UTTARANCHAL JAL VIDHYUT NIGAM LTD.,,DEHRADUN vs. DCIT, DEHRADUN

PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER

Penalty was imposed u/s 271(1)(c) of the Act with reference to disallowance of Rs.2,10,44,890/- pertaining to depreciation claimed by the assessee on assets acquired out of grant and subsidies received from the state government. It is an accepted fact that the assessee withdrew the ground of appeal relating to the impugned addition before the Ld. CIT(A).

He submitted that this fact was not known at the time of filing of return and, therefore, there was no misstatement of facts or concealment of income on this ground. He submitted that the wrong claim of depreciation was neither mala fide nor intentional.

He submitted that two views on the accounting treatment of the grant were possible. However, the assessee was of the view that the grant received was in the nature of capital receipt and accordingly the depreciation was fully allowable and the entire amount of grant was shown as capital reserve in the balance sheet. He relied on the decision of the Hon'ble Apex Court in the Assessment year 2005-06 case of CIT vs Reliance Petroproducts Pvt. Ltd. 322 ITR 158 (Hon'ble Supreme Court) and also on the following decisions of the coordinate Benches of the Tribunal :- i) DCIT vs Gujarat State Forest Development Corporation

Ltd. in I.T.A. No. 3294/Ahmedabad/2009 ii) ITO vs Twinkle Techplast Pvt. Ltd. in &

2209/Ahmedabad/2012 iii) NL Engineering Pvt. Ltd. vs DCIT in I.T.A. No.

1340/Chandigarh/2012

Assessment year 2005-06 6. The Hon'ble Supreme Court of India in the case of (supra), while referring to the word particulars in “inaccurate particulars of income”, observed, “as per

Law 'Lexicon, the meaning of word ‘particular’ is a detail or details, the details of a claim, or the separate items of an account. Therefore, the word “particulars" used in Section 271 (l)(c) would embrace the meaning of the details of the claim made.” It was further held as under:-

“We have already seen the meaning of the word “particulars” in the earlier part of this judgement. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in the case, there is no finding that any detailed supplied by the assessee in its return were found to be incorrect or erroneous or false. Such not being the case there would be no question of inviting the penalty under section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to inaccurate particulars.”

Assessment year 2005-06 7. The Hon'ble Supreme Court in CIT, Ahemdabad Vs. Reliance Petroproducts Pvt. Ltd (supra) further noted that in the facts of the case before it, there were no findings that any details supplied by the assessee in its return of income were incorrect or erroneous or false nor any statement made or any details supplied was found to be factually incorrect. The Court thus held that merely because the assessee had claimed the expenditure, which was not accepted or was not acceptable to the Revenue, that by itself would not, attract penalty under section 271 (l)(c) of the Act. It was also laid down by the Court that the intendment of the Legislature is not to levy penalty u/s 271 (l)(c) of the Act in case of every non acceptance of claim made by the assessee in the return of income.

Petroproducts P. Ltd. (supra) further held as under :

Reading the words "inaccurate" and "particulars" in conjunction, they must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. In this case, there is no finding that any details supplied by the assessee in its return were found to be incorrect Assessment year 2005-06 or erroneous or false. Such not being the case, there would be no question of inviting the penalty under s. 271(l)(c). A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars. The assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to 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 assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not attract the penalty under s. 271(1)(c). If the contention of the Revenue is accepted then in case of every return where the claim made is not accepted by AO for any reason, the assessee will invite penalty under s. 27I(l)(c). That is clearly not the intendment of the legislature. The Tribunal, as well as, the CIT(A) and the High Court have correctly reached this conclusion.”

the cost of assets purchased during the year and the depreciation on such assets had to be allowed on reduced value. The assessee had declared the complete information in respect of the said transaction in the return of income.

However, under bona fide impression, the depreciation on assets had been claimed at a higher value but that itself would not establish that the assessee had furnished Assessment year 2005-06 inaccurate particulars of income. The claim made by the assessee was bona fide. Where the assessee had submitted complete information and merely because the claim of depreciation had been made on a higher figure, does not make the assessee exigible to levy of penalty under section 271(1 )(c) of the Act.

no merit in the order of Commissioner of Income Tax

(Appeals) in confirming the penalty for concealment under section 271(l)(c) of the Act. Accordingly, we direct the Assessing Officer to delete the same. The grounds of appeal raised by the assessee are allowed.