, `',
IN THE INCOME TAX APPELLATE TRIBUNAL "B", BENCH MUMBAI
,
..,
BEFORE SHRI G.S.PANNU, AM & SHRI SANJAY GARG, JM
./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
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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
Rs.6,31,405/-.
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
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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
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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)
/ ACCOUNTANT MEMBER / JUDICIAL MEMBER
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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