- (1.) Heard Sri Shambhu Chopra learned senior standing counsel of the Income-tax Department and Sri Rupesh Jain appearing on behalf of the respondent. The following questions have been raised in the present appeal. "1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is legally justified in cancelling the penalty levied under section 271(1)(c) of the Income-tax Act irrespective of the fact that the assessee claimed excess depreciation to the tune of Rs. 1,42,30,221 than what was admissible to him as per the provisions of the Income-tax Act? 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is legally justified in cancelling the penalty levied under section 271(1)(c) in spite of the fact that the assessee did not furnish any explanation either before the Assessing Officer or before the Commissioner of Income-tax (Appeals) for claiming excess depreciation than admissible under the Income-tax Act and Explanation 1 to section 271(1)(c) clearly states that where in respect of any facts material to the computation of income of any person, such person fails to offer an explanation, the amount added in computing the total income of such person shall for the purpose of section 271(1)(c), be deemed to represent the income in respect of which particulars have been concealed?"
(2.) The brief facts of the case are that the respondent is a company involved in the manufacture of steel pipes, synthetic filament yarn and polyester clips, etc., filed its return for the assessment year 1998-99. The return was for 23 months disclosing the total loss at Rs. 1,75,91,003 computed in accordance with the provisions of Income-tax Act and has worked out its taxable liability under section 115J of Rs. 37,42,640.
(3.) The assessing authority computed the books profit for the purpose of levying tax under section 115J at Rs. 5,58,33,750. The allegation of the assessing authority is that the assessee has claimed extra depreciation under the profit and loss account.;