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Income Tax Appellate Tribunal, MUMBAI BENCH “A” MUMBAI
Before: SHRI SHAMIM YAHYA ACCOUNTANTMEMBER & SHRI PAVAN KUMAR GADALE
Date of Hearing : 15/07/2021 Date of pronouncement : 26/07/2021 ORDER PER PAVAN KUMAR GADALE, J.M. The assessee has filed the appeal against the order of Commissioner of Income Tax (Appeals)-49, Mumbai passed u/s 271(1)(c) and 250 of the Income Tax Act, 1961. The assessee has raised the following grounds of appeal: 1) That the learned CIT (A) 49 erred and confirm the penalty u/s 271(1)(c)of the Act at Rs.628424/-is quite illegal,arbitrary unwarranted, unjustified and bad in law. 2) That the learned CIT (A) 49 erred and not considering the facts properly of the case. 3) That the learned CIT (A) 49 erred and not considering the facts that the no normal depreciation disallowed in quantum appeal and hence additional depreciation disallowed by the Assessing Officer is without any basis and levy of penalty on such disallowance is quite arbitrary.
M/s Anik Industries Ltd. 4) That the appellant further crave, leave,to add, to alter and or to amend any of the aforesaid grounds of Appeal as and when necessary.
2. The brief facts of the case that the assessee company is engaged in the business of milk processing and filed the return of income for the assessment year 2008-09 on 27.09.2008 with the total income of Rs.35,31,50,805/- and the return of income was processed u/s 143(1) of the Act. Subsequently, notice u/s 143(2) and 142(1) of the Act was issued. In compliance, the Ld. AR of the assessee appeared from time to time and the case was discussed. The Assessing Officer considering the facts of investments as per the balance sheet observed that some administrative expenses are incurred by the assessee and made disallowance u/s 14A r.w.r.8D(2)(iii) of Rs.52,862/-and assessed the total income of Rs.35,32,03,667/- and passed order u/s 143(3) of the Act dated 30.12.2010. Subsequently, the Assessing Officer on perusal of the assessment record found that the assessee has claimed deprecation on the block of plant and machinery at 15% which includes depreciation claimed for the period October to March amounting to Rs.17771428/- as against allowable depreciation of Rs.7857402/-. Therefore, the Assessing Officer found that the assessee has claimed excess depreciation and has reason to believe that the income has escaped assessment and issued notice u/s 148 of the Act. The assessee has filed the return of income on 11.06.2013 with the total income of Rs.35,32,03,667/-.
3. The Assessing Officer has issued notice u/s 143(2) and 142(1) of the Act and also reasons recorded were provided. The assessee has submitted written submissions in the reassessment proceedings referred at Para 5 of the order. The assessee has supported the stand of claim of depreciation with the evidences. Whereas, the Assessing Officer has dealt on the M/s Anik Industries Ltd. Rs.18,48,850/- which is not allowable and was disallowed and assessed the total income of Rs.35,90,04,660/- and passed order u/s 143(3) r.w.s 147 dated 24.02.2014. Subsequently, the Assessing Officer has initiated penalty proceedings. In the penalty proceedings, the Assessing Officer considered the findings of the scrutiny assessment and the explanations submitted by the assessee. Further it was brought to the knowledge of Assessing Officer that the CIT(A) in respect of addition made u/s 143(3) r.w.s. 147 has allowed depreciation to the extent of Rs.39,52,136/- and sustained additional depreciation claim of Rs.18,48,850/-.The Assessing Officer in the penalty proceedings has called for explanations and the assessee has filed the details on 18.03.2017.The Assessing Officer having considered the fact that the assessee has claimed the excess depreciation and also the assessee has filed inaccurate particulars of income. Therefore, the A.O. has levied a penalty of Rs.6,28,424/- and passed order u/s 271(1)(c) of the Act on 29.03.2017.
4. Aggrieved by the order, the assessee has filed appeal with the CIT(A) whereas the CIT(A) has confirmed the action of Assessing Officer in levying the penalty and dismissed the assessee’s appeal. Aggrieved by the order of CIT(A) the assessee has filed appeal before the Honble Tribunal. At the time of hearing non-appeared on behalf of the assessee and the Ld. DR submitted that the Assessing Officer was correct in levying the penalty and supported the penalty order.
We have heard the Ld. DR’s submissions and perused the material on record. Prima facie the Assessing Officer has levied the penalty for the excess claim of depreciation disallowed in the order u/s 143(3) r.w.s. 147 of the Act. The Ld. DR’s contentions are that the assessee has filed M/s Anik Industries Ltd. inaccurate particulars of income therefore, the penalty was correctly levied. We on perusal of the facts and the assessment order at page 5 Para 7 find the observations of the A.O. considering the provisions of section 32(1)(iia) of the Act and the eligibility criteria. Whereas the assessee has adopted one of the possible claims at that point of time in the financial statements.We are of the opinion that, the addition made in the assessment order cannot be the basis for levying the penalty and every addition made in the assessment proceedings cannot be gateway for initiation of penalty. We rely on the ratio of the decision of Honble Supreme court in CIT v. Reliance Petroproducts (P.) Ltd. (2010) 189 Taxman 322 (SC). The mere making of claim, which is not sustainable in law, by itself, will not amount to furnishing of inaccurate particulars of income. Further in the present case, merely because the assessee had claimed additional depreciation which was not accepted by the revenue itself would not attract penalty u/s 271(1)(c) of the Act. Act. We considering the facts, circumstances and ratio of the judicial decision are of the opinion that the assessee cannot be liable for penalty. Accordingly, we set aside the order of CIT(A) and direct the Assessing Officer to delete the penalty and allow the grounds of appeal of the assessee. 6.In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 26/07/2021.