Bhadra Advancing Pvt Ltd vs The Asst Commr Of Income Tax on 11 March, 2008

[Cites 3, Cited by 7]

Karnataka High Court

Bhadra Advancing Pvt Ltd vs The Asst Commr Of Income Tax on 11 March, 2008

Equivalent citations: 2008 (4) AIR KANT HCR 445, 2008 TAX. L. R. 435

Bench: Deepak Verma, Anand Byrareddy

."

fA'I\'I''lI -
_, -lvlnllfl-IlW'g"I3(:nla-II-Ina U

   A ~  ..... 1' V

In THE HIGH COURT or KARNATAKA AT 

BANGALORE

I": In  TTTTB T1,?"

"3 at TH runur nu 1.110113  _

lid
I'll! I-In .l-Ill»-I \.Jl.' 

PRESENT     A
THE HON'BLE mm. JUsTE(§E.,.IJEVEP?iLI'£   J

 

Ms'$.Bhad:a+'L_':A"A'  '  .

 
   

- . -_.9 H. -=- .1 I'. .  AA

 

m.am;;.-'i?1-.}n'r  .1 4-"

 aimui: §214Y'e--ars,

 .. APPELLANT.

 V' (By  G;Saﬁij13am Senior Counsel, with 3mx.H.Vm1J', far
* ~ ~ .f  ' ~ . __§I?i.A  Adv.)
'   :A:a$:iatan1t Commissioner of

~ '  VHii-1'imunA_'l'mu-

II-l'I-IIII-luI_' «In M'

  ~  .r::mnpm:y  -- 4(1),

 -  'REm"'--ﬁ'E"T-
(By Sri.M."w'.SeshachalH. éuiv.) 

au_u:__u_u_-I=__u:__:u



This I..I.A.. ﬁled undo: Section 2604; of the Incoms 
RG13. 1'3-W1  mat ofmisr £13586, 14.ﬂE.20ﬁ3 ﬁﬁﬁd  
$69,472.-'BAI~IGi1998 for the assassmnnt ynar 1994-95;'iiwi11_g?'  
ta a.llr.wu' the: appeal and set aside: the ordnr of Elm In¢dma.TCl'ax"  

:"i.'f:r1;'ri11aa':.a Tﬁ1':'ai'ua'.¥., Bar:g*ali'ir€., iﬁ ETA. }€e.4?2;*B:~&$If.}f'E994%

tlﬂtnd 1-ﬁ..02~20(33n and ELI}.

"l"'l-n-Fm T T an-nu-inn 4'-H1      V'

.Hs.3lI-I3 Lu 1 u I V\F'J:.l.lu-I-ll'

lluaepalz Verma J ., delivemd the  

Heard  for the

acppeiimt    rm 'Ilsa

 ""  V'   

LL  ﬂL§ legality and propziatry oftha

(mint pasam; mma -rm Appnllam Tribunal, on 14.02.

 1998 for the assessment yar 1994-

('l__4_'..._...

 preferred by the assuaﬁ  oucuml

H 'v  Tax Act, 1961 (hnreimﬁer shall be

  shurt as "the Act").

 Facts sham cuf xmneeesamjr deta11s' are mmnonn" cl'

' ...m~..i_n.2.sgu.1=.,-a;»: ..---.H. U The appellant ---- wmsec is a company, carrying on by out maclninery and aquigmmt to A' 1.1 It is ailiﬁ xure-f»m*.-Ewe maxi _.Bt',"'*:$ss. 1': ﬁled its Ietum of income for the mamm §agg%1%994;%@9s«' declanhng am ufRs.5,63,990-00;V_§iﬂ1;iVch,V A a -L». r.Lep':«:r.=i=rti II ef R!s.lQ3.SV1;¥.15G'«£lD 9':-Q-'run u n In -

naxtmliy :1 Tata mcﬂai 320 am: Ex.3rrLr:

Excawatxar.

machines were Consaquemly it had "be-mar" as-.':.é.:'.1e'-.:',;,' en .,.,t.. 5.11-3. 9.99--.." val?

" my w taken in the rctmzn filed 'by were purchased from M15. Tara : Co.., Ltd., Jamshedpur Qhereinaﬁer ' 'be '1'a;;E'eE:xIe«t1' to Ehﬁﬁ is "'i"E'.1..x., Purchase Schema' Tlw order for nxaavator was f_ ;~.!3:;:sc1 by the sesame with TELCO on 22.03.1994 and the % % ' me. we plmd 111I_.c.:c;r an o3m4.o3,1994- The il'WDiCEE'- ﬁlerl by the appeiimtt --- assesses siww yaw fim exezavmx:-I was issued by TELCO on 26.03.1994 and for the 739 cxmme was imued on 15.03.1994. Accozr-:lin§ to the asaesaﬁezj mm lwa maallines warn actually dcliwsrati to the "

SH» 4' ~' V'-

1 ma 3.1-Ema: m 61' bafar.-. 31.53.1994 av...-'1 Wm c%..........."=_=°~='--'-3'-.e._-'2 by them in the same assessment year. the afcnmsai-:1 immices together wiilrseg l . 31.03.1994, which In-ixtforqed at we ':33: ﬁﬁiﬁﬁ i':""

31..n3.m94,w1mmj§.=mm ...:.:..._:;3. ' med' by mu:-times' ' its own site on 3-L'.93.'.l.99*!.' tlig gf pxagnndings undnr Section Au," ﬁiﬁner sought ts': the V"ameé,V9':':.~=.:'s*v..;laijai:"fnr depreciation and to aau::cttai:I1 if both maélﬁyiﬁs actually dalivmd tn the lassewilnirers of ' 5135 .II "ﬁat-3':-Ef-'.»*re 3 "'1 '.994 at: 11c.-.*., ...e mad.-: wqm. I:-. 'I J...v..v..|.

