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Income Tax Appellate Tribunal, “I”, BENCH, MUMBAI
Before: SHRI RAJENDRA, AM & SHRI RAM LAL NEGI, JM
सुनर्ाई की तारीख / Date of Hearing : 05/01/2018 घोषणा की तारीख/Date of Pronouncement: 04/04/2018 आदेश / O R D E R
PER RAM LAL NEGI, JM
The present appeal has been filed by the assessee against the order dated 07/01/2016 passed by the Ld. Commissioner of Income Tax (Appeals)-2, Mumbai pertaining to the assessment year 2008-09, whereby the Ld. CIT (A) has dismissed the appeal filed by the assessee against order dated 07.01.2016 passed u/s 271(1) (c) of the Income Tax Act, 1961 (for short ‘the Act’).
2. The assessee had filed its return of income for the assessment year 2008-09 declaring the total income of Rs. 2,08,174/- under the normal provisions of the Act and Rs. 5,18,091/- under section 115JB of the Act. The assessee had claimed set off of unabsorbed depreciation of Rs. 17,64,276/- 2 Assessment Year: 2008-09 and deduction under chapter VIA of Rs. 10,936/-. Later on the assessee company filed rectification application along with statement of total income claiming TDS credit and declared nil income after setting off the unabsorbed depreciation of Rs. 19,83,406/- for the assessment year 1999-2000 to 2002-03 and carried forward the balance amount of Rs. 4,66,402/-. In fact the assessee had already set off the unabsorbed depreciation and positive income for the A.Y. 2001-02 and A.Y. 2002-03 had been assessed. Accordingly, the assessment was reopened u/s 147 after issuing notice u/s 148 of the Act. In response thereof the authorized representative of the assessee appeared before the AO and submitted the details called for. The assessee contended that in the bona fide error has been rectified and the tax was paid as per the income computed under the MAT provisions. The AO accepted the revised return of income of the assessee however, initiated penalty proceedings u/s 271(1)(c) of the Act. 3. During penalty proceedings, representative of the assessee contended that since the bona fide mistake in the original was rectified on the basis of application moved by the assessee and since the assessee has pointed out the mistake in the original return of its own before taking any action by the department, question of concealment does not arise. However, the AO rejecting the contention of the assessee levied penalty of Rs. 6,12,872/- u/s 271(1)(c) of the Act, holding that the assessee has filed inaccurate particulars of income. 4. The assessee challenged the order passed by the AO before the Ld. CIT (A). The Ld.CIT (A) after hearing the assessee dismissed the appeal of the assessee and confirmed the penalty levied by the AO. Against the said order, the assessee is in appeal before the Tribunal.
The assessee has challenged the impugned order on the following effective grounds:-.
3 Assessment Year: 2008-09
1. “On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (A) erred in upholding the penalty levied by the Assessing Officer u/s 271(1)(c), without appreciating the explanation tendered in respect of the Appellant’s claim of set off of brought forward loss/depreciation, which was claimed on the mistaken belief that the Appellant was eligible for the said set off.
The learned Commissioner of Income Tax (A) erred in concluding that the return filed in response to notice u/s 148 dated 11.05.2010 cannot be treated as voluntary disclosure on the part of the Appellant, disregarding the Appellant’s letter dated 28.04.2010, wherein the Appellant has voluntarily disclosed the error of claiming set off of unabsorbed loss/depreciation in its return of income for the A.Y. 2008-09.
The learned Commissioner of Income Tax (A) erred in not appreciating that the claiming of set off for brought forward loss/depreciation was a bona fide error.”
Before us, the Ld. counsel for the assessee submitted that the mistake was bona fide and the same was rectified in response to the notice received u/s 148 of the Act. Therefore, the Ld. CIT (A) ought to have deleted the penalty levied by the AO. The Ld. CIT (A) has further wrongly held that the return filed in response to notice u/s 148 cannot be treated as voluntary disclosure on the part of the assessee. Since, the order passed by the Ld. CIT (A) is erroneous. The same is liable to be set aside.
On the other hand, the Ld. Departmental Representative (DR) submitted that since the assessee has furnished inaccurate particulars of its income, the Ld. CIT (A) has rightly confirmed the penalty levied by the AO. Hence, there is no infirmity in the order passed by the Ld.CIT (A) to interfere with.
4 Assessment Year: 2008-09
We have heard the rival submissions and also perused the material on record. The only issue to be adjudicated in this case is whether in the facts and circumstances of the case the Ld. CIT(A) has erred in confirming the penalty levied by the AO u/s 271(1)(c) of the Act for furnishing inaccurate of income in the original return filed by the assessee? We notice that the AO has levied the penalty in question holding that since the assessee has filed the revised return after receiving of notice u/s 148 of the Act, the action of the assessee cannot be treated as voluntary disclosure. We notice that the original return in this case was filed on 30.09.2008 after claiming set off of brought forward losses and depreciation of Rs. 17,64,276/-. Subsequently, the assessee filed the rectification application along with statement of total income claiming TDS credit and set off of unabsorbed depreciation of Rs. 19,83.406/- for AYs 1999- 2000 to 2002-03 in spite of the fact that it had already set off the unabsorbed depreciation and positive income were assessed for the assessment year 2001- 02 and 2002-03. We further notice that the assessee filed an application for rectification of mistake apparent on 28.04.2010. The contents of the application read as under:
“On perusal of four records, Computation of Income and Assessment Orders, we found that we have erred in claiming Set-off of Unabsorbed Depreciation in our Return of Income for the A.Y. 2008-09.We had claimed a Set-off of Rs. 17,64,276/- against our business income of Rs. 19,83,406/- even though we were not entitled to claim any set-off.
After rectifying the said error we are still not liable to pay tax but are entitled to a refund of Rs. 9,930/- which is evident from the revised Computation of Income. We are enclosing herewith the revised computation of Income for your ready reference and record.
Your goodself will further appreciate that, the above mistake is bona fide and genuine error. Even though we were not entitled to the Unabsorbed Depreciation to the extent of Rs. 17,64,276/- the same was claimed by 5 Assessment Year: 2008-09 our and our CA’s office staff due to non availability of certain Orders or records at the time of preparation of Return of Income.
However, while proceeding the return of Income under Sec. 143 (1), your good self has also accepted the Set-off claimed by us in the Return. Therefore, the said intimation/order needs to be rectified. Kindly rectify as above under intimation to us.”
From the contents of the application it can be concluded that the said application was moved by the assessee when the error came to the notice of the assessee. Further, the assessee had filed the rectification application aforesaid before issuing notice by the AO u/s 148 of the Act. The aforesaid facts corroborate the contention of the assessee that mistake in claiming unabsorbed depreciation in the original was bona fide and it had occurred due to non availability of certain documents at the time of preparing return of income as contended by the assessee. We, therefore, find merit in the argument of the Ld. counsel that since the assessee had made voluntary disclosure about the wrong claim made in the original return of income, the Ld. CIT (A) ought to have set aside the penalty order and directed the AO to deleted the same. We further notice that the AO has passed the assessment order taking into consideration the rectification application moved by the assessee. In our considered view, since the assessee has disclosed the error in its original return before taking any action by the department and the AO has accepted the revised return filed by the assessee withdrawing the wrong claim made in the original return, it cannot be concluded that the assessee has furnished inaccurate particulars of income.