The order of the Bench was delivered by
MAHAVIR SINGH (Judicial Member}.-This appeal by the Revenue is arising out of the order of the Commissioner of Income-tax (Appeals)- VIII, Kolkata, m Appeal No. 43/Commissioner of Income-tax (Appeals)- VIII/ Kol/09-10, dated November 18, 2011. The assessment was framed by the Assistant Commissioner of Income-tax, Circle-9, Kolkata, under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for the assessment year 2006-07, vide his order dated November 5,2008. Penalty in dispute was levied by the Assistant Commissioner of Income-tax Circle-9, Kolkata, under section 271(I)(c) of the Act, vide his order dated May 29, 2009.
The only issue in this appeal of the Revenue is against the order of the Commissioner of Income-tax (Appeals) deleting the penalty levied under section 271(1)\c) of the Act by the Assessing Officer on the claim of depreciation. For this, the Revenue has raised following three grounds :
"1. That on the facts and in the circumstances of the case and in law the learned Commissioner of Income-tax (Appeals) erred in deleting the penalty under section 271(I)(c) relying on case law but without considering the intention ofthe assessee that it has furnished incorrect particulars willfully which testament to concealment of income.
2. That on the facts arid circumstances of the case and in law the learned Commissioner of Income-tax (Appeals) has erred in deleting the penalty under section 271 (1) (c) without considering the facts that the penal may be imposed for willful furnishing the incorrect particulars which testament to evade tax or concealment of income.
3. That in the facts and circumstances of the case and in law, the learned Commissioner of income-tax (Appeals) has erred in deleting the penalty under setion 271 (1) (c) ,failed to appreciate the test as the Hon'ble Supreme Court pronounced in the case of Union of India v. Dharamendra Textile Processors [2008] 306 ITR 277 (SC) on which the then Assessing Officer relied upon."
We have heard rival submissions and gone through the facts and circumstances of the case . The brief facts are that the assessee filed its return of income on March 3 2007 and assessment was framed under section 143(3) of the Act, vide order dated November 5, 2008 by the Assessing Officer. The Assessing Officer while completing assessment made disallowance of depreciation at Rs. 3,80,692 on the ground that machinery were not put to use during the year. The Assessing Officer further allowed additional depreciation on xerox machine and also payment of provident fund under section 43B of the Act. The Assessing Officer initiated penalty proceedings and also imposed penalty relying on the decision of the hon'ble Supreme Court in the case of Union of India v. Oharamendra Textile Processors [2008] 306 ITR 277 (Se). Before the lower authorities including the Assessing Officer during the course of assessment proceedings, during penalty proceedings and even before the Commissioner of Incometax (Appeals) during appellate proceedings, the assessee claimed that depreciation was claimed on the basis of tax audit report and complete particulars regarding depreciation were disclosed in the tax audit report. Learned counsel for the assessee before us as well as before the Commissioner of Income-tax (Appeals) relied on the decision of the hon'ble Supreme Court in the case of CIT v. Reliance Petroproducts P. Ltd. [2010] 322 ITR 158 (Se), wherein it is held as under (page 165) :
"We are not concerned in the present case with the mens rea.
However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word 'inaccurate' has been defined as :
'not accurate, not exact or correct ; not according to truth ; erroneous; as an inaccurate statement, copy or transcript.'
We have already seen the meaning of the word 'particulars' in the earlier part of this judgment. Readingthe 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 this case, there is no finding that any details 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 the inaccurate particular.
It was tried to be suggested that section 14A of the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It was further pointed out that the dividends from the shares did not form the part of the total income. It was, therefore, reiterated before us that the Assessing Officer had correctly reached the conclusion that since the assessee had claimed excessive deductions knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; (i) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. We do not agree, as 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 accet 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, in our opinion, attract the penalty under section 271(1). If we accept the contention of the Revenue then in case of every return where the claim made is not accepted by the Assessing Officer for any reason, the assessee will invite penalty under section 271 (1) (c). That is clearly not the intendment of the Legislature.
In this behalf the observations of this court made in Sree Krishna Electricals v. State of Tamil Nadu [2009] 23 VST 249 as regards the penalty are apposite. In the aforementioned decision which pertained to the penalty proceedings under the 'Tamil Nadu General Sales Tax Act, the court had found that the authorities below had found that there were some incorrect statements made in the return. However, the said transactions Were reflected in the accounts of the assessee. This court, therefore, observed (page 251):
'So far as the question of penalty is concerned the items which, were not included in the turnover were found incorporated in the' appellant's account books. Where certain items which are not included in the turnover are disclosed in the dealer's own account books and the assessing authorities includes these items in the dealer's turnover disallowing the exemption, penalty cannot be imposed. The penalty levied stands set aside.'
The situation in the present case is still better as no fault has been found with the particulars submitted by the assessee in its return.
The Tribunal, as well as, the Commissioner of Income-tax (Appeals) and the High Court have correctly reached this conclusion and, therefore, the appeal filed by the Revenue has no merits and is dismissed."
He further relied on the decision of the hon'ble Calcutta High Court in the case of Usha Martin Ventures Ltd. v. ITO in G.A. No. 953 of 2011, Income-tax Appeal No. 90 of 2010, dated May 20, 2011, wherein it has been held as under :
"In such circumstances, we are of the opinion that in view of the decision of the Supreme Court in the case of CIT v. Reliance Petroproducts P. Ltd. reported in [2010] 322 ITR 158 (SC), no penalty should be imposed upon the appellant for wrong claim of depreciation in violation of the provisions contained in the Income-tax Act.
We have already pointed out that such claim was initially made on the basis of the auditor's report and it has also been brought to the notice of the authorities below that after the detection of such mistake committed by the auditor, the said auditor was changed by the assessee.
We, thus, find that the learned Tribunal below committed substantial error of law in affirming the order of imposition of penalty which is no fin conformity with the view taken by the Supreme Court in the abovementioned matter.
We find that the issue is exactly similar what was before the hon'ble Calcutta High Court in the case of Usha Martin Ventures Ltd. In the facts of the present case there is no doubt the claim of depreciation by the assessee was wrong but the assessee has filed complete particulars qua these assets and also in the claim of depreciation in audit report and in the return of income and nothing was concealed from the Department. In such circumstances, respectfully following the· decision in the case of Usha Martin Ventures Ltd we are of the View that' penalty levied by the Assessing Officer has rightly been deleted by' the Commissioner of Income-tax (Appeals). We confirm the same. The appeal of the Revenue is dismissed.
In the result, the appeal of the Revenue is dismissed.
The order pronounced in the open court on April 19, 2013.