Delhi High Court
Commissioner Of Income Tax vs Ashoka Mercantile Ltd. on 5 May, 2005
Author: M B Lokur
Bench: S Kumar, M B Lokur
JUDGMENT
Madan B. Lokur, J.
1. The Revenue is aggrieved by an order dated 14th June, 2004 passed by the Income Tax Appellate Tribunal (for short the Tribunal) Delhi Bench 'E', New Delhi in ITA No.742/Del/2000.
2. The relevant assessment year is 1996-97.
3. For an earlier assessment year, that is, 1995-96, the assessed had claimed depreciation in respect of property bearing No.53, Friends Colony, New Delhi, which was said to have been used by the assessed for purposes of business. This claim was repeated for the assessment year 1996-97.
4. For the assessment year 1995-96, the Assessing Officer disallowed the claim and, according to the assessed, in order to buy peace it got the dispute settled under the Kar Vivad Samadhan Scheme on 11th August, 1998.
5. On the very next day, that is, 12th August, 1998, the assessed withdrew the claim for depreciation for the assessment year 1996-97 in respect of the property used for business purposes, apparently on the ground that the issue was settled under the Kar Vivad Samadhan Scheme.
6. The Assessing Officer in penalty proceedings initiated under Section 271(1)(c) of the Act took the view that the explanation given by the assessed was not correct and that it had never used the building for business purposes and has wrongly claimed depreciation thereon. It was noted that the revised return filed by the assessed withdrawing the claim for depreciation was falsely made. Accordingly, the Assessing Officer took the view that the assessed had committed default by way of concealment in mating a false claim for depreciation. An amount of Rs.1,20,800/- was imposed as penalty on the assessed.
7. Feeling aggrieved, the assessed filed an appeal before the Commissioner of Income Tax (Appeal) [for short CIT (A)]. While deciding the appeal in favor of the assessed, the CIT (A) held that the revised return or a revised computation made by the assessed was voluntary and bona fide. It was also held on the facts of the case that the building had been used for office purposes. Therefore, the assessed was entitled to claim depreciation thereon. Accordingly, it was held that it was not a fit case for levy of penalty and the appeal filed by the assessed was allowed.
8. The Revenue then filed an appeal before the Tribunal in which it was contended that the CIT (A) had completely overlooked the view taken by the Assessing Officer for the earlier assessment year, that is, 1995-96. It is because of the view taken by the Assessing Officer for the earlier assessment year that the assessed had applied for having the dispute settled under the Kar Vivad Samadhan Scheme. As such it was submitted that the withdrawal of the claim for depreciation by the assessed was not bona fide.
9. The Tribunal did not agree with the Revenue and came to the conclusion that the assessed had settled the dispute under the Kar Vivad Samadhan Scheme on 11th August, 1998 and on the very next day had bona fide withdrawn its claim for depreciation in respect of the office premises. It was noted that the Assessing Officer had not asked the assessed for any clarification in respect of the claim for depreciation, although some other clarifications were sought for by a letter dated 7th August, 1998. An explanation with regard to the claim for depreciation was sought for only on 8th December, 1998, which was much after the dispute had been settled under the Kar Vivad Samadhan Scheme and the withdrawal of the claim for depreciation by the assessed. Under these circumstances, the Tribunal dismissed the appeal of the Revenue.
10. The contention urged by learned counsel for the Revenue in this appeal under Section 260A of the Income Tax Act, 1961 is that the withdrawal of the claim by the assessed was not bona fide. We are of the view that this contention is liable to be rejected.
11. There is a clear finding of fact that the withdrawal of the claim by the assessed was subsequent to a settlement of the dispute under the Kar Vivad Samadhan Scheme on 11th August, 1998. On the very next day, the assessed withdrew its claim for depreciation. The Assessing Officer had not asked for any explanation or for any clarification from the assessed in respect of the claim for depreciation until 12th August, 1998. Therefore, it cannot but be concluded that the actions of the assessed in this regard were bona fide and this has been so held, quite rightly, by the CIT (A) as well as the Tribunal. We do not find any reason to interfere with these conclusions arrived at and no substantial question of law arises under the circumstances.
12. The fact that for the earlier assessment year 1995-96 also the Assessing Officer had rejected the claim of the assessed for depreciation does not really detract from the conclusions arrived at by the CIT (A) and the Tribunal. This is because the assessed had clearly stated that it opted for the Kar Vivad Samadhan Scheme only to buy peace and have the matter resolved. The moment the matter was resolved, the assessed withdrew its claim for depreciation. No fault can be found in this step taken by the assessed, nor does it show that the actions of the assessed were either not voluntary or not bona fide.
13. The Tribunal also held that the Assessing Officer did not record any satisfaction for initiation of penalty proceedings under Section 271(1)(c) of the Act. Penalty proceedings were simply initiated but as held by this Court in Commissioner of Income Tax v. Super Metal Re-Rollers, [2004] 265 ITR 82 (Delhi) and Commissioner of Income Tax v. Ram Commercial Enterprises Ltd., [2000]246 ITR 568 (Delhi) that the Assessing Officer is expected to record his satisfaction that penalty proceedings are warraned. The mere fact that penalty proceedings are initiated cannot lead to any presumption that the satisfaction of the Assessing Officer had been duly arrived at and must be deemed to have been spelt out.
14. Dismissed.