' as mantimmcl here.-inabove, a letter was anldrassad "j in 'J* .'-'z1.«1::t:: who had intimmad ten the Amazing Oﬂioer Vida its med 30-91.1996 mmmann thctuin tha ﬂﬂlllﬂ Wm n"I..I cnmmﬁuﬁiomed on 3i.ﬁ'5.'i'§v-=r Wis C '""'"'""' '"6:

an 'M 'Is-

on 3o..ea.19s:4 at twu different was by the lesseesfhirers ofajjeee .B_-$SI_ESiSt!$.

mm. hmeg my mama with by iﬁﬁiﬂlﬂ sf euumms to TELCQ. hmtg made" ,, it was revceﬁed was perfermegl. (J1uD4._1994 Wm ﬁnally imtcieﬁ ever at Qf.i}1eeﬁﬁee§S.ee?s4"'ﬁirer' -cm ee.u...1e94. As IegardM11_e e.=;¢as%a-Iggy, vtevealed that the txials were esui -the was was handed over , H' 111 t :1

4. M. 1:...' 9 " 'A = ** we Mar ....1'' uliﬁ e-.-asessee ., , .1 "Ar3s:esur;:j13tig Vcbmeluﬁed, an a. result ref the mqllhies, have been said to be put to use before the awessee was '1m:1ig1'ble to claim " ~ ' ~ . _&'ep3ae&ieiiop_'1~on the saici niaehir" - w men. uase""nerr. 'year.

atmrieeti return, ' ' the clam' of depre* 61211011' far that. essemment year- The Asseesing Dfﬁeer proceeded to 1:1,. 91:11:: dated 29.03.1995, inter alia, rm '0 \-

ctamwe the ~ "-«.--I'iV"v'*«.f§"ianurajL:eeinyaier of Income Tax ﬁéirpeﬁ}. Tm "-pea'. J. .. the 1=mseseee's claim for depxeciatien on the

-..w-,",";.set The Ass:-mm ﬂfﬁcer further initiated A' few item; at' under 23-'I{1Xe; in u;-an fa,u;--..;;.u 'reason then mseeesee had concealed regerdirlg ~ "!.t...e';ewe.t the .~'1.eeeseL..g Cltfﬁ.-eer lmicﬁ penalty under t:?1.:t1;i»;*c; % act, 'nc-iding ntmm that the as envisaged mm Section V2? V1. "Itue of fmmsh1t|g' ' ﬁlm' {ﬁn} 'PIE J-If fhﬂ " _..'.'i'..".'~'._..'-L... Ll?-gllglghu were u uw nu.-uwuu-.u two naeehhteet was falsely or wrongly aggrieved by the sad order passed by the yxefmed to file appeal before the x 'we allowed by the Appellate Authority, which gave ':14'-r;%--t§t.a« ﬁling cf the appeal by the Revenue, against the said has set aeiﬂe mad quashed the appeiide order passed by the C3-¢J}1I3F:1tt.'ﬁ5i0I&BI' of Inceume Tax (Appeals) and restored the order . L .\' pamee Thy the Assessing, Ofﬁcer, thus giving. ﬂee to ﬁling of agpeel -3; aeaessee under Seetinn 260-A of the " 5

:ii "l'1§..-.

5! wpeﬁ 3% Uﬁﬁ eumuﬁal questions of law.

:23 L IL'i:rG1]1'IlS_§E!1§}BS af ; 'ifi'*i'usii:-

was iii. 1.

and iii the ' ~ _cireu2n§:mieesf"-of"tl1e case. the claim for V. eiaﬁe-h;"whm the maclumry" Wm and set in mean to the work the lemee with whom a lease % had been executed by the "appanmu in the course of its leming businwewwamongclaimwjwﬁfy the levy af penalty under Section 271(l)(c)ofﬂ1eActwhenitevasfbund thnttlzemaehjzwsdidnotreacrhthewoﬁt site of the issue and were conmﬁsﬁerwﬁ e--'Th-L 'U9 3! in 1 1:} I in I Ill 'IV!-VIII In-

befmre ms and nftha accounting year?

5.. We have accon:1i.t1g1}' hem-d the learned oowiﬁﬁ patting atlmgth Md perused the records,-' « . A

6. Swim 2?1(1'}(c) has =*'*".:" EEHE4 mwazﬁi Hewgg-£1, which for tlm purposc of this 'iiégvﬁiyv 1994.93 raadsasmular H _ ____ _ " relunls, ,V »x§goti1::w_,_* ccancealmarnt of ma Assessing Cﬁfﬁcer % .:.:%%:ue ck.m-gm (A.ppca.|s" ) or the in the course of any undar ﬁ'ds'f;ad (9-3 (Omitted)

(c) has nmmealmi the particulars at' his incmna or fumished i11ancurata paxﬁnulms ofsuch income, ._T@ V A' .

ii'! iii} 55;; in -rung V. inst! . 4 , mg, mg :°1i:3:_; 'tJi*~:t11t"§souslI1 to be 2 reason of the AV of particulars :5? irnnonuz or the of inanmtratc particulars ofsuchincaomn.

(A) such person fails to offer an nxplanatirm or offers an explanation which is found by the Assessing Officm: or the A I '7"?

.2' " -_ a

-:10 :~ Ccxnutlissionxer (Appeals) or the Canmmsionnrta be false, or :h1¢cv3;tte:» U£:*su\c}1 person as 3 remit for the purposes of of this Sui:-sectinm, 'be

-: ll :-

7" It is also pertinent to menticm. here that assesses when these two machines on h.-i.r-e purchase "

6|.-n'w7w.u L-nu naaﬂg-3"mu an Limited fer excavator and between {he {aséeaeeej "1"%:"I::,-"5._, %o II1VE5l'.l'IlBZﬂ1 mid Fii1§a.*1§:e ezmee 1'_h,.n,5 the mice ,___ -f t,he§e ;_ paid I' "lay tine finsnwiers of the aasesée-e_+~ TELGG. iii the mm-..~.m issued '.r3Lc:b em desenb" ed ~ v32§3esaeﬁ.:11aQT13ee11 owner of these maahines. _ juxﬁceed to the afeieﬁaid qﬁeﬁ""rLs raf law, emamee facts and dates am required to be reiterated. admittedly placed orders en the two machines. '-.Vi.msI'IiI;-n1>~I:.'l nunmnn ale-an-I nvﬂgualaw H I'\3"l_ 113.1994 ._.I;1 id-lJlli_u.I.}_| Mttaaluu uni. un 'IIIII'|-I'd. u. a..n..i.-.r 1.: a... . w . «.- ' ' respe=:::n've1y. Asia from' t11:einveiees1ssue' it by the TELCO, gatws for arms was issued on 15.03.1994 and the gmepass for ezxzcmrmor was issued on 22.03.1994. The 11%» HI -:12 :- ctme was tn be supplied at Lalithpur, U.P.,. to the hint of amassw, whereas cxcmratnr was to be supplied to "

