DAKSHIN GUJARAT VIJ CO. LTD,SURAT vs. THE DY.CIT, CIRCLE-1(1)(1), VADODARA

The present appeal has been preferred by the Assessee against the Order, dated 30/01/2026, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘CIT(A)’] whereby the Learned CIT(A) had partly allowed the appeal against the Penalty Order, dated 30/03/2024, passed under Section 270A of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] for the Assessment Year 2017-2018. 2. We have heard both the sides and have perused the material on record.

The delay of 23 days in filing the present appeal is condoned in view of Assessment Year: 2017-2018 the explanation offered by the Assessee. The Assessee has raised, inter alia, assailed the order passed by the Learned CIT(A) on the following ground:

Perusal of record shows that for the Assessment Year 2017-2018 assessment was framed on the Assessee vide Assessment Order, dated 30/12/2019. The Assessing had, inter-alia, made the following additions/disallowances and had also initiated penalty proceedings in relation to the same: Sr. Particulars Amount of Net Amount of Penalty No Addition/disallo addition (INR) initiated by AO wance made in order u/s u/s 143(3) 143(3) dated 30.12.2019 1 Addition on account of Govt Grant 60,71,40,000/- 60,71,40,000/- 270A(1) r.w.s 270A(8) r.w.s 270A(9)(e) 2 Consumer contribution towards 88,88,08,000/- 88,88,08,000/- 270A(1) r.w.s cost of capital asset 270A(8) r.w.s 270A(9)(e) 3 Disallowance of additional 49,52,66,000/- 49,52,66,000/- 270A(1) r.w.s depreciation 270A(8) r.w.s 270A(9)(e)

Vide penalty Order, dated 30/03/2024, the Assessing Officer levied penalty being tax payable on aggregate addition of INR.1,99,12,14,000/- made by the Assessing Officer (which was confirmed by the Learned CIT(A) vide Order, dated 30/03/2023, passed in quantum proceedings). Thus, the Assessing Officer levied a penalty of INR.1,37,82,38,682/- under Section 270A of the Act for the Assessment Year 2017-2018. 6. Being aggrieved, the Assessee filed appeal challenging the levy of above penalty before the Learned CIT(A). During the pendency of the aforesaid appeal, the Tribunal set-aside the above additions vide Common Order, dated 31/01/2024, passed in ITA Nos. 330, 331, 404 & 495 pertaining to Assessment Years 2017-2018 and 2018-2019. A copy of the aforesaid order of the Tribunal passed in the quantum appeals for the Assessment Year 2017-2018 was placed before the Learned CIT(A). After considering the same, the Learned CIT(A) directed the Assessing Officer to recomputed/modify the penalty in view of the findings in the set-aside order to be passed by the Assessing Officer in consequence of Common Order, dated 31/01/2024, passed by the Tribunal whereby cross appeals in the case of the Assessee for the Assessment Year 2017-2018 were disposed off. The relevant extract of the impugned order passed by the Learned CIT(A) reads as under:

Not being satisfied with the above relief granted by the Learned CIT(A). The Assessee has preferred the present appeal, inter alia, raising Ground No. 1 (reproduced in paragraph 3 above).

We have perused the Common Order, dated 31/01/2024, passed by the Coordinate Bench of the Tribunal disposing off, inter-alia, cross- appeals for the Assessment Year 2017-2018. By way of ITA No.330/AHD/2023 pertaining to the Assessment Year 2017-2018, the Assessee had challenged the three additions listed in Paragraph 4 above by way of Ground No. 1 to 2.1 raised in that appeal. In relation to the three additions, the Tribunal set aside the issue back to the file of Assessing Officer. The relevant conclusion are at paragraph 4.2, 5.2, and 7 of the Common Order, dated 31/03/2024, reproduced herein below:

Respectfully following the decision taken by the Coordinate Benches of this Tribunal, we find it fit and proper to remand the issue to the file of the Ld. AO for re-adjudication of the same and to pass orders upon verification of the proportionate amount of grant relating to different assets and to pass orders accordingly.

