DR.BALIRAM HIRAY HI-TECH TEXTILE CLUSTER SERVICES PRIVATE LIMITED,MALEGAON vs. ITO MALEGAON NASHIK, MALEGAON

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ITA 2039/PUN/2025Status: DisposedITAT Pune25 May 2026AY 2017-183 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty levied under Section 270A was not justified. Following judicial precedents, it was determined that an excess claim of depreciation, especially when it was a bona fide mistake or did not reduce tax liability, does not warrant penalty.

What were the facts?

The assessee, a special purpose vehicle managing a Common Facility Centre, claimed depreciation on assets acquired through a government grant. The Assessing Officer (AO) disallowed a portion of the depreciation claim, deeming the ownership justification invalid. Subsequently, the AO levied penalty under Section 270A for under-reporting of income.

What were the issues?

Whether penalty under Section 270A is leviable for an excess claim of depreciation, and if the AO's order for penalty was sufficiently reasoned.

Which sections of the Income-tax Act were involved?

Section 270A,Section 43(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE

Before: SHRI Dr. DIPAK P. RIPOTE & SHRI VINAY BHAMORE

For Appellant: Shri Pramod Y. Vaidya
For Respondent: Ms. Neha Thakur

PER Dr. DIPAK P. RIPOTE, A.M : This is an appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), NFAC [Ld.CIT(A)], passed u/s. 250 of the Income Tax Act, 1961 (‘the Act’) for AY 2017-18 on 16-07-2025, emanating from the penalty Order u/s 270A of the Act, dated 29-03-2023.

2.

We have heard both the parties and perused the records. Government of Maharashtra has set up a Common Facility Centre (CFC) in Textile Cluster Malegaon. Running and maintaining CFC was responsibility of the Assessee, which was a special purpose vehicle constituted by Govt as per TriParty Agreement. Asssessee had claimed depreciation on the Assets . Ld.AR has filed one factual paper book and one case law paper book. In this case, in the assessment order for AY. 2017-18, the AO held that assessee’s claim of ownership of capital assets acquired through Govt. grant is not justified and it is against the essence

ITA No. 2039/PUN/2025

of Tripartite agreement. The AO invoked Explanation 10 to section 43(1) of the Act. Therefore, the AO restricted the assessee’s claim of depreciation of Rs. 1,85,18,335/- to Rs. 17,81,341/- only. In this case, identical disallowance was made for AY. 2016-17, which AO has referred in his order. Accordingly, penalty was initiated. During the penalty proceedings, assessee made an elaborate submission and claimed that it was a Bonafide claim based on expert advice. Assessee also submitted that it has never suppressed any facts and all details were filed. However, AO levied penalty u/s. 270A of the Act. The relevant paragraphs of the penalty order are reproduced as under:

Thus, the AO levied penalty u/s. 270A of the Act on account of under reporting. Ld.CIT(A) confirmed the penalty. It can be observed from the penalty order reproduced above, that the AO has not discussed how there was under reporting of income. The penalty order is cryptic without specific discussion. Be as it may be, on identical facts, the ITAT, Mumbai in the case of DCIT vs. Sasan Power Ltd., [2023] 157 taxmann.com 763 (Mumbai-Trib.) has held as under: Quote “11. The moot question here is whether the ld. A.O. was right in levying penalty u/s. 270A of the Act resulting in invoking of section 270A of the Act. The assessee in the present case has stated that it was not in an advantageous position to claim higher depreciation as it was adverse for the assessee in subsequent years and that there was no question of reducing the tax liability where the assessee’s return of income declared a huge loss during the year under consideration.

ITA No. 2039/PUN/2025

12.

The ld. CIT(A) had relied on the decision of the Hon'ble Apex Court in the case of CIT vs. Reliance Petro Products Pvt. Ltd.(supra) where it has held that furnishing inaccurate claim of expenditure would not amount to giving inaccurate particulars of such income. The assessee has relied on various other decisions which have reiterated the proposition that the claim of higher depreciation would not amount to concealment of income. It is also observed that the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Somany Evergreen Knits Ltd. [2013] 35 taxmann.com 529 (Bom) has held that excess claim of depreciation was a bona fide mistake on the part of the assessee which attracts no levy of penalty. 13. By respectfully following the above said decision, we deem it fit to hold that there is no infirmity in the order of the ld. CIT(A) in deleting the penalty levied by the ld. A.O. As we have decided the issue on the merits of the case, the legal grounds raised by the assessee in its cross objection becomes academic.”Unquote

Similarly, in assessee’s own case for AY. 2016-17, the ITAT in ITA No. 2038/PUN/2025, dt. 06-05-2026, has deleted the penalty levied on the same issue.

3.

Respectfully following the judicial precedents, we hereby direct the AO to delete the penalty so mentioned. Accordingly, the appeal of the assessee is allowed.

Order pronounced in the open Court on 25th May, 2026

Sd/- Sd/- (VINAY BHAMORE) (Dr. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे/Pune; दिन ांक/Dated : 25-05-2026 TNMM

आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: अपील र्थी / The Appellant 1. प्रत्यर्थी / The Respondent 2. 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘A’ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune

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