$1' 1*..."-.-. E-%6i%b3:£ at 9»1j%'.1.'.'. C.*}*."e...='-¢q'.!£.*'%£----.'?.,I'.',;.~..,[email protected]'~1|~._, the mmsee had entexed into tum am! 29.93.1994 with In-![:'s. Gem of'exc.wmor ta it and on l9;,£)3.l99A-?!x...L:1i*";i!:.'r1 Mia. E!' )"'II......_i.|..._ -nun.-.s.-4 urrwumu frat s'up@a'"= 'f '~F??fivum*""s£wummL _ 1: 'may'""'' ur-.3.

baem rerferreami to as" tIﬁa.V:'Va9se%sse%§V"Caup1ed with this fwtual 5:-r:nar1ii'ti:'_§;--« that TELCO had also 'l'l3§!_§"'infxAfi-hia'r_'1' thg Rg1.mn11 nriﬂn ;"_r,;; 1gtt!'n1r "A 1:

I' UDUI 'IrH¢\I. In-'pr-ca' 3-# ..-'- »..s...... ... . .-.....-.,..I?...ﬂ!|.£ . 1.'-'«.»«~' ' ' {J3 5.1 ha tile quaijr Gﬂicer, cram: Wm cununiacaiangd rs:-Jf'*th£a"'11iVi"'&r of the assnssua on 31.03.1994, im-zdexufator sinned at another ml: of the the cu" 3ﬂ.ﬁ3.19"'n-4. Gil aﬁcaﬁa af a1'i':Ies-uiu' facts, Viiza hereinabova, tha assesses was under a % beﬁefma: it had becomn: entitled to claim depreciation

-cm L..:¥f ~ =? M ...;;i. him mm ..'_.L--:-: in mg ass.=g_......a;=.?.. yam 1.994-95.

-um mar r -I arulnncuunuu . V _ ' pruuaaainci tn ﬁin its return showmg' 1039, WIN!!!" ' ' cmuaﬁmd. uxlaim of dnpreciation an these two machines. Huzxrwea-"mt, later on. it withdrcw claim of depreciation and ﬁlsd TV} LI " 3Ij;bs¢_qu&xi:*tsa}._.3.1.%;ﬁ3.1W4. Tnercforu it proaaaﬁad fresh 1tetum.. -Obviously, it claimed depreciation on aforwmki mmhixw-3 in the next asscsmnmat year. 13, Lnam.c.d munsal for the appe]1a;1t""con1§ﬁded Tnﬁzww cw.-muwﬁtteés w mm" in cc}:-.5ag, 'L4-.:U1*:s=.:_ c the ulatlénxu urf depreciation was 'Eh-é'.= Thmrm tbs provisimm 1{M1}{;;}%&,¢r were m.'r.a_r:m::ui% 1't.was.a {would ruveal fur ail p-ractimi. ﬁﬁ tV 31%'. has-..-*-me e':::-.::.-' of machinga it had also becmms: exiﬁttleai It was only on arlquilies :'a~..*.:.:ie 13;;-':.-:, it iii.'-'$1':-}al..¢':!,A:'_'t_.3;.'I_-s=.r1r_. were nut to its fl)!' dnpraciatian in that assesmnent yam" and the i 'V Even though. awarding to the appellant * ~ ~ .f s-«me Euuauy pm m use "-u-.--..-M

---1'------+ 'M 31.93.1994 m A I' Irvrlv Iwn-wt'.

VA nnpre" swan' it had ' the clam' for fur mm a:asesa1ne:nt'ynar and prnfarrcd to clﬂm the " " " is:-. L119. 1.r:=.«.s-at aassasmm gag ﬂmraby ﬁled fresh ratum. It was tharaftare caantamieci in the fauna ferﬁﬁas 61" t3"

cm, tlw bmta ﬁdes of the claim of the assassee for depreciation "b -:14 :- muld not be doubted and in any case the name: had _xpgsv:u1 itsanif far Envy ofpmalty as cmntmnplatud "

............1 nnnnn was In-av +1-nu nnr\n11nﬁ&

11. TL.-Em: U EULI-.l..ﬁ'.I .I.U.t. I-IIF -Iiuyll-nI..I.ua.I.n._ 'V mLh.m1I:1ue' ' 5. Hmmver, it is not necé's*'.é§13r to which have to .:-:-._...e E:h.¢4.:n_i.~:: syymmma

-an s..:~I.__.V-

an .. Cmnmmw' ' :;i'E!hE2g2:s..i7£nance (19 Linnited andGﬂ':ar.$._.33I"s*1_'R , ' ~ The :;1§E:sti£s11 in the above cm m ﬁsaasa-e's.wﬁt'ie~g_.7:";*.w t.-r.'- Ln": em. A nwmns simipm '?)2'A...___ofvthn Inamme-tax Act, mi. Thu sf ﬁnancial :'.~.ompanj.r which purchased out the same to manufacturexs. undu of hire. :1: min wuvfau, "'v'uu.w uuumaau'-"

that whrm maehmm-5:' is ﬁver: on hire by thu Vh -£;w"J1n'::r tn the hint on payment ofhira charges, the owncr is ~.=£g=::~ s.=:n.*.1t1$.;.-'--.*. t~:.'- d m an L111; so lured out. .1 ThaLatransactionofhi1'eisuneofi:a:'hmntofmB macﬁminaxgi. Imxeiﬁnoextinsuislnnaltt ofmyrzigluofthe Arm -:15 :- ewner in the machinery. There is merely a licence the hirer to use for a tmnporary period, the ii }'l.i.1.U~pu1L'«}.'Luau n5:""um|uuu.,_.~wa:u§iey"'n:§nw elemem are involved, namely. the ee'e.e....=.a! sale, it wee ..e1:.1__ ;..h.e,t "QEQQ ltsgtuibejng one of a mamas: uf mpme:;3r 'xanm "es any element ef_ .se1e,v-me Vm'st 'be treated as a 'txwmsfex' allowance.

