PR. COMMISSIONER OF INCOME TAX vs. M/S KISHANGARH HI-TECH TEXTILE PARK LTD.

Order 24/05/2022 Heard on admission. Though, Mr. Priyesh Kasliwal, Advocate for Mr. P.K. Kasliwal, Advocate enters appearance on behalf of the respondent, as the case is listed for admission, at this stage, the respondent cannot be allowed to oppose admission. Learned counsel for the Revenue would argue that the Tribunal has committed patent illegality and perversity in holding that the deletion qua penalty was in accordance with law inasmuch as the assessee while claiming deduction had submitted inaccurate particulars and therefore, within the meaning of the provisions contained in Section 271(1)(c) of the Income Tax Act, 1961 (for short ‘the Act’), the assessee made himself liable for penalty also under the law.

(2 of 4) [ITA-82/2021] We have gone through the order passed by the learned Tribunal. Learned Tribunal while adverting to these issues has recorded its satisfaction as below:- “After having gone through the decisions as well as facts of the present case, we are of the view that that assessee had disclosed complete particulars of subsidy of Rs.36.00 crores and the respective depreciation at 80% was claimed on the entire addition to Wind Mill without reducing the amount of subsidy of Rs. 36.00 crores from the cost claimed on the basis of various decisions of the Coordinate Benches of the ITAT and the Hon’ble High Court, the assessee has neither concealed any particulars of income nor it had filed any inaccurate particulars of income. All the information was available in the Balance Sheet of the assessee. Therefore, according to the assessee, no penalty under Section 271(1)(c) can be levied in respect of the disallowance of depreciation of Rs.15,07,77,715/- (Rs.18,28,81,334 – Rs. 3,21,03,619) made by the AO. In support of its contention that no penalty u/s 271(1)(c) can be levied in respect of disallowance of depreciation made by the AO.” After relying upon certain decisions on the issues, the Tribunal has further recorded as below:- “Since the assessee has disclosed entire facts in the Balance Sheet with regard to the subsidy of Rs. 36.00 crores received by it and the depreciation at 80% on the entire windmill as a whole has been claimed on the basis of various decisions of Hon’ble Rajasthan High Court and the subsidy of Rs.36.00 crores received by the assessee from Ministry of Textile, Government of India was not reduced from the cost of the windmill, as according to the assessee, the Proviso to Explanation 10 of Section 43(1) was not applicable in the case of assessee placing reliance on M/s Lotus Integrated Taxpark Ltd. vs DCIT (supra). Although, in assessee’s case on merits the Coordinate Bench has sustained the addition but as far as imposition of penalty, principles are altogether different. In penalty proceedings, we

(3 of 4) [ITA-82/2021] have to consider full and complete disclosure of all facts and figures and in case, the assessee had made disclosure of all facts and figures then in that eventuality no penalty is leviable U/s 271(1)(c) of the Act. Therefore, in view of various decisions discussed above, we are of the considered view that no penalty u/s 271(1)(c) can be levied upon the assessee in respect of the disallowance of depreciation of Rs. 15,07,77,715/- made by the AO. In view of the above facts and circumstances of the case, we do not find any reason to interfere in the order of the ld. CIT(A), accordingly, we uphold the same.” The submission of learned counsel for the Revenue that as the proviso to Explanation 10 of Section 43 (1) of the Act was found not applicable in the case of assessee, an inference has to be drawn that assessee had submitted inaccurate particulars, cannot be accepted. Irrespective of whether or not assessee is entitled to the benefit under proviso to Explanation 10 of Section 43(1) of the Act, in order to entail liability for penalty, there has to be satisfaction based on material as required under Section 271(1)(c) of the Act, that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. From the papers which have been placed before us, we do not find that there is any material to come to the conclusion that in order to claim benefit of deduction under Section 43(1) of the Act, the assessee had submitted inaccurate particulars. Therefore, in our consideration, no question of law arises for consideration in this appeal and the same is accordingly dismissed. As far as, the assessee’s claim for deduction under Section 43(1) of the Act is concerned, it has stated that issue is pending

(4 of 4) [ITA-82/2021] consideration in appeal. This order only relates to the aspect of penalty not the claim of deduction. (SAMEER JAIN),J (MANINDRA MOHAN SHRIVASTAVA),ACTING CJ Karan/19