Case Law Details
ITAT AMRITSAR BENCH
Kamal Sood
Versus
Deputy Commissioner of Income-tax
IT APPEAL NO. 92 (ASR.) OF 2012
[Assessment Year 2006-07]
Date of Pronouncement -28.08.2012
ORDER
1. This appeal of the assessee arises from the order of the CIT(A)-II, Ludhiana, dt. 3rd Jan., 2012 for the asst. yr. 2006-07.
2. The assessee has raised following grounds of appeal :
“1. That learned CIT(A) was not justified by holding that assessee had revalued the assets with the aim to increase their value in balance sheet for furnishing to the bank.
2. That learned CIT(A) has erred in not taking into consideration the written submission of the assessee along with documents and also ignored the facts stated therein.
3. That the learned CIT(A) was not justified in holding that assessee had claimed wrong depreciation whereas claim of depreciation was surrendered without arguments just to purchase peace of mind subject to no penalty of concealment.
It is therefore prayed that penalty under section 271(1)(c) imposed by AO at Rs. 66,066 and reduced to Rs. 27,297 by rectification under s. 154 and wrongly confirmed by CIT(A) may kindly be cancelled and appeal may kindly be accepted.”
3. The brief facts of the case are that during the course of assessment proceedings, the AO noticed that the appellant had shown additions made to the machinery account of Rs. 6,89,600 and the factory building account of Rs. 8 lacs. The assessee was asked to produce the bills in this regard but he failed to do so. The assessee stated that he was not having any bills/vouchers in respect of these additions and he surrendered the same. The assessee revalued these assets with the aim to increase their value in the balance sheet for furnishing to the bank. Accordingly, the AO disallowed depreciation claimed on these assets and initiated penalty proceedings. During the penalty proceedings, the assessee filed written reply before the AO along with various judgments of the Courts in support of his contention. The AO distinguished all these case laws vide his penalty order under appeal. While levying the penalty, the AO observed that :
“Looking to all the facts of the case and given due consideration to the assessee arguments, it is concluded that the assessee had claimed wrong depreciation on account of additions made in machinery and factory building accounts amounting to Rs. 82,500 and Rs. 80,000 respectively when no additions were actually made to these assets and thus the assessee had furnished the inaccurate particulars of his income to the tune of Rs. 1,62,500. Therefore, the mens rea was on the part of the assessee to conceal the particulars of his income in this way.”
After considering the facts of the case, the AO imposed penalty under s. 271(1)(c) to the tune of Rs. 66,066 upon the assessee.
4. The learned CIT(A) confirmed the action of the AO.
5. We have heard the rival contentions and perused the facts of the case. In the present case, the AO had levied penalty under s. 271(1)(c) of the Act, for furnishing inaccurate particulars of income. It is not under dispute that the assessee had claimed wrong depreciation on account of additions made in the machinery and factory building accounts, which has been surrendered by the assessee to buy peace of mind. The explanation had been submitted during the assessment proceedings as well as in the penalty proceedings. Therefore, it cannot be said that the assessee had submitted inaccurate particulars of income. In such circumstances and facts of the case, the AO cannot levy penalty under s. 271(1)(c) of the Act. Reliance is placed on the decision of the Hon’ble Punjab & Haryana High Court in the case of CIT v. Rajnish Nath Aggarwal [2008] 172 Taxman 26 where the assessees surrendered income on account of uncorroborated freight charges debited in P&L a/c merely to buy peace of mind and to avoid further litigation. It was also held by the Hon’ble Punjab & Haryana High Court that there is no error in the order of the Tribunal deleting the penalty levied under s. 271(1)(c) and no substantial question of law arises. Therefore, in the facts and circumstances of the case, the AO is directed to cancel the penalty and the order of the learned CIT(A) is reversed accordingly. Thus, all the grounds of the assessee are allowed.
6. In the result, the appeal of the assessee in ITA No. 92/Asr/2012 is allowed.