re!' Jncame-get vs. Mahamrkm Apex

-an;-5 fifre.-gmuex 'fed; 254' If 9 ,amf V ---V afIncom--m vs. Pinnacle Firtauca LiIm'1'ea'. gf Q .3eee;2"1e3a5,

-um-A Aaamaﬂ I-'n.'|'|n.&tn-I-ﬁn flea -not-in 13¢!-ii' lg"

"..{'eaat1Fmm1' cePriv*ate Lmuted,' ' supra £11 Jmriﬁem ﬂsﬁﬁders Ltri. Va. Cammisaianer 0;' income Tax It ha been held in that "W0 the element of sale, in the case mm, 'twin mndjliona have to be fulﬁlled for asllewmas J' (1) that the plant and mast "m owned by tins aisiwsﬁee; {ii} mast 'i*;a'.'asad'j'§*~f~..:;".a pmpcrma sf bu.-sinass of the assesses"

degrectﬁatinn in respect nf 'lﬁnégﬁ... V laﬁall. __ .. __ 'whim-a a;%.epm:ia*.im: '-L'{'#"Jl."l In-e;.c1=i=11e¢,1.,...i!:A'i1:!s'1;:n.::§.r; hale; gs; uzidm; of usa, " ﬁﬁf or aaqwiﬁﬁaiijg or tlﬁxlg is being ﬁumea lug} of such lewing.

_w1iam=¢m payable at a later date _ V' i--__,.g;r"--t11¢ will mm: at a lat.-at _ {if time wnuld not be relevant for 'V ofdaterrnmJ11g' ' the use ofthe H or thing. In a. business ofleasing "the momant the rmicle or thing is leased o1.1t.t}|zm:is:heoIt}1.ingisputtousefor the pttrpnsc af Imaging at is new for lnaailag. the bumness. The rent or proﬁt, which will aecnrue, will accrue an amaount rafgrauuoflwe fmmthe datewhentha lease is grmltad, even though the proﬁt DI thena11tma:yaccru:eatalaterpoin1of cj ufarrmamianer cf fnccmice-W vs. Ream .'v'.':-..'_.e.--.~'.-5%' 3 Limited', 35¢' ITR £552

-« In this am, this wmssee who Raﬁ-.5 *.a"=@*::1;-:'.t ck..i..':=.-ed. which was purchased by it 'Tu: .<'~.siﬁ*'"mi:ng,"

ca-mm v'm'::' purchase mulz-' A%t.hg*;.gs¢sm had failnd to esmblish frlaa 4L":*s*:T:'§"»fQF** far ..e.',-gas',-1-L.=I.*.i.... tum rejected. of Incorns-taac, the ﬁndn1g" %:n; avaghem by tlw Appeum Auﬂ1onty' % appeal by the Remm, the Tribunal, while « vim»! of the Appellate Authoﬁty, following the ' .. "timsions cnf High Cami. af Dslhi ad the High {least Llf V ' -. hnld that since the assesmec was cngaguﬂ in the Business uf1eas'm'ug,themanhi1mnmustbe dacnmdtohwvc bemused for its baa.-'run-as rm saenar $1-.-.2 am; lmgad to the lessee. The IL/ -:13 :- Delhi High. Smart afﬁlmed the View of the Tribunal md h.;Ji;1 that. mm: tlm machines are shown to haw war in the 'isms, t.'ru*: am?' mam he zieemad utilised far the business of the asswseé, mama is engaged in a leaahg cfmmmmssmwm of Inca.rn§§&xx and

- R this case, ti14a7._ass,§a§s§aaﬁw§rf-'*=;_i'ﬁxa _r:+'are+f-"'?' é.u..*-ape.-5 and tippaxéi on a daily basis. a:sf"i;i:aj'a and repairs an safual kip;-n&s._.f&';-in-1 Ls an-as ._:3.«d_ put " 't.-::_ usﬁfi kept as 3 mud-'lay was one (if ﬁiééizg dispute. Answuring the said quncticm, tho asses: wm required to provide the uppus ' " ~~ 3 stmﬁ--135" so that, in we rrrant cf "-3- "aim ':me.k=dm-Ir. w. A ; r-;u iris, if the vchirslcs on hire wm not capable of bung these would haw: been used. The depremanon" ' and rapa1rs' " 'tang. réf -: 19 :- Relying on the above line of cases. the Senior 1:.r»r.~,~1.=lr.1 that hmrizg regard to than busir|nsg;V~~~-*:ﬁi'_«' asanssaeﬂ is ﬁii-.":. af lam-'.3 sf ::cru1d.sa.fa1gr be mad man when the dahver' M. to» its hirer, the was haw 'HIM ' uumms. we *1.-;.**~.~... user gzf L. ptu-paaaw of a claim for ., .

12. ﬁexiljr, -3? 65% ten suppamithev justify the levy of paznaltgex. iv the: the assesses had an '*im":tia:" tr: -'V4-'n_':§*:a*s1 aha a.'-.£!, tee en.'-.=*a..n..~ t..r.: g;m;n.1....t. at' T J is made to the case decitiaci "by firm 'ﬁﬂﬁp N Shmﬁ Vs. Join: Camanimaner of V 29: mg :19. In the said case, the féfme the Supranrw Caruxt was ""1 %i7'u'id'a 'as:e1%'ideé A Far a paaﬂoulm assessment war, the in-scams was 'V':'_4:'dna3I!§m1uﬂ, mm alia, showing a long-tann capital 1095. Thu 1%'-iii.'-'I vr-as anal m ..1ve arls-:22: an s=_:.=;=-._.t -1' gal;-. cf praperby. being land and The claimed to have 3 11'4"' sham therein. An agreement of salt: was entered 'Yb

