RACHNA OVERSEAS PVT. LTD.,NEW DELHI vs. ITO, NEW DELHI

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ITA 5359/DEL/2014Status: DisposedITAT Delhi16 June 2016AY 2010-114 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the excess depreciation claim was an inadvertent mistake and not an intentional concealment of income or furnishing of inaccurate particulars. Following the precedent of Pricewater House Coopers Pvt. Ltd. vs. CIT, the penalty was deleted.

What were the facts?

The assessee claimed excess depreciation due to not reflecting the sale of plant and machinery and vehicles in the income-tax depreciation schedule, although it was reflected in the Companies Act fixed assets schedule. Upon detection, the assessee revised its depreciation, paid the additional tax, and the AO imposed a penalty.

What were the issues?

Whether a penalty under Section 271(1)(c) can be imposed for an inadvertent mistake in claiming excess depreciation when the underlying facts were disclosed elsewhere and tax was paid upon detection.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCHES : SMC-I : NEW DELHI

Before: SHRI R.S. SYAL

For Appellant: Shri Pranshu Goel &, Ms Priyanka Mongia, CAs
Hearing: 16.06.2016Pronounced: 16.06.2016

ORDER This appeal filed by the assessee is directed against the order passed by the CIT(A) on 07.07.2014, upholding the penalty of Rs.89,549/- imposed by the AO u/s 271(1)(c) of the Income-tax Act, 1961, in relation to the assessment year 2010-11.

2.

Briefly stated, the facts of the case are that the assessee filed return declaring income of Rs.23,71,800/-. During the course of assessment proceedings, the AO observed that the Schedule of fixed assets as per the Companies Act divulged that the assessee had sold Plant and machinery at Rs.12,59,421/- and Vehicles at Rs.20,52,300/-, whereas the Schedule of fixed assets as per the Income-tax did not reflect any such sale. This resulted in to excess claim of depreciation. On being called upon to clarify, the assessee revised its depreciation calculation to Rs.75,19,061/- from the earlier figure of Rs.78,08,860/-. Along with the submission dated 3.12.2012, the assessee filed a revised computation of income claiming depreciation as per Income-tax Act at Rs.75,19,061/- and a challan of Rs.1,19,510/- dated 30.11.2012, being the tax on the different amount of depreciation at Rs.2,89,799/-, was also enclosed.

The AO made addition of Rs.2,89,799/- and, thereafter, imposed penalty on this amount. The ld. CIT(A) confirmed the penalty.

3.

I have heard the rival submissions and perused the relevant material on record. It is clearly admitted in the assessment order that the assessee sold Plant and machinery at Rs.12.59 lac and Vehicles at Rs.20.52 lac, which sales were properly shown in the Schedule of fixed assets as per Companies Act. It was only in the Schedule of depreciation for income-tax purposes that such amount of sale was not shown, which led to the claim of depreciation on higher side by Rs.2,89,799/-. When such mistake was pointed out, the assessee immediately revised its depreciation computation and paid due tax thereon. These facts indicate that the assessee did not have any intention of concealing the income or furnishing inaccurate particulars of income because the factum of the assessee having sold these assets was very much available in the Schedule of fixed assets as per Companies Act before the AO. It was only an inadvertent mistake committed in calculating the amount of depreciation under the Income-tax Act. The Hon’ble Supreme Court in Pricewater House Coopers Pvt. Ltd. vs. CIT (2012) 348 ITR 306 (SC), has held that no penalty u/s 271(1)(c) can be imposed for a bona fide mistake or a normal human error. In that case, disallowance was 3 reported in the Tax Audit Report, but, by inadvertence, it was not there in the return of income. The Hon’ble Supreme Court held it to be a bona fide mistake not attracting any penalty. The facts of the instant case are quite close to those considered and decided by the Hon’ble Apex Court in Pricewater House Coopers Pvt. Ltd. (supra).

Respectfully following the precedent, I order for the deletion of the penalty.

4.

In the result, the appeal is allowed.

The order pronounced in the open court on 16.06.2016.

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