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Dy.CIT Vs. Khushbu Auto Finance Ltd.

Asst.Year - 2005-06 I have also gone through the orders passed by Assessing Officer, CIT (A) and the Hon'ble Tribunal in the quantum appeal. Appellant had acquired a Windmill for Rs. 5,50,25,522/- from M/s. Suzion Energy Ltd erected and installed at Village Soda, Jaisalmer, Rajasthan. Appellant claimed depreciation @ 80% for the year on it as windmill has been tested and commissioned on 30.09.2004 as per wind project commissioning certificate issued by Executive Engineer, Barmer Rajasthan. Assessing Officer restricted the claim of depreciation @ 40% instead of 80% claimed by the appellant on the basis of some document found at the maintenance department of suzlon Industries at time of survey on that company u/s 133A of the act and report prepared by the ADIT (Inv.). It was alleged in that report as noted by AO that the certificates of commissioning are issued in routine manner without physical verification of site. Further, in the statement prepared by MIS Operator of Suzlon & verified by O & M Manager of Suzlon it is mentioned that date of installation of windmill in case of Assessee Company is 05.11.2004 and not 30.09.2004 as stated by the assessee Company. Hence, AO disallowed the claim of appellant. CIT (A) allowed the appeal of the assessee. On Appeal by AO before ITAT disallowance of depreciation has been upheld in the quantum appeal by the Tribunal on the ground that no material in the form of lorry receipts, octroi receipts or any other proof of transportation of goods which would-evidence that the machinery was indeed transported from Daman to Village Soda and had reached the site and commissioned has been placed on record. Further, no evidence has been placed on record by the assessee to demonstrate that the insurance was indeed taken for transportation of machinery. In penalty order AO has alleged that the assessee himself has not furnished all the true facts relating to his income and Rs. 2,20,10,209/- is the income in respect of which inaccurate particulars has been filed and has concealed the income. Appellant has furnished before me evidences in the form of commissioning certificate, Energy generation report of the month of September 2004, joint inspection report of various officials, copy of power purchase agreement, date wise sale of electricity from the date of commercial operation, invoices for supply of windmill, copy of delivery Dy.CIT Vs. Khushbu Auto Finance Ltd.

Asst.Year - 2005-06 challans with lorry receipts of various transporters for supply of parts of windmill, communication in the form of letters between various officials and appellant, minutes of meeting by officials of Suzlon and Rajasthan renewable Energy Corp. Ltd. in paper book page no. 47 to

115. On perusal of the paper book it is evident that assessee during the course of assessment proceedings has submitted at page no. 60 to 78 which are lorry receipts and delivery chailans for material supplied by Suzlon Energy Ltd. Appellant's contention was that it was never the issues raised by AO as well as CIT (A) that machine has never reached the site so that it could have been installed before 30.9.2004. Further, the invoice submitted by the appellant wherein fact of insurance is required to be arranged by Suzlon energy Ltd. was mentioned, hence it cannot be said that no insurance was arranged for transportation of machinery. Hence it was submitted that these two issues were already examined by the AO at the time of verification of claim of the depreciation. The ownership of the windmill is not doubted by any of the authorities. Only the matter of dispute is the date of installation. As per Appellant it is before 30.09.2004 and as per department it is after 30.09.2004. It is also contended by the assessee that the commissioning certificates issued by the committee of many persons including the government officials it cannot be said that installation certificate is issued without due care. Further installation certificate also substantiated by the generation of electricity units which is also certified by these persons. While supporting the claim assessee relied upon three decision of high courts where the installation and commissioning certificates issued by the government officials is considered as the correct date of the installation. Merely because the claim of the assessee was found to be on installation and commissioning certificate issued by the committee of various persons including government officials, which was preferred by AO over the statement found from one of the maintenance engineer of Suzlon Limited and disallowed the claim, it cannot be said that claim of assessee was false. It is just a matter of preferring over one evidence submitted by AO over another evidence relied upon by AO. According to me it was a bona fide claim of the assessee which was rejected. Therefore it cannot be said that it was the false claim made by the assessee. AR has relied on the decision of decision of Hon'bie Punjab & Haryana High Court in the Dy.CIT Vs. Khushbu Auto Finance Ltd.

Asst.Year - 2005-06

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Officer of Rajasthan renewal energy Corp Ltd., executive Engineer III (TCC-IV), This minutes copy is furnished at page no. 96-97 of paper book. Appellant has also submitted invoices of windmill purchased at page no. 75 to 83 of paper book. Copy of delivery challans and lorry receipts for parts of windmill supplied from 03.09.2004 to 09.09.2004 are also submitted at page no. 60 to 74. Appellant had also entered into power purchase agreement for supply of power with Jodhpur Vidyut Vitran Nigarn Limited. As per this agreement it is confirmed that power plant has been commissioned in the month of September 2004. However, chargeability of the power would be applicable from the commercial operation date when performance acceptance is completed.1 Till then it was agreed that power would be supplied free of cost by these units. Appellant has submitted all these documents which shows that date of commissioning is 30.09..2004. However, the statement prepared by officials of Suzion Energy Ltd. Obtained by AO from ADIT (Inv.) suggest that date of commissioning is 05.11.2004. None of the evidences which is overwhelmingly support the claim of the assessee was found to be false. Decision relied by the AR of honourable Madras High Court and various decision of ITAT depreciation is allowable to the assessee as the electricity board has certified the date of commission of the windmill or stating that commissioning certificate issued by Govt. Authorities shall be conclusive evidence of installation and commissioning of Windmill. Though disallowance of depreciation is confirmed by hon. ITAT in appellant's case but it is no where alleged by any authority that documents submitted by appellant are false or misleading. As regards the furnishing of inaccurate particulars, no information given in the Return was found to be incorrect or inaccurate. The words "inaccurate particulars" mean that the details supplied in the Return are not accurate, not exact or correct, not according to truth or erroneous. In the absence of a finding by the AO that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false, there would be no question of inviting penalty u/s 271(l)(c). By no stretch of imagination can the making of an incorrect claim in law tantamount to furnishing inaccurate particulars. Therefore on this score also the penalty order does not stand.

Dy.CIT Vs. Khushbu Auto Finance Ltd.

Asst.Year - 2005-06

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Further, the purchase of windmill in question and depreciation claimed thereon is very much part of financial statements and return of income furnished by the appellant where date of installation is stated to be 30.9.2004 which is supported by the evidences mentioned herein above. Contention of Assessing officer that the claim was not bona fide and assessee could have claimed the depreciation in the subsequent years. This itself proves that in fact windmill is installed which is used for the purposes of the business depreciation is allowable on it. Reliance of Assessing Officer on statement prepared by officials of the Suzlon was not examined by department nor was any opportunity granted to appellant for cross examination. Even for making an addition based on statement of third parties, AO is duty bound to give cross examination of that party otherwise the addition is also not sustainable. Therefore the penalty u/s 271(1) (c) is definitely cannot be sustained in absence of cross examination.