-: ID :-

inm in Impact of the mud undivided share: for a particular nf mummy. Fur purpusea ~:af'va1ualion, a registarcd "

mm vﬁ"2t:=.;i« '.a".n"ﬁ '""m Wﬁ n'.;'atuu**"*au.i.*..a:.'. % pen a ':'al*.3:=.a'"12.-'3.'-rs.;e.e§'... F rhfi' fun gzuzpuse-a caf computatian of capital wm by the comnma in gAxe;.a.mr 1.1:.'I....i H 3§;ﬁ-.11 553}; of '- 4 - r 1 _A.:_._ r~afntr::ﬂ1_ fhn manter 'ﬁn"u'uauon"

-mm whu in [me basis of am ]?£':tN2ﬂ't.._ r $81111' ww _ an-ma-vui 3 u:'I-nnx-u-,__.ra1-mg ..__¢__.___--.-_< 'w.--. .5-_... Baneimwuuii. um-r.1;.a_7.'v cu notice: read with Section 2n of the Am,' ~33 it bctwam the value M and the District Va1umon' the reply of the WW 'V was unmwcassﬁally clmllenged before the (sf Incu;rns--ta:-: and the Income~--tax Appellate

-#f

-: I1 :-

"Thus,it.appaarsthatthe1'eis adistinctline of amlwrities which clearly lay down that A cmmidming a question ofpnmahy, mans V A mat a relevant n . .

mm, mm the statute says isxm for % % penalty one A"

it. may or may not by ..l.'_"_'_..-..4 .1 '1 among}: if the loans. 15'} on maccurau 13 anijﬂmng men' *";ﬁﬁ:ii 'mist the qﬁnmun std} 'aim as rmmw"-*6 *me:'1V ref' " wpr-'.r.'ed

1...: cf

-.*e.=.;=:.;;-zr-,'_i.'=.g of -..I:r.n.s mg 1. gedgé !aefr:ra'g¥ensﬁw'cs_r1 he ' nosed. would ' w - --- ---x ¢a1.~§a mum at dwisions ofthis Court". ma that the quwt;Inn' would be whether it aufit. discretionary juxisdiction Wm properly ma -"'+-W t...=-.:r.I"'-'~:.~'t1':H1-""pI-rv..1,s.-l!y1rI.r.a»t Alnlnr uwnrvau -van and um levy of penam is not only in % , .haImnlvm such diamtmis rnqtxiredtobo mmised omhe part .:_;.§;;i1,g Amazing Dfﬁisax the mlevant factors in mind. Some n::-ffhceaa (T1 ti" fame "T53! :

I. ubu-Io':-u-in P359501)' 5!.

4.1..

H pxovisiorno and the factors which are material would relmahle to:

.r_-nu-_:-n._.__ I... -m- .. .,.....1....,.¢..'...... .4. NH' "

[_3,1I32|.|Il3J.'ﬂ to mm uii ptanauun ui' uu.or'*"' --%"""?"u:.uut:*'*'"".

Placing re11mo"' e on the oases of ' "

ofInco.Ma-Tm", !9?3;f3}- the may of The statute ' 111 ojuutu' yuof_t."*' .:-'..ﬁe%.g 95%. He is recgufrxeclvvttoenife' so as to show that there" is . prixnmvi the assess:-.e had concealed ";'o:minh.oﬁ:..ao_rrrm.e___ pamou1_._. mud this onus is eta oepmtxnen' ' t. Once the primary 'maroon' Vt of the secondary burden of proof would ass-oeoeo because, the proceodu1g' under Section ' tit"

'-J H:

13:1).-={o) is o' 3 ---.3'. 2-.a.*m'e, :3.-: t....-.-.- ates t..e-.t, its ' I Lvooitsequoztoos are intended to be M effaotive deterrent which will put a stop to practices which Pmlismtont considers to be a.ga_ina&. the pooh: mutt, therefore, it was for the '::/

-; Z3 :-

department to establish that the assesses was guilty ftmaislxing inaccurate of income.

14. Ruliwais also plmmdon I2A:hqk has us, Mr 1... . . .. W; 309 my hr 1% i.-V ig Ar . ::111.1'§;s;I;;i-':_;___m't_ ....,......,.. ......,,._., Eiiﬁp N Shmﬁf supra by the very' * cc-mt who.-rmht, inmfar as mi: gamma;

it 1:; lmlsd um if with lacuna ﬁde §fm_i it:V;_ acted on the basis nf wrong igagat 7 of his failure to discharge lrr t....-:1. " 4 . Sm-am" @311 weum also draw anmtm to am t:¥'?E'_ %.A'!';I*92§i't;*.a!z_ vs. Erfmr-arnsrm'm Tariiie Ffﬁﬁﬁiiﬁfi H 'V and HR 244, whemn' the qumw-I1' whether the mandatory penalty an pemons who evade ' "'§n_§I.IuuunL- mu. hon. .3».-u a1aVL-vu|rl4'I- A.-IF +au- ahniﬂil , fn fag' E in *a§;§cnt:&a1 mquirmnmn was referred to a iugar iannuix of tha 3upmmef3cm:t,inviewoftJ1nuanﬂictofopi11ioni11ﬂ1a ju..d,,;,tsrI.,s1.r1t.:~' of thug Dimlsion Benches if the Supnme Court in .195' Bump N Shmfvs. Jain! Cansmtlmonar of 1ncam--nx. 291 1;'.a_ 5:9 and Cimiruman, me: vs. Shrlram Mum: Fmd,__ % ""4"" ,_T.-.

