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

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ITA 2038/PUN/2025Status: DisposedITAT Pune06 May 2026AY 2016-176 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that merely making a claim that is not sustainable in law, especially when all relevant facts were disclosed and the claim was made under a bonafide belief based on CA advice, does not amount to furnishing inaccurate particulars. The AO failed to point out any incorrect documents or specific inaccurate particulars filed by the assessee.

What were the facts?

The assessee company claimed depreciation on assets purchased with government grants. The Assessing Officer (AO) disallowed a portion of the depreciation, leading to an addition to income. Subsequently, the AO initiated penalty proceedings under Section 271(1)(c) for filing inaccurate particulars.

What were the issues?

Whether a penalty under Section 271(1)(c) can be levied for making a claim that was subsequently disallowed due to a bonafide belief and full disclosure of facts, without the assessee furnishing inaccurate particulars.

Which sections of the Income-tax Act were involved?

Section 43(1),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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

Before: MS. ASTHA CHANDRA & SHRI Dr. DIPAK P. RIPOTE

For Appellant: Shri Pramod Y Vaidya
For Respondent: Shri Shashank Ojha
Hearing: 09.03.2026Pronounced: 06.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “A”, PUNE BEFORE MS. ASTHA CHANDRA,JUDICIAL MEMBER & SHRI Dr. DIPAK P. RIPOTE, ACCOUNTANT MEMBER ITA No. 2038/PUN/2025 Assessment Year: 2016-17 Dr. Baliram Hirary Hi-Tech Vs. Assessment Unit ITD Textile Cluster Services Pvt NFAC, Delhi. ltd., Indraprastha, College Road, Malegaon Camp, Malegaon, Nashik - 432105 PAN: AAECD1803H Appellant Respondent

Assessee by : Shri Pramod Y Vaidya. Revenue by : Shri Shashank Ojha (through Virtual) : Date of hearing 09.03.2026 Date of pronouncement : 06.05.2026 आदेश / ORDER PER Dr. DIPAK P. RIPOTE, ACCOUNTANT MEMBER :

This is an appeal filed by the assessee against the order Commissioner of Income Tax (Appeals) (NFAC) u/s 250 of the Income Tax Act, 1961 for A.Y 2016-17 passed on 17.07.2025, emanating from penalty order u/s 271(1)(c) of the Act dated 29.03.2023.

2.

We have heard both the parties and perused the records. In this case assessee is a company. Assessee had filed return of income for A.Y 2016-17 electronically on 21.09.2016 claiming loss at Rs. 2,45,85,005/-. Assessee’s case was selected for scrutiny. During the assessment proceedings AO observed that assessee had purchased certain assets and claimed depreciation on it. AO also noted that assessee had received grants from Government for purchase of the impugned assets. AO invoked explanation 10 to Sec. 43(1) of the Act and recalculated the

ITA No. 2038/Pun/2025, Dr. Baliram Hiray Hi-tech Textile Cluster Services Pvt ltd. depreciation. Accordingly after recalculating the depreciation AO made addition of Rs. 1,95,93,327/- which was excess depreciation claimed by the assessee, as per the AO. AO also invoked penalty u/s 271(1)(c) of the Act in the assessment order alleging filing of inaccurate particulars. AO accordingly issued notice u/s 271(1)(c) of the Act, specifically mentioning filing of inaccurate particulars.

3.

Aggrieved by the assessment order assessee preferred appeal before the Ld.CIT(A). However, to avoid litigation and based on legal advice, assessee withdrew the appeal filed before ld. CIT(A).

4.

The AO again provided opportunity to the assessee during penalty proceedings. Assessee filed elaborate submissions during penalty proceedings. During penalty proceedings assessee submitted that assessee had made the claim under a Bonafide belief and based on the advice of the CA. Assessee had filed all the relevant details and none of the detail filed by assessee was incorrect. The assessee’s claim for depreciation was disallowed by AO that does not mean that assessee had filed inaccurate particulars. Assessee also relied on various decisions. The AO levied penalty u/s 271(1)(c) of the Act vide order dated 29.03.2023.

5.

Aggrieved by the penalty order, assessee filed appeal before ld. CIT(A) who confirmed the penalty. Aggrieved by the ld. CIT(A)’s order assessee filed appeal before this Tribunal. 6. Ld. AR filed elaborate submissions along with case law paper book.