Ground no. 1.1 : The Assessing Officer has included addition on account of capital grants and Consumer Contribution whilecalculating book profit u/s. 115JB of the Act. The Ld. A.R. submitted that this ground was set aside by the Co-ordinate Bench in assessee’s own case in ITA No. 618/Ahd/2018 for the Asst Year 2011-12 vide common order dated 22.07.2022 as follows: “xx xx”

The Ld. CIT DR appearing for the Revenue has no objection in setting aside the matter back to the file of the Assessing Officer for fresh adjudication. Thus we set aside this issue to the file of the Ld. Assessing Officer and pass orders in accordance with law by giving proper opportunity to the assessee.

Thus this ground no.1 raised by the assessee is allowed for statistical purposes.

Ground no. 2: The assessing officer disallowed the claim of additional depreciation ₹.49,52,66,000/= on the ground that the assessee failed to submit the details and establish the genuineness of the expenditure. On further appeal before Ld. CIT(A), he held that that the assessee has given sample copies of bills before the AO, however, it is seen that the assessee is in the business of distribution of power, which is covered under section 32(1)(iia) of the Act. There are certain other conditions, which are required to be satisfied for claiming additional depreciation. Additional depreciation is not allowable on the items which are used forrepairs and replacement, used machinery within or outside India. The assessee failed to file the required details as per section 32(1)(iia) of the Act, therefore the assessee is not entitled for the claim of additional depreciation.

Ld. counsel for the assessee submitted before us complete details were filed by the assessee before the Ld AO, which are available at page number 2,3, 17 of the paper book which reads as follows: “xx xx”

Thus, the Ld Counsel pleaded that the assessee is entitled for additional depreciation on post amendment to section 32(1)(iia) of the Act.

Per contra Ld CIT DR appearing for the Revenue submitted as the earlier ground was set aside to the file of AO for verification.This ground may also be set aside to the file of Juri ictional Assessing Officer for verifying the claim of additional depreciation.

We have given our thoughtful consideration and perused the materials available and record. Though LdCIT(A) held that the assessee has not produced the details of additional depreciation before the AO, it is seen from the submissions made by the assessee vide its letters dated 04-12-2019 and 10-12-2019 [which are placed at Page No.2 & 17 of the Paper Book], detailed submissions on additional depreciation with Annexures were submitted by the assessee. But the lower authorities failed to consider the amended provisions of law and denied the claim of additional depreciation to the assessee. Therefore, in the interest of Principle of Natural Justice, we hereby set aside this issue to the file of Juri ictional Assessing Officer to verify the claim of additional depreciation and allow the same in accordance with the provisions of amended law. In the result Ground No. 2 raised by the assessee is allowed for statistical purpose.”

On perusal of above, it becomes clear that the additions made by the Assessing Officer which formed the very basis of levy penalty under Section 270A of the Act have been set aside by the Tribunal vide Order, dated 31/01/2024. Therefore, in our view, the levy of penalty under Section 270A of the Act can no longer be sustained, and therefore, the penalty levied by way of Penalty Order, dated 30/03/2024., passed under Section 270A of the Act is deleted. However, it is clarified that the Assessing Officer would be have such liberty as available under law to initiate penalty proceedings at the time of passing order as per the directions of the Tribunal given by the Order, dated 31/01/2024, passed in ITA No.330/AHD/2023 for the Assessment Year 2017-2018. In terms of aforesaid, Ground No. 1 raised by the Assessee is allowed. Since we have deleted the penalty, the other grounds raised by the Assessee have been rendered academic. Keeping in view identical submission made by the Learned Authorised Representative of the Assessee during the course of hearing, all the other grounds raised by the Assessee are dismissed as having been rendered academic in nature.

In result, in terms of Paragraph 9 above, the present appeal preferred by the Assessee is partly allowed.

""यथ"/ The Respondent. 3. संबंिधतआयकरआयु"/ Concerned CIT 4. आयकरआयु"(अपील) / The CIT(A) 5. िवभागीय"ितिनिध, आयकरअपीलीयअिधकरण/ DR, ITAT, 6. गाड"फाईल /Guard file. आदेशानुसार/BY ORDER, उप/सहायकपंजीकार (Dy./Asstt.