Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1981-82 - Assessee claimed depreciation and investment allowance on new machinery installed and tested on 4-3-1981, but used in actual production only in November, 1982 - Assessee subsequently withdrew its claim - Assessing Officer initiated proceedings against assessee for furnishing inaccurate particulars and levied penalty under section 271(1)(c) - Tribunal held that assessee's claim was bona fide - Whether Tribunal was right in cancelling penalty imposed under section 271(1)(c) - Held, yes - Whether difference of opinion between Assessing Officer and assessee as to whether experimental running of machinery was sufficient to regard it as used in business of assessee entitling assessee to claim depreciation for year, would not be regarded as sufficient to impose penalty on ground that particulars given by assessee were inaccurate - Held, yes FACTS The assessee had purchased a machine which was installed on 4-3-1981 and was tested with aid of temporary electric connection. However, the actual production with the use of machine commenced only in November, 1982. The assessee had claimed depreciation for the assessment year 1981-82, but subsequently withdrew the claim. The Assessing Officer initiated proceeding against the assessee for having submitted inaccurate particulars in the original returns and levied penalty under section 271(1)(c) which was confirmed by the Commissioner. The Tribunal cancelled the penalty imposed and was of the view that there was not any furnishing of inaccurate particulars by the assessee. The Tribunal held that the claim that had been made by the assessee for depreciation and investment allowance on newly installed machinery was bona fide. On reference : HELD The finding of the Tribunal was that the claim made by the assessee for depreciation and investment allowance on newly-installed machinery was bona fide and was based on a decision of the High Court in the case of V. Ramakrishna & Sons Ltd. v. CIT [1984] 149 ITR 554/ 16 Taxman 433 (Mad.). [Para 1] The fact that the assessee subsequently withdrew the claim did not show that…

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