High Court Of Madras
CIT vs. Sri Saradha Textile Processors (P) Ltd.
Section 271(1)(c)
Asst. Year 1990-91
P.D. Dinakaran & T.V. Masilamani, JJ.
Tax Case (Appeal) Nos. 1204 & 1205 of 2005
10th November, 2005
Counsel Appeared : N. Muralikumaran, for the Appellant
JUDGMENT
P.D. DINAKARAN, J. :
The above tax case appeals are directed against the order of the Tribunal, dt. 15th May, 2002 made in ITA No.
307/1994, C.O. No. 28/1994 respectively. The Revenue is the appellant. The assessment year involved in the present appeals is 1990-91. The short facts of the case are that the assessee-company, for the asst. yr. 1990-91, had claimed depreciation and investment allowance on the machinery, which was received on 4th April, 1990, i.e. after the previous year ended on 31st March, 1990. When this was pointed out by the AO, the assessee withdrew the claims. But the AO by the assessment order dt. 18th Feb., 1992, levied penalty under s. 271(1)(c) for falsely claiming depreciation and allowances with an intention to evade taxes. Aggrieved by the imposition of penalty, the assessee preferred appeals before the CIT(A), who had deleted the levy of penalty by his order dt. 30th Nov., 1993. The Revenue, not satisfied with the reversal of the assessment order, approached the Tribunal. The Tribunal by its order dt. 15th May, 2002 dismissed the appeal holding that the fact that the assessee had filed revised returns withdrawing the claim, when it was pointed out, shows their bona fides and no penalty was leviable. It is against this order, the Revenue preferred the present appeals raising the following substantial questions of law :
“1. Whether, in the facts and circumstances of the case, the Tribunal had enough material to hold that the claim for depreciation and investment allowance on machinery was due to the bona fide mistake ?
2. Whether, in the facts and circumstances of the case, the Tribunal was right in quashing the penalty under s. 271(1)(c) for the assessment year in question?”
4. Though two questions have been framed, the learned counsel appearing for the Revenue submits that both the questions go together.
5. While considering a similar question, of course under WT Act, the Gujarat High Court in the decision CWT vs. Hasmukhlal Gandalal (2003) 184 CTR (Guj) 23 : (2003) 264 ITR 42 (Guj), held that the penalty can be imposed only when the Revenue comes to the conclusion that the assessee had a mala fide intention and that as to whether the assessee had mala fide intention, is a question of fact. That is the case, where the concurrent findings of the authorities below were challenged before the High Court and the High Court held as under : “The Dy. CIT(A) had come to a conclusion that the assessee had no intention to furnish inaccurate particulars and the said finding had been confirmed by the Tribunal. Therefore, it could not be presumed that the assessee had a mala fide intention to furnish inaccurate particulars. Since the assessee had revealed the correct valuation of the property before the assessment proceedings had been completed, it could not be said that the assessee had furnished inaccurate particulars of the property.”
6. In the present case also the authorities below have concurrently held that when the mistake was pointed out, the assessee had withdrawn his claim for depreciation and investment allowance on the machinery and filed a revised return and this action of the assessee shows their bona fides. It is also not the case of the Revenue that the assessee had the mala fide intention of furnishing inaccurate particulars with a view to falsely claiming depreciation and allowances to evade taxes. The above finding of the Tribunal was based on the facts, with which we are not inclined to interfere.
7. In this view of the matter, we answer the questions in the affirmative against the Revenue and in favour of the assessee, holding that the Tribunal had enough materials to hold that the claim for depreciation and investment allowance on machinery was only due to the bona fide mistake and that the Tribunal was right in quashing the penalty under s. 271(1)(c) of the IT Act. Accordingly, the appeals are dismissed. No costs.
[Citation : 286 ITR 499]
