MASALAWALA A.T.C,MUMBAI vs. ITO 20(2)(2), MUMBAI

This appeal u/s 253 of the Income-tax Act is directed by the assessee against the order of CIT(A)-31, Mumbai dated 28.05.2014 for Assessment Year (AY) 2006-07. Wherein the ld. CIT(A) confirmed the penalty levied u/s 271(1)(c) of the Act.

Brief facts of the case are that the assessee filed return of income for relevant AY declaring total income as Nil. The assessment was completed u/s 143(3) on 19.12.2008 determining the income of Rs. 1,16,810/-. In the quantum assessment, excessive WDV of furniture & fixture amounting to Rs. 2,13,490/- was disallowed. Consequently Short Term Capital Gain (STCG) of Rs. 1,16,812/- was brought to tax. Assessee filed appeal before the CIT(A) but the same was dismissed consequent upon second appeal was filed before this Tribunal and the same was also dismissed on 24.01.2012. After dismissal of the appeal, the AO issued notice for initiation of penalty and levied a penalty of Rs. 64,050/- @ 100% of the tax sought to be evaded vide order dated 29.03.2012. Aggrieved by the order of penalty, assessee filed appeal before the CIT(A) but the same was dismissed, thus the present appeal is filed before us.

We have heard the ld. Authorized Representative (AR) of the assessee and the ld. Departmental Representative (DR) for the Revenue and perused the material available on record. The ld AR for assessee would argue that the assessee has disclose all particulars of income in the return, there was no concealment of income. Mere disallowance of claim of WDV of claim of furniture and fixture would not lead to furnishing of inaccurate particulars of income. On the other hand the ld DR for revenue supported the order of authorities below and would argue that the appeal of the assessee on the quantum assessment was dismissed by this Tribunal.

We have considered the rival contention of the parties. The of the for the Only short question for re-determination in the present appeal is whether mere excessive disallowance of WDV of furniture & fixture amounting to Rs. 2,13,490/- attract penalty or not. It is settled position of law that mere disallowance in the quantum assessment would not lead to making a conclusion that there was concealment or furnishing of inaccurate particular of income. Further, we have noticed that assessee in the reply to the notice of penalty proceeding has categorically explained that the depreciation claimed of furniture & fixture was disallowed to some extent and there was no deliberate concealment and the assessee was not liable for penalty. Thus, the assessee has sufficiently explained as per Explanation-1 attached to section 271(1)(c) of the Act. Keeping in view the peculiarity of the fact of the case, we find that the penalty levied by AO and confirmed by the CIT(A) is not sustainable in the eyes of law, hence, the entire penalty is deleted. 5. In the result, appeal of the assessee is allowed. Order pronounced in the open court on this 7th October, 2016.