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Facts
The Assessee, a private limited company, declared a loss of Rs. 2,53,31,641/- for AY 2016-17. The AO disallowed depreciation claimed twice by the Assessee, amounting to Rs. 2,07,82,790/-, and imposed a penalty of Rs. 71,92,508/- under Section 271(1)(c).
Held
The CIT(A) deleted the penalty, holding that the double claim of depreciation was a clerical error and not a willful concealment or malafide intention to evade taxes, relying on Supreme Court judgments. The Tribunal found no error in the CIT(A)'s order.
Key Issues
Whether a penalty under Section 271(1)(c) is leviable for a double claim of depreciation arising from a clerical error, which was rectified by the assessee, and did not result in any tax benefit.
Sections Cited
32, 271(1)(c)
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Income Tax Appellate Tribunal, DELHI
Before: SHRI YOGESH KUMAR U.S. & SHRI MANISH AGARWAL
Appellant Respondent Assessee by None Revenue by Sh. Manish Gupta, Sr. DR Date of Hearing 26/05/2025 Date of Pronouncement 13/06/2025 ORDER
PER YOGESH KUMAR, U.S. JM:
The present appeal is filed by the Department of Revenue against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [‘Ld. CIT(A)’ /NFAC for short] dated 29/02/2024 for the Assessment Year 2016-17.
Brief facts of the case are that, the Assessee is a Private Limited Company, filed return for Assessment Year 2016-17 declaring loss of Rs. 2,53,31,641/-. The Ld. A.O. completed the assessment proceedings computing the total loss of the Assessee at Rs. 45,48,851/-, wherein the A.O. disallowed depreciation of Rs. 2,07,82,790/- which was claimed twice by the Assessee u/s 32 of Income Tax Act, 1961 ('Act' for short).
An order of penalty has been imposed to 28/06/2019 u/s 271 (1)(c) of the Act, wherein the Ld. A.O. imposed penalty of Rs. 71,92,508/- which is equal to 100% of tax sought to be evaded.
Aggrieved by the order of penalty dated 28/06/2019, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 29/02/2024, by following the ratio laid down by the Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro Products Pvt. Ltd. (2010) 322 ITR 158, directed the A.O. to delete the penalty.
Aggrieved by the order of the Ld. CIT(A) dated 29/02/2204, the Revenue preferred the present Appeal.
None appeared for the Assessee, the notices issued by the registry have been returned unserved. Considering the issue involved in the present Appeal, we deem it fit to decide the Appeal on hearing the Ld. Departmental Representative and verifying the material available on record.
The Ld. Departmental Representative vehemently submitted that, the Ld. CIT(A) erred in deleting the penalty without appreciating the fact that the penalty order u/s 271(1)(c) is civil liability and the Assessee has willfully made the concealment or with malafide intention to evade the taxes. Thus, the Ld. CIT(A) committed error in deleting the penalty, therefore, sought for allowing the Appeal.
We have heard the Ld. Departmental Representative perused the material available on record.Admittedly, the Assessee in its return claimed the depreciation twice. As per the Assessee, the claim madetwice was due to clerical error and before the A.O., the Assessee claimed that depreciation chart was entered twice in software and WDV was added twice andthe Assessee requested the A.O. to disallow unobserveddepreciation carried forward of Rs. 2,07,82,790/-.
Further, it is also a matter of fact that the Assessee did not derive any benefit due to ‘loss’ in future years and the mistake was rectified while filing the return of income for Assessment Year 2019-20. The Ld. CIT(A) by relying on the ratio laid down in the case of Reliance Petro products Ltd. (supra), wherein held that mere making claim which is not sustainable by law will not amounts to furnishing inaccurate particulars regarding income of the Assessee. Further, the Ld. CIT(A) has also relied on the Judgment of Hon'ble Supreme Court in the case of Price Water House Coopers Pvt. Ltd. 138 ITR 306, wherein it is held that penalty is not leviable in the case of inadvertent and bona-fide error.
Considering the fact that the claim of depreciationmade by the Assessee being clerical error while entering the details of depreciationand the same did not affect the taxespaid and the said error has been corrected by the Assessee in later assessment years, the Ld. CIT(A) rightly observed that there was no mala-fide intention on the part of the Assessee to evade taxes and deleted the penalty.
Thus, we find no error or infirmity in the order of the Ld. CIT(A) in deleting the penalty, finding no merits in the Grounds of Appeal of the Revenue, the Grounds of Appeal of the Revenue are dismissed.
In the result, the Appeal of the Revenue is dismissed.