HIGH COURT OF
Commissioner of Income-tax
v.
Mahabaleshwar Gas & Chemical (P.) Ltd.
MADAN B. LOKUR AND DR. S.MURALIDHAR,JJ
IT APPEAL NO.1041 OF 2007
October 31, 2007
Section 271(1)(c),
read with section 260A of the Income-tax Act, 1961 - Penalty - For concealment
of income - Assessment year 2001-02 - Assessing Officer disallowed assessee’s
claim for depreciation and made addition to income of assessee-Assessing
Officer also imposed penalty upon assessee under section 271(1)(c) - On
appeal, Commissioner (Appeals) held that disallowance and addition made did not
amount to concealment of income - On appeal, Tribunal held that assessee’s
claim for depreciation was based on bona fide belief and disallowance of said
claim on a difference of opinion could not be treated as concealment of income
by assessee particularly when all particulars in respect of said claim were
fully furnished by assessee in its return of income - Tribunal, further held
that since there was no recording of satisfaction of Assessing Officer in order
of assessment that penalty proceedings must be initiated, appeal preferred by
revenue should be dismissed - Whether Tribunal was justified in its action -
Held, yes
FACTS
The Assessing
Officer disallowed assessee’s claim for depreciation and made addition to
income of the assessee. The Assessing Officer also initiated proceedings under
section 271(1)(c) and imposed penalty upon assessee. On appeal, the
Commissioner (Appeals) held that even though the Assessing Officer had recorded
satisfaction but on merits of the case the disallowance and addition made did
not amount to concealment of income. On appeal, the Tribunal upheld the order
of the Commissioner (Appeals) on merits. Additionally, the Tribunal followed
the decision of CIT v. Ram Commercial Enterprises Ltd. [2000]
246 ITR 568/[2002] 122 Taxman 620 (Delhi) and held that since there was no
recording of satisfaction of the Assessing Officer in the order of assessment
that penalty proceedings must be initiated, the appeal preferred by the revenue
should be dismissed.
On revenue’s
appeal under section 260A:
HELD
It is
sufficient that the satisfaction of the Assessing Officer for initiating
penalty proceedings against an assessee under section 271(1)(c) is discernible
from the assessment order itself and that such satisfaction need not be
separately or expressly indicated in the assessment order. In that event the
assessment order in the instant case would have to be examined to find out if
the satisfaction of the Assessing Officer was discernible. [
From the
assessment order, it was not possible to discern any satisfaction of the
Assessing Officer that penalty proceedings must be initiated against the
assessee under section 271(1)(c).
[
It was also
found that the revenue’s appeal had been dismissed on merits by the Tribunal.
It had been held that the claim of the assessee for depreciation was based on a
bona fide belief and that the disallowance of the said claim during assessment
proceedings on a difference of opinion could not be treated as concealment of
income by the assessee, particularly when all the particulars in respect of the
said claim were fully furnished by the assessee in its return of income. [
Therefore,
there was no infirmity in the view taken by the Tribunal. [
No substantial
question of law arose for consideration.
[
CASE REVIEW:
CIT v. Ram Commercial
Enterprises Ltd. [2000] 246 ITR 568/[2002] 122 Taxman 620 (