M/S. MAMRAJ CHUNI LAL,DELHI vs. ITO, NEW DELHI

As per its grounds of appeal the assessee has challenged the imposition of penalty on account of additions/disallowances made in the assessment order in respect of following issues: - (i) Rs. 3,351/- on account of difference in Ahrat Commission. (ii) Rs. 4,207/- towards interest. (iii) Disallowance of Rs. 3,12,941/- claimed on account of additional depreciation u/s 32(1)(iia).

We have carefully considered the rival submissions on the penalty in dispute. The Ahrat Commission difference has arisen mainly due to difference in calculation as done by the other party qua the claim made by the assessee. The difference is stated to be on account of different methods adopted by different parties. Hence, such difference does not tantamount to any concealment of fact or furnishing wrong particulars per se. In our view no penalty can be imposed in the facts where such minor difference is neither concealment of facts nor furnishing of inaccurate particulars. We, thus, direct the AO to delete the penalty on this score.

For the same reasoning and having regard to the smallness of the amount and in the absence of any malafide shown in the variation on account of interest attributable to reconciliation difference the penalty on account of interest credited Rs. 4,207/- is also not just and proper. The penalty is thus, deleted on this score as well.

The third issue pertains to additional depreciation. The assessee has made additions in the machinery account of Rs. 15,64,702/- and has claimed additional depreciation of Rs. 3,12,941/-. It transpires that the claim of additional depreciation is based on audit report authenticated by a Chartered Accountant. Under the circumstances, while the disallowance of additional depreciation may be plausible, the assessee of an ordinary prudence, should not necessarily suffer on account of the mistake of the Chartered Accountant. Needless to say, penalty under section 271(1)(c) cannot be imposed merely because it is lawful to do so. The circumstances indicates that statutory discretion available to AO ought to have been exercised in favour of the assessee in the absence of any contumacious conduct per se. Having regard to the Chuni Lal vs. ITO] A.Y. 2011-12 - 3 - mitigating circumstances present in the facts of the case, we direct the AO to delete the penalty on this point as well.

In the result, the appeal of the assessee is allowed.