AREBEE STAR MARITIME AGENCIES P.LTD,MUMBAI vs. JCIT (OSD) 8(1), MUMBAI

The only issue in this appeal of assessee is against the order of CIT(A) confirming levy of penalty by AO u/s 271(1)(c) of the Act on disallowance of depreciation amounting to Rs. 15,648/- and computer expenses to the extent of Rs. 8,51,293/-.

Briefly stated facts are that the assessment was completed u/s 143(3) of the Act and AO made addition on account of disallowance of depreciation at Rs.20,12,221/-, disallowance of computer expenses at Rs.53,79,293 and addition u/s 41(1) of the Act at Rs. 10,15,1,817/-. Finally, the CIT(A) restricted the disallowance on the amounts on which penalty is levied by the AO u/s 271(1)(c) of the Act to the extent of depreciation at Rs. 1,15,648 and computer expense to the extent of Rs. 8,51,295/- (wrongly mentioned the figure of computer expenses by the AO at Rs. 80,51,295/-). The assessee before AO during the assessment proceedings and appellate proceedings and even during penalty proceedings explained that out of depreciation expenses of Rs. 1,15,648/- disallowed by the AO and confirmed by CIT(A) on the basis that the assets to the extent of this amount was not purchased. The learned Counsel for the assessee filed details of additions to the computer on 29-08-2005 purchased from the NDLAUL computers amounting to Rs.1,00,000/- on 30-09-2005 NDLAUL purchased of computer for an amount of Rs. 15,648/-. To correlate this, the learned Counsel for the assessee explained that the payment is made from CITI Bank Account No. 15823097, whereby that the payment is made by cheque No.25669 dated 02-09-2005 for an amount of Rs. 1,00,000/-. The Assessee supported this assertion by filing a copy of bank account and details of computer expenses. As regards to the computer expenses the assessee filed the following details: - Date Particulars Amount Details of Expense Bill/TDS Cert Remark 02.04.2005 Unique Enterprises 19,325.00 TDS Certt Found Not allowed 20.06.2005 APS Logistics Software 4,25,000.00 TDS Cert Found Not allowed 25.07.2005 Unique Enterprises 4,57,500,00 TDS Cert Found Not allowed These details are provided at page no. 3 of the compilation of the assessee. To prove this, learned Counsel for the assessee filed copy of Bank statement of CITI bank Account No. 15823097, wherein, cheque No.22743 dated 09-07-2005 for an amount of Rs. 4,1,157/- was paid to APS Logistics Software Services. Similarly, from the same account the cheque No. 23469 dated 09-08-2005 for an amount of Rs. 4,48,167/- was paid to Unique Enterprises. She, the learned Counsel, filed copies of TDS certificates which clearly proves that the entire amount of Rs. 8,51,293/- is reconcile. It means that the assessee has made this claim before AO and before CIT(A) during the appellate proceedings, but the same was rejected and addition was made only on the basis that the documentary evidences are not available. The AO started penalty proceedings and levied the penalty. The CIT(A) also confirmed the action of the AO on the same reasons. When these evidence were confronted to the learned Sr. DR, he just relied on the order of the lower authorities.

We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the AO has wrongly made addition of computer expenses of Rs.8,51,295/- and disallowed the depreciation to the tune of Rs. 1,15,648/- because the assessee is able to produce each and every evidence i.e. the payment of computer expenses and depreciation. The assessee submitted TDS certificates and bank statement and details of purchase of assets. Here the Revenue has wrongly imposed the penalty even addition could have been deleted in such facts and circumstances. Hence, we reverse the orders of the lower authorities and delete the penalty levied by the AO and confirmed by CIT(A) for concealment of income u/s 271(1)(c) of the Act. The appeal of the assessee is allowed.

In the result, the appeal of assessee is allowed. Order pronounced in the open court on 17-02-2017.