LL' 55f. am, 'I'1'Wﬁ'\Fﬁ, he "vvmld -ab:-xiii that *-mi' circmnsaances of the present case onhanil, :;_ E the mwssae was not entitled v% t....I:4..'1;-:.m'e. iIJi.;e.*.i.n af new-1tv yegggﬁngﬁ and wuuld cmciuria that in favnlur surf the '

15.. Fear learned counsel a§_yem'i«u,g:V1.{m*. that that records would in a.*s§-f $=:aa3s::.}a:! 315* "Mme *- .5 mm -1' t I- If Iootﬂlriauiia-III! Iu- -I-1:-I-n--no-u u--up to"3"1.«0.3,9.4 as the: mm: were aonmaissionaﬁ put to use and until the assaee stem ﬁnd machinw. 'v'v'-milé am. 'as claim daptwinttinn an the same. Ha ﬁltthezr f_ e.men cm: ms: nu: am}.-eaarui legal posit" ion cannot be doubted, 9.23%.}: h......- -I.:.t % 3% 9f .32 _I L114:

Act, which deals with ﬂepreciatian. Reiitulce is pieced on me foIlowiI13m.uhorities :-- W»

-1 25 :-

:13} air Shaﬁh! Sugar and mum: mu Lid. and w. ﬂnmmiméoner qffncame-lax, Being 168113'. ?'0.5. " I' 'V 'I'_ ALLI... _._...... 1.1-- ........._...__._,. ,. 'I_._..._: 111 mus 333:, wt: msussuc, :1 imame frmn the mmufactun:

emafentﬁen. ms. The Incmne-tax i1'1th_.e_ V "=4 M-""9" *=-I'-"1**ie;-1..a.= hes; -= m..:'-eggs, "iv mt IIIEHV HM-Dal-iﬂnlm 11-Ivar shall ungc the: assezasinmtt mama' . It. was: the amansswfs {(39 warn totally mm and not %' not challenge the We, it game. run; an. mm ..

rewrmm. "ﬂat-.1 Incmne_4ta;x~.o'fii§'erVhavi1Ig issued a notice under Seroti-mm of the Income:-tax Act, 1961 »:;;11p:_n1.}* :1.m_L1_I_r::_=;'.L I11: imposed a __ Vifaaﬁ. 2274 ilcaidnm" mere" was i:oncaam1en1' ' yv sf appeal wm preferred against the order. The Iﬁeﬁﬁced the One of the questions that wm ':1 h '' "Dan um; .'I.Ti 3. 1 mum aarnanmﬁg &,'pf\dl& I'1II.n 'IJ-11:11 an!!!' flnﬂa .5:

k A ﬁmtuug ~aft;Iu: Tribunal that the asacae had not concealed iimomm was warrant in law mid ﬂu: High Court having mswerad =;

in s an .ti md :11: mag lxmmg hem in appeal before

1.-.--r~.-........... .....

I It;

the Supt:-emu: Eiouxt, time Suprenw Court held that the High cm :1-111:: lay downthn law agylicahla to the facts "l'_".'I....u-...._)n'I :4 1-.' Lu. and' Aqua; V ' 1 DuI1w.u1,.. In tm: uuﬁmt way an % bafm th.-. it was 11'mrt:'u:ead that the 'In'1:rnnal had not Wm hrelevtnlt or cmlsidered 'V £rze1em:;t ,1" ba_s.=a.m; i._ dgciaiqn or suspiwim ami u.fﬁF=as 'Wmng"' iﬁ imarfnwfmg wit.h mg L h h .» 'vs;--.t of Im.'ams--iax, 111% asstia15Vt:e ii: rice from suppliers in Anﬂ'th;av,Prad¢av _. " _ The some'. timas aunt directly and péiwt by draﬁ or tn-Ingrnpltic ._ I' ___ 1'I__ t11§i1lsfé:._«hA1f$1t;ii*_i;:i:g of the assessmant procmm " . um V V' noticad that a demand draft and a telegraphic not entered by the assesses in its cash book on the

-r '> tr ¢ ....a 53:11: wm p121'-*..1~.:-..'=-ad 3.114 ..__.aﬂe, V' " When than were pointcd out to the asscssue, ﬁns ammsarm suhmittacl a lettur stating that, as sufrloimt. cmh hﬁaalw mam mt mrailgble tn it cm the dates of the transaction, it '%

-: 2? :-

had ubtaineﬁ learns from ﬁiends as it expected to repay lama within 3. short times, and thmfum, no entries wgge "

A.

2.. 1...~L._....u......

Illl-£1 HJUUIEH Jlf .--A1JI.sLuu.-L' 4'4: .nA.lI.|1 3.1.. 'Ul.lII£.- 1 as uu"""" uu;a.u.-.6 since it was unable to fumish evidence fog it the mom as additional Pcaxalw prm::e¢aJngu" ' were isﬁaee. Thu: ﬁmmsmg f'a')In1:1A§.§:;2j£:;a:é1n:::':V§~~VVé:::pJ.&1:ssIi§3n in ragard to the laws to br;~I Explamaion l(B) of F1.u.a'-.:::':1"a-vxsgﬁ n-1% n- f.'ﬁu-C3!-W":-iunrr ':'I'I'II'1{'\EQd 3 FnI'|:I1i'I:|. «|:!__...:.......,.... "rt 9,. 1 .'Au;-. %l.l.F"5£"Li'.31|_litIi'3l.Ii,§ uuwvx us hCJ*GIirl~.iJiJ.EiL um":

The dlslms' ' sad. In a fuItlu:r' appeal, {tlia mmm a1ioﬁ?ed t'}us same. The qunst1cms' arising bnfnre the High Court.

Tine. answered the question in favour of the V Rwe:vﬁﬁ'z:,.'tE:§.m§éssw was in appeal before the Supmna Court. Sngjyeéﬁcbﬁ: Carurt held that by virtue of notice under action V' 'E-'L-n g In a.:\I'-'AA 1" ad' I A I"|'\A|'.! ﬁﬂg W 'i tbﬁ 1 1,§u1 my 1-' HJMUHMU I-Il.:lIe.l..I.u.v Iwuu-.1-avu ya. vliana nu 'V V :.:ﬁ}§:inm51mmas staated in the cxplmatmn" am his fa:1ura' to write his cumctinmma was not due to ﬂraud ornnglact, hn shallba damned ta concealed pmticulam of his income or 3 I131" bf. 1 ﬁfuw II-alibi-»;.'|.I'.l.Jﬂ unit 30% B " '"'-wn:,'-=='imJ 1:»:-=_n.s1_lfg,r fan: brr.:a__n__ -:13 :- funmislmi inaccurate particulars thareof mid consequently.

liable in gmnalty provided by that seem md disagreed Y Eiaktaii 'isry the Bafﬁbay Cw». '._.um.._'jug.-mhisf Comm";-*s1':nnw affncawse-tax vs. mam 2as;r.rehm;h hh 3 * - 7 cg: cmurm, 55.3: vs. SJ'm'rwu Ema in fund mu! assni; hﬂ i'a'3:"u;uu'"*-tat'. Wm' casts hxcess of the hunts' ' pmmimmaamhehhssE1?{Mma1 Funds) Regulations, 1996 .

