFIDE OR NOT AND WHETHER THE ASSESSEE HAS DIS CLOSED THE MATERIAL FACTS RELEVANT FOR ITS ASSESSMENT BEFORE THE REVENUE AUTH ORITIES. IN THE INSTANT CASE, AS NOTED ABOVE, ALL RELEVANT MATERIAL FACTS F OR THIS PURPOSE ARE FOUND TO BE DULY DISCLOSED BY THE APPELLANT IN ITS RETURNS O F INCOME FILED BEFORE THE ASSESSING OFFICER. ALL THE RETURNS FILED DULY DISC LOSING THESE RELEVANT FACTS FROM A.YRS. 2000-01 TO 2002-03 WERE ACCEPTED BY THE ASSESSING OFFICER. IN ADDITION IT IS A CASE WHERE TWO VIEWS ARE POSSIBLE BECAUSE THE APPELLANT HAS ACTED ON THE ADVICE OF ITS TAX EXPERTS WHOSE RELEVA NT ADVICE IS DULY VINDICATED BY THE HONBLE SUPREME COURT IN THE CAS E OF MAHENDRA MILLS (SUPRA). IT IS HELD IN NUMBER OF JUDICIAL DECISION S THAT IN CASE OF DIFFERENCE OF OPINION OR TWO VIEWS ARE POSSIBLE, PENALTY U/S 2 71(1)(C) CANNOT BE LEVIED. MOREOVER, AS NOTED ABOVE, ON SIMILAR FACTS & CIRCUM STANCES, PENALTY U/S 271(1)(C) IS NEITHER INITIATED NOR LEVIED IN THE CA SE OF THE APPELLANT FOR THE A.Y. 2002-03. IN THE INSTANT CASE, A GENUINE DIFFE RENCE OF OPINION WITH REGARD TO DEDUCTION PROVIDED UNDER THE STATUTE, MA KES IT FALLOUT OF THE AMBIT OF EXPLANATION TO SECTION 271(1)(C) OF THE ACT, SIN CE THE APPELLANT HAS MADE FULL DISCLOSURE OF ALL THE RELEVANT FACTS AND HAS A CTED BONAFIDE. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) CANCELLING THE PENALTIES IMPOSED BY THE A.O. U/S 271(1)(C) FOR ALL THE THREE YEARS UNDER CONSIDERATI ON, THE REVENUE HAS PREFERRED THESE APPEALS BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT NO DEPRECI ATION WAS CLAIMED BY THE ASSESSEE ON FIXED ASSETS IN A.Y. 2000-01 TO 2002-03 WHILE COMPU TING ITS INCOME ELIGIBLE FOR DEDUCTION U/S 80IB. ALTHOUGH, THE ASSESSEE WAS REQ UIRED TO CLAIM THE SAID DEPRECIATION AS HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE O F INDIAN RAYON REPORTED IN 261 ITR 98, THE JUDGMENT IN THE SAID CASE WAS DELIVERED ONL Y ON JANUARY 22, 2003 I.E. AFTER THE DATES OF FILING OF ITS RETURNS OF INCOME BY THE ASS ESSEE FOR A.Y. 2000-01 TO 2002-03. PRIOR TO THAT, THE ASSESSEE HAD AN OPTION TO CLAIM DEPREC IATION ON FIXED ASSETS AS HELD BY THE 8 ITA 6471 TO 6473/M/08, HINDUSTAN RUBBER (SILVASA) HONBLE SUPREME COURT IN THE CASE OF CIT VS. MAHIND RA MILLS LTD. 243 ITR 56 AND THE AMENDMENT IN THE PROVISIONS OF SECTION 32(1) MAKING IT MANDATORY FOR THE ASSESSEE TO CLAIM DEPRECIATION ON FIXED ASSETS WAS MADE ONLY W. E.F. 1.4.02. THE ACTION OF THE ASSESSEE IN NOT CLAIMING THE DEPRECIATION ON FIXED ASSETS FOR A.Y. 2000-01 TO 2002-03 THUS WAS BONAFIDE WHICH WAS BASED ON THE LEGAL POSI TION PREVAILING AT THE