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ITO-9(2)-3, Mumbai-20 Vs. M/s Maredia Tex Pvt. Ltd., Plot No.34, Amli Industrial Estate, Silvassa, Dadra & Nagar Haveli-396230
July, 23rd 2015
         ,   `',  

                 ./ITA No.2501/Mum/2011
              (   / Assessment Year :2007-08)
                      M/s Maredia Tex Pvt. Ltd.,
     ITO-9(2)-3, Mumbai-20       Vs.
                      Plot No.34, Amli Industrial
                      Estate, Silvassa, Dadra &
                      Nagar Haveli-396230
        ./   ./ PAN/GIR No. : AACCM 5119 R
     ( /Appellant) ..     ( / Respondent)

    /Revenue by                        :   Shri Yogesh Kamat
    /Assessee by                       :   None

   / Date of Hearing :                       19/05/2015
  / Date of Pronouncement                    22/07/2015

                               / O R D E R

Per Sanjay Garg, Judicial Member

        The Revenue has preferred this appeal against the order dated 18-

1-2011, passed by the CIT(A)-20, Mumbai, relating to the assessment

year 2007-08, whereby the CIT(A) deleted the penalty initiated against the

assessee u/s.271(1)(c) of the I.T. Act.

2.      None appeared on behalf of the assessee in spite of service of

notice, therefore, the Bench decided to dispose off the appeal after

considering the submissions of ld. DR.

3.      Facts giving rise to the present appeal are that the assessee

company is engaged in the business of manufacturing of texturising yarn.

The assessee has claimed depreciation of Rs.19,99,616/-. During the
                                                                    ITA No.2501/11

assessment proceedings, the AO observed that the assessee did not

carry out any manufacturing activity during the year and asked the

assessee to furnish the details of addition to fixed assets and to justify the

claim of depreciation. The assessee submitted the required details,

however, the AO was not convinced with the explanation offered by the

assessee and, therefore, disallowed the claim of depreciation on assets of

assessee of Rs.18,75,833/- as excess and levied minimum penalty of


4.    Aggrieved thereby, the assessee preferred appeal before the

CIT(A), wherein the CIT(A) deleted the penalty so imposed by the AO

after observing as under :-

      "3. I have considered the issue.iln C.I.T. v Atul Mohan Bindal, 317
      I.T.R. 1 (S.C.), the Apex Court held that for applicability of section
      271(1)(c ) the conditions stated therein must exists. The conditions
      are that the assessee should have concealed the particulars of
      income or furnished inaccurate particulars of such income before
      the penalty u/s 271 (1 )(c ) could be levied. This has been reiterated
      in a recent decision of the Apex Court in C.I.T. v Reliance Petro
      Products P. Ltd, 322 I.T.R. 158, wherein Hon'ble Apex Court
      interpreted the meaning of the expressions, "concealment",
      "inaccurate", and "particulars" used in clause (c) of section 271(1)
      and held that everything would depend upon the return of income
      filed because that was the only document where the assessee can
      furnish the particulars of income. The Apex Court held that when
      such particulars are found to be inaccurate the liability of penalty
      would .arise. Reading the words "particulars" in conjunction with the
      word "inaccurate", the Apex Court held that they only mean that the
      details supplied in the return which were not accurate, not exact or
      correct, not according to truth or erroneous, and unless there is a
      finding that any details supplied by the assessee in the return were
      found to be incorrect or erroneous or false, there would be no
      question of inviting the penalty u/s 271(1)(c). The Apex Court
      further held that mere making of the claim which is not sustainable
      in law by itself will not amount to furnishing inaccurate particulars of
      income of the assessee, and such claim made In the return cannot
      amount to inaccurate particulars. The Apex Court held that if the
      assessee has furnished all the details of its expenditure as well as
      income in its return, which details, in themselves, were not found to
                                                                  ITA No.2501/11

      be inaccurate nor could be viewed as the concealment of. income
      on its part, it was up to the authorities to accept its claim in the
      return or not. Merely because the claim was not accepted or was
      not acceptable to the revenue, that by itself would not attract the
      penalty u/s.271(1)(c). The Apex Court went on to hold that if the
      contention of the revenue is accepted then in case of every return
      where the claim made is not acceptable by the AO for any reason,
      the assessee will invite penalty u/s.271 (1 )(c ).

      4. In the instant case the appellant has not concealed any income.
      It claimed deduction of depreciation on fixed assets on the ground
      that they were used in trial production commenced in the last month
      of the year. It further claimed that raw materials were consumed for
      the purpose as evident from the quantitative details shown in the
      Audit Report. The AO did not accept the claim mainly for the reason
      that no sales had been credited in the P&L A/c following any
      production in the year The AO has not stated that the appellant had
      furnished inaccurate or false particulars of consumption of raw
      materials. It is a case of mere difference of opinion. The particulars
      of claim were not found to be inaccurate, incorrect or false and only
      the deduction was said to be not permissible under the law. As held
      in the case of Reliance Petro(supra) a mere making of the claim
      which is not sustainable in law will not amount to furnishing
      inaccurate particulars of income. The conditions prescribed in
      section 271(1)(c) do not exist in this case. I, therefore, cancel the
      penalty imposed of Rs.6,31,405/-."

5.    Now, the revenue is in appeal before us against the aforesaid

findings of the CIT(A).

6.    After considering the submissions made by the ld. DR as well as

the orders of the authorities below, we find that the assessee had claimed

deduction of depreciation on fixed assets on the plea that they were used

in trial production which commenced in the last month of the year and that

the raw material was consumed for the same which was evident from the

quantitative details shown in the audit report. The ld. CIT(A) held that it

could be a case of difference of opinion but not a case of furnishing of

inaccurate particulars of income. He, therefore, deleted the penalty so

imposed after relying the decision of Hon'ble Supreme Court in the case
                                                             ITA No.2501/11

of Reliance Petro Products Pvt. Ltd., 322 ITR 158. We do not find any

reason to interfere in the findings recorded by the CIT(A) and the same

are hereby upheld.

7.    In the result, appeal of the revenue is dismissed.
      Order pronounced in the open court on this 22/07/2015.

               Sd/-                                    Sd/-
            (..)                                  ( )
           (G.S.PANNU)                         (SANJAY GARG)
 Mumbai;               Dated 22/07/2015
. ./pkm,    ./ PS

    /Copy of the Order forwarded to :
1.    / The Appellant
2.    / The Respondent.
3.    () / The CIT(A), Mumbai.
4.     / CIT                                                / BY ORDER,
5.    ,   ,  / DR, ITAT, Mumbai

6.     / Guard file.
                  //True Copy//
                                                           (Asstt.   Registrar)
                                             ,  / ITAT, Mumbai
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