BRIJDA ROAD LINES P.LTD,MUMBAI vs. ITO WD 6(1)(4), MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद�य लेखा सद�य, राजे�� राजे�� केकेकेके अनुसार अनुसार/ PER Rajendra A.M.- लेखा लेखा सद�य सद�य राजे�� राजे�� अनुसार अनुसार Challenging the order dated 11.9.2014 of CIT(A)-14, Mumbai the assessee company has filed the present appeal.Assessee-company,engaged in the business of transportation and petrol pump dealers filed its return of income on 14.10.10, showing total income of Rs.3.04 lakhs.The AO completed the assessment u/s.143 (3) of the Act, on 19.3.2013,determining its income at Rs.40.80 lakhs. 2.Effective Ground of appeal is about levy of penalty of Rs.10.56 lakhs u/s. 271(1)(c) of the Act for furnishing inaccurate particulars of income.During the assessment proceedings,the AO found that the assessee had claimed depreciation @ 40% on commercial vehicles, that as per the depreciation schedule it was entitled to claim depreciation @ 30%.As the assessee did not file any clarification,10% of excess depreciation(Rs.34.19 lakhs) on commercial vehicle was withdrawn and addition to that extent was made.The AO also initiated penalty proceedings u/s. 271(1)( c). As per the AO none appeared before him nor an explanation was filed in connection with the penalty proceedings, that the assessee had not filed appeal against the quantum orders,that it had furnished inaccurate particulars of income and had also concealed its income while showing excess depreciation, that as per Explanation 4 to section 271(1)(c) he levied a penalty of Rs.10,56,675/- u/s. 271(1)(c ) of the Act. 3.Aggrieved by the order of the AO the assessee preferred an appeal before the FAA. After considering the submission of the assessee and the penalty order, the FAA held that even if there was no concealment of income or furnishing of inaccurate particulars on the basis of ex- facie bogus claim penalty was leviable, that the assessee had claimed excess depreciation u/s.

6768/M/14-Brijda Roadlines 32 of the Act.The FAA referred to the case of Reliance Petroproducts Pvt.Ltd (322 ITR 158); Zoom Communications Pvt.Ltd(327 ITR 150)and held that the assessee had furnished inaccurate particulars, that it had not filed any bonafide explanation for the claim made by it, that the argument of the assessee that extra depreciation was claimed inadvertently could not come to its rescue,that it had recourse to qualified professionals,that the amendment for reduction in claim of depreciation became operative w.e.f. 01/01/2006,that the year under consideration was 2010-11, that the argument of error was malafide,that the AO had rightly levied the penalty.The FAA referred to the case of M/s. Arcotech Ltd. (IT Appeal No.71 of 2013 dt.12.9.2013 of the Del HC) ; Kanchenjunga Advertising Pvt. Ltd.(ITA/944/of 2011); MAK Data Pvt.Ltd.(34 taxmann 448) and so many other cases and held that the issue involved was not debatable nor were two view possible, that the claim made by it was non genuine or inaccurate. 4.During the course of hearing before us, the Authorised Representative (AR) argued that the assessee was in transportation business as well as running petrol pump,that it was using the vehicle/tanker for the business in the individual capacity also that the tanker was used for business, that depreciation @40% was allowable for tankers if used for own purpose.He referred to the case of Seksaria Bisvan Sugar Factory Ltd.(ITA/4428 /Mum/2012 dt.5.8.16); Somani Evergreen Knits Ltd.(Income tax appeal No.1332 of 2011dt.21.03.2013) and said that it was a bonafide and an inadvertent mistake.

5.We have heard the rival submission and perused the material before us.We find that the assessee had claimed depreciation @40% for a tanker that was being used for his business as well as for personal uses,that the rate of depreciation is different if it is used commercially.It was argued that the assessee was under bonafilde belief that rate of depreciation was same whether or not the tanker was utilised commercially or not.In our opinion,the explanation filed by the assessee is possible explanation and cannot be out rejected out-rightly.It is also a fact dispute is about the rate on which depreciation should be allowed.It is not a case where the assessee has made a bogus claim or where the asset was not existing.While deciding the issue of levy of penalty u/s.271(1)(c)of the Act the basic thing to be considered is the explanation offered by the assessee. Considering the peculiar facts and circumstances of the case-all the details were available on record and that the AO had not doubted the genuineness of the existence of the asset-we are of the opinion that it was not a fit case for invoking the provisions of section 271(1)(c)of the Act and levy penalty.Cases relied upon by the AR of the 6768/M/14-Brijda Roadlines assessee,endorse the view taken by us.We find that in those cases penalty proceedings were dropped in almost similar circumstances.So, reversing the order of the FAA,we decide the effective ground of appeal in favour of the assessee.