6.1 In this case penalty has been initiated for filing inaccurate particulars of income. However, penalty has been levied for concealing the particulars of income. The relevant paragraph of penalty order is reproduced here as under:

ITA No. 2038/Pun/2025, Dr. Baliram Hiray Hi-tech Textile Cluster Services Pvt ltd. “In response to the show-cause notice issued, the assessee furnished his reply on 22.03.2022 requesting to drop the penalty proceeding on the grounds of ignorance to the provisions of section 2(24) (xviii) of the Act again reiterating the same facts as produced in its earlier submissions. The explanation of the assessee was considered but the same was not accepted for the following reasons:- 1. In all its submissions from the beginning of the penalty proceeding, the assessee itself is in admission of the fact of claiming excess depreciation before various authorities including before the Ld. CIT (A) and the assessee withdrew the appeal filed for which its appeal filed before the Appellate Authority got dismissed as withdrawn. 2. Nowhere in its submission, the assessee could fumish satisfactory reply along with supporting documents to negate the Assessment Order passed u/s 143(3) of the Act regarding the addition of depreciation allowance rather, the assessee has accepted the very fact of claim of excess depreciation for the relevant A.Y. for which the necessary inference is drawn to the effect that the assessee has concealed the particulars of its income to the tune of Rs. 1,95,93,327/- for the relevant A.Y. 2016-17. 3. It is also pertinent to mention here that had there been no assessment made by the AO u/s 143(3) of the Act, the assessee would not have admitted the very fact of excess claim of depreciation thereby reducing its total income for the relevant A.Y. 2016-17. Hence, in the light of the same, the AU is of its opinion that the assessee had claimed excess depreciation allowance to the tune of Rs.1,95,93,327/- advertently for which provisions of section 271(1)(c) of the Act is squarely applicable to it. Hence, the assessee's request to drop the penalty proceeding is not tenable. After taking all the facts and circumstances into consideration, the undersigned is satisfied that penalty u/s 271(1)(c) of the Act is leviable against the assessee for concealing the particulars of income to the tune of Rs. 1,95,93,327/- for the relevant A.Y. 2016-17”.

6.2 We have also perused the notice u/s 271(1)(c) which specifically mentions the charge of filing inaccurate particulars. However the AO has levied penalty for concealment. The Ld. CIT(A) has observed that it was a typographical error and sum

ITA No. 2038/Pun/2025, Dr. Baliram Hiray Hi-tech Textile Cluster Services Pvt ltd. and substance of penalty order was filing inaccurate particulars. Be it as it may be, in this case assessee’s books of accounts are audited. During the assessment proceedings assessee had filed all the relevant details regarding grants received from Central Government and State Government. Assessee had also filed details of acquisition of fixed assets. No defects has been pointed out by the AO in these details. Admittedly assessee claimed depreciation on the entire cost of acquisition without reducing the amount of grants utilized for purchase of assets. Assessee submitted that assessee was under a Bonafide belief that entire amount is eligible for depreciation. Assessee followed the advice given by the CA and claimed depreciation. In these facts and circumstances of the case, it is a fact that assessee made a claim and disclosed all facts related to the claim. Subsequently during assessment proceedings AO observed that it was an inaccurate claim. However, AO has not observed that assessee has filed any incorrect documents. Thus admittedly all facts were disclosed by the assessee. Therefore, mere making a wrong claim under Bonafide belief cannot be a reason for penalty u/s 271(1)(c) of the Act. In the assessment order it has not been specified which particulars filed by assessee were inaccurate.

6.2 Hon’ble Supreme Court in the case of CIT Vs. Reliance Petro Products Ltd., 322 ITR 158 (SC) has held as under:

9.

We are not concerned in the present case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word "inaccurate" has been defined as :- "not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript." We have already seen the meaning of the word "particulars" in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must

ITA No. 2038/Pun/2025, Dr. Baliram Hiray Hi-tech Textile Cluster Services Pvt ltd. hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars.

6.3 Thus Hon’ble Supreme Court has laid down the law that mere making a claim which was not sustainable in law will not amount to furnishing of inaccurate particulars. Respectfully following the decision Hon’ble Supreme Court in the case of Reliance Petro Products Ltd (SC) and maintaining the judicial consistency we direct the AO to delete the impugned penalty.

7.

In the result appeal of the assessee is allowed.

Order pronounced on this 06th day of May, 2026.

Sd/- Sd/- S (MS. ASTHA CHANDRA) (DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; िदनांक / Dated : 06th May, 2026. KRK, Sr. PS

ITA No. 2038/Pun/2025, Dr. Baliram Hiray Hi-tech Textile Cluster Services Pvt ltd. आदेश की �ितिलिप अ�ेिषत / Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant. 2. ��थ� / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “SMC” ब�च, पुणे / DR, ITAT, “SMC” Bench, Pune. 5. गाड� फ़ाइल / Guard File. आदेशानुसार / BY ORDER,

// True Copy // Assistant Registrar, आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.

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