"W *---fame"-*'I¥=?=n: :2.r.:1n1.a_y L119: ﬂ " . the crf rugistrnﬁom ithnifﬁgtmﬂﬁns and Exchange Board oflndia had cmmwe:ntiox1s and conﬁnnead the charges .L_._1....!'I- _'_._.'.~.--... "... ....'I.|... H1 53 ' gr I11: Supranmh Cam: in the p1-oaaed:mgs' that .J f§.'lﬂfC§HV$dj was, whethar mans ma was an essential element for 1' _;m gbgatians. Mia:

Jﬂlllr Imnunuﬂ r.:m15idvmt'ing several siecisiotns wimein ii vim held mama ran "W5 ~. '-i§q.nran'|m.ua~rs~I!. -: 29 :- is not an eassaantial ehxnem for impnsing penalty for nivil ubligmix:-us nmnely in, the case of: n;....~,:-J.-... .m.-I' H-AaA£n.anV.v|.¢I.n cu!' .l§""'l""IL.-f E L. 3 h I...

:

Liiﬁireci. {I53'.9l$).Is' SCC 4?},

-~ .J.1C.A'ndu:n'ic: Linmed Var. Chi¢f f:a;;JacVi'or'-int,' ;E::t.i'-_l82'£.= :' I 9531.516 SCC £565,

- «I - J .r- 'J E .. ﬁiﬁ. mm 14.1'. J'1«.iI"Eif g '.'_'5f:é;'}:J" m..;_t.; V§i3,_ . Gufmai I3*a1un¢var§§ J4geu;¢y1§3*._"VCay§¢nj£.:;:':in12rV'qfIncomo-mt, (1959; 3 sac 3-2; & E % ~ n.$"a-=s$s,a"'.': '5'.-.# Z ;i,;,sg.);;%':g.g_;_$;.3V.cp:rr"r

- .-5'Eﬂ.¢"'v.5r. Cforparation, (2'(I?£"J5)I.'? Company ..3i3:e.§;" 331; ~ 'I..1_'_ ...L£_ .. .......... 'I..A._ ouugau I: as c r' lI"p1u d Dy u an ma majaegjmaaons is tablished and hence the interntiun ihe--«..'Péi'h¢es such violaticm becomes wholly "Min. ....1.. n. ..,:-*.,::.:*:}1 ed. 9LvL.l snligafian wlzich a..._.=LI peH..__..n1t}r in car was under' the provmimas" aftim Act and ma Eagulaﬂnng would inuncdiately auract the levy of pmalty mespazaztiw at" the fact; wlwther mntravantion must he made by ID held ere-q my

-1!-an-H'!-1'1 rldn -an-1 Hanna the m%55. rI "QT " 'umlerme 931321 ﬂﬁﬂtimi.

-: 30 :- the clefmaltner with guilty intention or not and unlem lmguage of the suture indicates the need to Eli'-|!Hn"§|: hf lirfi _En-Mw-vuavw 1.: a «war rrauunr 'EB:

- V'! " . ..

"re .De":.*..*.'}= {,'e.-.-'..e'2.=.-z.-.r.="w2er n*--!5~-~nn===- 1* sag. V mmppu Hﬁgpxmz 290 In 353 _ 1-: mm: , 'rm 7 .. .1............. ..

t to the Ttzcenefat nf depte" _ " 3*i"1i'1* eff. cf The Asaaegairag produce any an-'i:Iem:e 'imLeepe-n_ ﬁes Ext'-'depieciation. In appeal, it aw '1a:'».'s'.""-:ih:%.*'_t.'.1'e" '.2119. the kept xaemiy 'use"b1:ﬁ,j~. need and that therefore, the weeea The same having been Tribunal, the same was pally allowed. I___ I-

would not enable the wsessee to claim and ifthe machinery is not used, Section 32 would in 1-: b_.em I"! l€lil'l:'Ji.llui.Jl$-Iol-.I.I.l.I Iﬂblt auuuuu Maw Iauw II win.-nu Ir onucivi-' ﬂees tea, it, in when}: I.1_n.:w.ee.essm~I,:_ 3 -: 31 :- 9} Cmmmfaﬁaner of Income-I'ax vs. Sres Vaﬂiappa Taxtilﬂj 29: me 32.2. wherein the ravenuu had questioned the % um .l.r..;i.'ia..Iu.u::I.IL Elilalulila ns:.I.I|-aw I-uﬂ u.r-rJ- F u.--.-7 .. .. ~~~.---;. _ ' V _. inconm an the cast of purchsma of -- this C-r:uurt that the msesmee had chc4s_u§n_f;o the

- _gg'd tn the on the .._ : ;;~.-.'..:....

H3 1156 'i'I¢fI)I'r£! =1 "ﬂ 3' :. Wm ciwpstnhad !:_ha on date and on was provided by ﬂmesaw.-. 2*-.g£mmm.l.";g had giv'anVV"a detaa1'« %V regmi to the matter" in qaem:iu:m.-- --.The 'TﬂCb1l.'J ' had failed to task: the same as1de' the order of and ﬁ1&.:feft3$aAtits':"'eI;iaiV'e::fpE:r;aiJt? ""-"as held: an' 1 g . ' hand, ad1runad1' 3:, the assume having' ammo' d f_ ﬁsapfnﬂﬁation whﬂn falaaly assuming tha thu manl1ines hadbcm ts.) ass upon vnﬂﬁamiom when the: assess: was '--n-nu-up I V cwaﬁm'tec'i with aciuai fact ﬁﬁrnrn, the ﬁat':-iris chasm Ito vriizhdrnw the claim fur dapncidion could only lead "Vb -: 31 :- tu the prwmnptiml of falseparticulms having been ﬁrst ilastmae ma thmforc, the amnssee would "

,__:1'I_. ._ .__- ...'I1_.}.r. _.__....j__ U dm nut miss for, if the Rwenun had nc}; :,_:A the asasessae= would have its * 'no-'--wQ'---Intvo'-"

....I:'.!pI§.~-.r.r.i....i..,:=.. and var-um 1.1-.g t.::.v;":;:H:aA:;1~:»;:;:-1,414 ma quastimm in this 111' of I'G*U'I3!'I]l.El ..