RELEVANT TIME. MOREOVER, THE FACT THAT NO DEPRECIATION WAS BEING C LAIMED ON ITS FIXED ASSETS WAS CLEARLY DISCLOSED BY THE ASSESSEE IN ITS RETURNS OF INCOME FOR A.Y. 2000-01 TO 2002-03 WHICH WERE DULY ACCEPTED BY THE A.O. U/S 143(1). EVEN IN THE RETURNS OF INCOME FILED FOR THE YEARS UNDER CONSIDERATION I.E. A.Y. 2003-04 TO 2005 -06, ALL THE MATERIAL FACTS RELEVANT TO ITS CLAIM FOR DEPRECIATION ON FIXED ASSETS WERE DUL Y FURNISHED BY THE ASSESSEE BY FILING THE SCHEDULE OF FIXED ASSETS AND DEPRECIATION CLAIMED T HEREON. ALTHOUGH, THE SAID CLAIM OF THE ASSESSEE FOR DEPRECIATION TURNED OUT TO BE EXCE SSIVE AS A RESULT OF DEPRECIATION HAVING NOT BEEN CLAIMED IN THE EARLIER YEARS AS FOUND DURI NG THE COURSE OF SURVEY, THE ACTION OF THE ASSESSEE IN NOT CLAIMING THE DEPRECIATION IN TH E EARLIER YEARS WAS BONAFIDE AS ALREADY OBSERVED BY US. MOREOVER, IMMEDIATELY AFTER THIS D ISCREPANCY WAS BROUGHT TO THE NOTICE OF THE ASSESSEE DURING THE COURSE OF SURVEY ACTION, THE ASSESSEE ACCEPTED THE SAID MISTAKE INADVERTENTLY AND BONAFIDE MADE BY IT AND FILED REV ISED RETURNS WITHDRAWING THE SAID CLAIM MADE FOR EXCESSIVE DEPRECIATION. KEEPING IN V IEW THIS CONDUCT OF THE ASSESSEE AS WELL AS THE FACT THAT ALL THE MATERIAL FACTS RELEVA NT TO ITS CLAIM FOR DEPRECIATION MADE BONAFIDE WERE FULLY AND TRULY FURNISHED BY IT, WE A GREE WITH THE LD. CIT(A) THAT IT WAS NOT A FIT CASE TO IMPOSE PENALTIES U/S 271(1)(C) FOR AL L THE THREE YEARS UNDER CONSIDERATION. ACCORDINGLY, WE UPHOLD HIS IMPUGNED ORDER CANCELLIN G THE PENALTIES IMPOSED BY THE A.O. U/S 271(1)(C) FOR ALL THE THREE YEARS UNDER CONSIDE RATION AND DISMISS THESE APPEALS FILED BY THE REVENUE. 9 ITA 6471 TO 6473/M/08, HINDUSTAN RUBBER (SILVASA) 6. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMIS SED. ORDER PRONOUNCED ON 30 TH NOVEMBER, 2010. SD/- SD/- (ASHA VIJAYARAGHAVAN) ( P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 30 TH NOVEMBER , 2010. RK COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) - XX - MUMBAI 4. THE CIT- 20 MUMBAI 5. THE DR BENCH, H 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI 10 ITA 6471 TO 6473/M/08, HINDUSTAN RUBBER (SILVASA) DATE INITIALS 1. DRAFT DICTATED 25.11.10 SR.P.S./P.S. 2. DRAFT PLACED BEFORE AUTHOR 26.11.10 SR.P.S./P.S. 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER. - J.M./A.M. 4.DRAFT DISCUSSED/ APPROVED BY SECOND MEMBER. J.M./A.M. 5. APPROVED DRAFT COMES TO THE SR.P.S./P.S. SR.P.S./P.S. 6. KEPT FOR PRONOUNCEMENT ON SR.P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S. 8. DATE OF WHICH FILE GOES TO THE HEAD CLERK. 9. DATE OF DISPATCH OF ORDER.