M/S. J.K. FOOTWEAR PVT. LTD. ,MUMBAI vs. ITO -10(2)(1), MUMBAI

Shri Dinesh Rajgor appearing on behalf of the assessee submitted that in all the three impugned assessment years, penalty u/s. 271(1)(c) of the act has been levied on disallowance of depreciation. The issue in present appeals is squarely covered by the order of Tribunal in assessee’s own case for AY 2012-13. In assessment year 2012-13 the assessee had claimed depreciation on factory building. Admittedly, no business activity was carried out by the assessee and the assessee had claimed depreciation on factory building that was let out. During assessment proceedings the assessee realised its mistake and filed revised computation. The depreciation was disallowed as the building was let out and the assessee had claimed standard deduction u/s.24 of the Act. Penalty under section 271(1)(c) of the Act was levied. After being unsuccessful in First Appellate proceedings, the assessee carried the issue in appeal before the Tribunal in ITA No.3563/Mum/2017. The Tribunal vide order dated 08/03/2019 deleted the penalty. The facts in all the three impugned assessment years are identical. The penalty under section 271(1)(c) of the Act has been levied in respect of disallowance of depreciation.

Per contra, Ms. Usha Gaikwad representing the Department vehemently defended the impugned order and prayed for dismissing the appeals of assessee. However, the ld. Departmental Representative fairly admitted that penalty under section 271(1)(c) of the Act on similar set of facts has been deleted by the Tribunal in assessee’s own case for assessment year 2012-13.

Both sides heard, orders of authorities below examined. The penalty under section 271(1)(c) of the Act has been levied in the impugned assessment years on account of wrong claim of depreciation on factory building that was let out. We find that the Co-ordinate Bench in assessee’s own case for assessment year 2012-13 has deleted penalty under section 271(1)(c) of the Act on identical set of facts by observing as under:- “5. We have considered rival submissions and perused material on record. Undisputedly, the assessee has wrongly claimed depreciation on the building let out by it. However, the facts on record reveal that similar claim was made by the assessee in preceding assessment years as well. Further, it is seen from the materials placed before us, the return of income filed by the assessee for assessment year 2014–15 claiming depreciation was subsequently revised disallowing the depreciation. Further, in the return of income filed for the assessment year 2015–16, the assessee has not claimed any depreciation. Keeping in view the aforesaid facts, assessee’s explanation that depreciation claimed in the impugned assessment year was due to an inadvertent and bonafide mistake is acceptable. That being the case, we are inclined to delete the penalty imposed under section 271(1)(c) of the Act amounting to ` 2,28,458. Ground raised is allowed.”

The ld. Departmental Representative has not brought before us any distinguishing fact so as to force us to take a different view. Facts and reason for claiming depreciation on building being pari materia in the impugned assessment years, we find no reason to deviate from the view already taken by the coordinate Bench in deleting penalty on such disallowance. Ergo, the findings of CIT(A) are reversed and the penalty levied under section 271(1)(c) of the Act on disallowance of depreciation is deleted for parity of reasons.

In the result, appeals of the assessee for assessment years 2010-11, 2011-12 and 2013-14 are allowed.