M.PRABAHARAN,CHENNAI vs. CIT(A)-3, CHENNAI

आयकर अपीलीय अिधकरण, ‘ए’ �यायपीठ, चे�ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI �ी महावीर �सह, उपा�य� एवं �ी मनोज कुमार अ�वाल, लेखा सद�य के सम� BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.145/Chny/2021 िनधा�रण वष� /Assessment Year: 2016-17 Shri M. Prabaharan, The Income Tax Officer, Managing Director, Vs. Corporate Ward-5(3), 389/5, Vellalar Street, Chennai. Aynambakkam – 600 095, Tamil Nadu. [PAN: AAGCR-4875-F] (अपीलाथ�/Appellant) (��यथ�/Respondent) आयकर अपील सं./ITA No.548/Chny/2021 िनधा�रण वष� /Assessment Year: 2016-17 RKP Poly Bags Pvt. Ltd., The Income Tax Officer, 389/5, Vellalar Street, Vs. Corporate Ward-5(3), Aynambakkam – 600 095, Chennai. Tamil Nadu. [PAN: AAGCR-4875-F] (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/ Appellant by : Shri B. Jeevarathinam, C.A ��यथ� क� ओर से /Respondent by : Shri ARV Sreenivasan, Addl. JCIT सुनवाई क� तारीख/Date of Hearing : 07.09.2022 घोषणा क� तारीख /Date of Pronouncement : 07.09.2022 आदेश / O R D E R Per Mahavir Singh, Vice President : ITA No.548/Chny/2021 in the case of RKP Poly Bags Pvt. Ltd.: This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-3, Chennai, in ITA No.20

ITA Nos.145 & 548/Chny/2021 :- 2 -: /CIT(A)-3/2019-20 dated 22.08.2020. The penalty under dispute

levied by Income Tax Officer, Corporate Ward-5(3), Chennai for the

Assessment Year 2016-17 vide order dated 16.11.2018 u/s. 143(3) of

the Income Tax Act, 1961 (hereinafter ‘the Act’).

CIT(A) confirming the action of the A.O in levying penalty u/s.

271(1)(c) of the Act on differential amount of opening WDV of assets

as on 01.04.2015 and the closing WDV of assets as on 31.03.2015.

engaged in the business of manufacturing and exporting of packaging

material. The assessee filed its return of income for A.Y 2016-17 and

assessee’s case was selected for limited scrutiny under CASS for the

reason that, “Opening Written Down Value of current year is greater

than Closing Written Down Value of previous year”. The A.O noted

the details and he noted from the schedule of depreciation filed along

with return of income that the opening WDV as on 01.04.2015 for the

block of assets, where claim of depreciation is at 15% is at Rs.

2,27,47,077/-, whereas the closing WDV for the same block as on

31.03.2015 is at Rs. 1,08,39,164/-. Therefore, the depreciation

claimed as per revised depreciation chart and calculated the

differential depreciation was at Rs. 17,86,187/- which was disallowed

ITA Nos.145 & 548/Chny/2021 :- 3 -: and added to the returned income of the assessee. This assessment

was finally accepted and the assessee paid tax on the same. No

appeal was preferred against the assessment.

of the Act and levied the penalty for furnishing of inaccurate particulars

of income chargeable to tax to the extent of Rs. 17,86,187/-.

Accordingly, the minimum penalty levied was Rs. 5,51,930/- equivalent

to 100% tax showed to be evaded. The A.O levied the penalty despite

explanation submitted by the assessee that the assessee itself re-

check of total depreciation and found to be incorrect due to the

mistake in calculating the depreciation which happened due to

duplication of the value of assets as it has added the individual assets

as well as their subtotal. It was not accepted by the A.O and levied the

penalty accordingly. The Ld. CIT(A) also confirmed the action of the

A.O only for the reason that there was discrepancy with respect to

additions made and for this, the Ld. CIT(A) observed in para 5.2 to 5.2

as under:

“5.2 As per the appellant the error has happened at the auditor’s office, but it has failed to provide any affidavit or any communication with the auditor which could substantiate the said claim. 5.3 Though the appellant had paid off the relevant tax and interest, it was paid only when it was specifically pointed out to him about the wrong claim. 5.4 The AO in its order has also noted the discrepancies with respect to the additions made and not only the opening and closing WDV balances.” Aggrieved, the assessee came in appeal before the Tribunal.

ITA Nos.145 & 548/Chny/2021 :- 4 -: 5. We have heard rival contentions and gone through the facts and

circumstances of the case. Before us, the Chartered Accountant Shri

B. Jeevarathinam categorically admitted in writing that the duplication

of assets has happened while calculating the depreciation as per

Income Tax Act while computing the tax computation sheet by his

staff. He admitted that while doing so, the staff has wrongly computed

the deprecation value filed 15% block of assets with respect to the said

assessment year and accordingly, excess depreciation claimed was

made to the extent of Rs. 17,86,187/-. The Chartered Accountant vide

letter filed during the course of hearing and admitted this mistake as

under:

“Here we admit that the mistake above was done by one of my staff and the same was totally not aware of by the company as the same was not related to the book of accounts of the company as it alters only the statement of accounts and the annexure in the Income tax Depreciation statement. Indeed the companies itself are very much ignorant about all the tax rules and laws. Hence I kindly request your honor to consider the true factual grounds that the company has no intention to evade tax or to provide any false statement to suppress any profits with any malafide intentions.”

Chartered Accountant and there is no intention of the assessee to

evade the tax. Moreover, the assessee has already accepted

assessment and paid taxes. In view of the facts and circumstances

narrated above and the cumulative effect of the facts, if we analyze, it

clearly shows that the assessee was under bonafide belief in claiming

ITA Nos.145 & 548/Chny/2021 :- 5 -: this depreciation. Hence, we delete the penalty and allow the appeal of the assessee. ITA No.145/Chny/2021 for Assessment Year 2016-17 in the case of M. Prabakaran: 7. We noted that this appeal is not maintainable for the reason that the above appeal in ITA No.548/Chny/2021 is actual appeal against penalty order in the case of the company RKP Poly Bags Pvt. Ltd. and this penalty is levied only on the company and not the Managing Director i.e., assessee individually. Hence, this appeal filed by the assessee in individual capacity is not maintainable and hence dismissed.

Order pronounced in the open Court on 07th September, 2022.

Sd/- Sd/- (महावीर िसंह) कुमार अ�वाल अ�वाल अ�वाल) अ�वाल (मनोज मनोज मनोज कुमार मनोज कुमार कुमार (Mahavir Singh) (Manoj Kumar Aggarwal) उपा�� / Vice President लेखा सद�य सद�य सद�य /Accountant Member सद�य लेखा लेखा लेखा चे�ई/Chennai, �दनांक/Dated: 07th September, 2022. EDN/- आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकर आयु� (अपील)/CIT(A) 4. आयकर आयु�/CIT 5. िवभागीय �ितिनिध/DR 6. गाड� फाईल/GF