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Income Tax Appellate Tribunal, MUMBAI BENCH “I”, MUMBAI
Before: SHRI G.S.PANNU & SHRI AMARJIT SINGH
The captioned appeal by the Revenue is directed against the order of the CIT(A)-XXVIII, Mumbai dated 06/02/2008 pertaining to the Assessment Year 1996-97, which in turn has arisen from an order dated 29/03/2005 passed under section 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’) .
2 (Assessment Year : 1996-97) 2. In this appeal, the Revenue has challenged the order of the CIT(A) by raising the following Ground of appeal:- “1. On the facts in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty levied under section. 271(1)(c) of the Act relating to disallowance of depreciation and deduction under section.80M of the I.T. Act without appreciating the fact that the assessee had concealed the particulars of his income and had also furnished inaccurate particulars of such income.”
3. Briefly put, the relevant facts are that the respondent assessee (erstwhile SCICI Ltd.) is a public financial company and derives income from project financing comprising of foreign currency loans, rupee loans, underwriting, direct subscription and guarantees, leasing, etc. In assessment finalized under section 143(3) on 19/03/1999, the income was assessed at Rs.88,69,68,576/- as against the income of Rs.91,76,24,591/- declared originally on 30/11/1996, which was subsequently revised during the assessment proceedings to Rs.70,20,27,400/-. The difference between the assessed and the revised returned income, which is relevant for the present purpose is on account of depreciation on leased assets and partial denial of deduction under section 80M of the Act. On both these issues, the Assessing Officer held the assessee guilty of concealment of income within the meaning of section 271(1)(c) of the Act and levied a penalty of Rs.16,34,86,145/-being 100% of the tax sought to be evaded on such disallowances. With regard to the difference in the allowance on the depreciation of leased assets, the Assessing Officer examined the lease transactions and inferred that they were mere financial arrangements and not lease transactions in actuality. Consequently, the depreciation claimed was denied. Further, deduction under section 80M was allowed at Rs.4,56,95,295/- as against the claim made in the return of Rs.4,61,56,863/-. On such 3 (Assessment Year : 1996-97) differences, penalty was levied under section 271(1)(c) of the Act. The penalty levied on both the limbs has since been deleted by the CIT(Appeals), as according to him, there is no element of concealment or furnishing of inaccurate particulars of income within the meaning of section 271(1)(c) of the Act. Against such a decision of CIT(A), the Revenue is in appeal before us.
4. Before us, Ld. Representative for the assessee submitted that the very basis for levy of penalty does not survive because both the disallowances made by the Assessing Officer have since been deleted by the Tribunal in the quantum assessment proceedings vide ITA No.3535/Mum/2004 dated 25/07/2014, copy of which has been placed on record.
Ld. Departmental Representative has not controverted the aforesaid factual matrix.
In view of the aforesaid order of the Tribunal(supra), in our view, the ultimate conclusion of the CIT(Appeals) in deleting the penalty is liable to be affirmed, as the basis for levy of penalty, namely, the additions on account of depreciation on leased assets and partial denial of deduction under section 80M have been set set- aside by the Tribunal. As a consequence, the conclusion drawn by the CIT(Appeals) is affirmed, albeit on different ground.