13" H-yr point out that even if it 1w.raare7m be ac-ta'-.'pt§d res, was not an element .fm'4L:~*+~;.;..,~=*i...9,,, p malty nfnrsead-i-nma ' V I-lull---I-'1 la---'cw:--u---nun-5

-' -:-tffrluél that in order" to claim' ' ' ' "

to have hem put to use, omumt be held ItisnotiI1:hspute'_ thattlwmachJncry' _ has LL-'L-« _.....n.. '.. 1:...» ....-....|..

- um' ﬁuuy, Wh' in mm, yum it ta araal uaa. thr. assume is cmtm-mud, the machinery is pm: to 113::

ctnum of its business Md that satisﬁes the condmon' ' for ' d."'.'§_?'J.."'59.=":."...'..»'.!.£'.."£1.. F¥m..e, Lib... _-___lam1 nmham" T nor can it he said that, was 'awed on incorrect patticuimu The withdrawal nf the claim was on a mute

-: 33 ;-

acceptmice nf the impression given by the Revenue was not enl:it].ec1 to claim was actuaily ﬂ1e'**mi?u":§etii'1ea"tt " "

withdmwal eta ]1t'.3tIES'|J1li;I1 my §imert bytttwg3-eeeeftte ccurtceahnetttt trf inconw or on B£CC'v1tJit_tEif v% pa.*"':-l:'m..:.,e.:a. In tmls r-=.g9.:d, 1;; thﬂ .-9.... ciated at the bar mum have'tb,_'be' " * to the facts and of the line of cases éealiltg w1'.t}1 V't.'v{1e'w*icouI1'»=e of hitttg ' y' tu 'ﬁr: '"1: 'ﬁr' mil 9;5,1p1ica1hlezh:«VVt}1sﬁseﬁetetet be taken note of. mt' 'fhg...__.«_e,.1:ave ecrntezmixans mi 3 perusal of the shew thﬂ in this case also then: was ti.) Le man rzenuin guess of the riztigintce has been placed by the msessee. net the A cm which reliame has been placed by the assessee 'tcmibe mil to be sham orbogus. This ﬁnding has also not been 3' 1"

A . ' ' ' -nnmnnari reeexdeti ..-y .?."-e Trtbtmal an mtg :e'-....... ".11.; 5% ,...,....t are 'E the ammtptinmt with regard to the cmrectness and gertuinertew ofthe nineumaxtts.

20.. Loom to the mum ofbrusilw which the appanam her.-an on, the actual mm of thus: machines "

...-u...J.J.;.;.J 3.... 8].:-. .-.-.nuab.:.nmn1.n.|| .n.n1.-I ﬁﬁﬁﬁzﬁﬁfy It?) 1316 uunalunrnu 111 Laws palm ' user ah' the machines was by the hints csf '»I,;h:e handed war the respective '-9.; thu§§ir- iﬁrork V ,~ was fmt the Bim whn have to its own mqu1mn' ant. and .. But man alone wneuld 111$ the assent ﬁom 29.33.1994, the ware 'to the hjrers at thnir respective sites. Thus the responsible or answerable as to ﬁrom what 4--I--- C: ﬂu I ET ml. : uﬂlh -

puﬁwwmuuauk-3:1?' is... un ﬁwﬂlbs nonusar enfthe machines bythe nu-an ofthe Vamqnésue wuzvuld not. asp-n've.~ the ass:-awe ﬂrom clanmng' ' ' requirarnents for claiming nmrnely it had 'become "T035

-z 35 :-

the mmlet rafthe machines Md the same were in tum laased to before 31.03.1994.

22* Inf-.m"t., tlwre was no mud on 31 nzmm {fa rluhn Ar Ann!-nriatinn "gar + l'.!'|l.."'F W. W". Mu -Imuu-I-u. 4-v 1:4.-v-Iir

-5 ll-HTS' Ffdilllﬂl.

'. -0-_~' aasessmmu Wm. It appears that dud aﬁvitfa ma asmasca, it proceweded '_ it in 111:: 1rnext.sas51esse1nnnI,_year. Hoiargvgeaé, the M1. .r An -5' '-15.3. In.' n.'nngL.n_._ L 23, In by the Rewnue that asaasmuglaad claim" daprematw' ' n on the said ' _m. 12$ ixiiﬁ-.ef%11a;-ggrt year. This wcruld further m to a.a$"es$e§é'Vv"nwu'V ' " ' " bezrﬂaﬁcie and the sanw" " " could ' have Baen*.. at all. Th: reasvons uss1gned' by of Imam Tax (Appeals) apws to ba Wall mm mm Huagnﬂ nu Ann-r.a,u*\,I' Tdandl mqnaiﬁnn Thn gonna , Hf 'ﬁI- HE-»In$ W Illln I-MIL Idlnf-I-IIWMIU JV}? 1l'&%l'1-'\nfﬂIvl|IRJJI-- I-III! 'XIII! . ' V '* _ u " .mu:s-thsm: berm reversed or want by the ""'mL 'U ~: 25$ ;-

E4. E'€'8l1ifﬂO¢It[il1E nfmezns reaia tohe appliadtn the cnfthis mm, then. after having. gme through the mats ui_'_ A' We uarf ﬁﬁ that ei:uﬁ.u.*1'uu.,'*~' '.:m1*;.:--*?..--f£j:*z-3i*;"*~a*a;*.:?L attitude 0f the mmsae would show Im"m'ra§ 1: Then otwiously assassee ncV:u't'efx;;1:v§iaAa§1«--it2seﬁ' J1!'-In J-!'w"p '1-ran xv-wt-nu-3-r 'w1r¢ nip u---rwr _ . ',,,'...' -_ F »1 1i.!"|u'J'|.'r Tnnmgr g 1 this Am. Tm the of law in fawur tgf rovnnun.

Ccaxtwquently iﬁf Vhexeby set aside and r._'r"ua51'mwi V ' (Appeals) " 1?5_.. wauld stand dispasod of. A83'.

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