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Income Tax Appellate Tribunal, “SMC”, BENCH MUMBAI
Before: SHRI R.C.SHARMA
O R D E R This is an appeal filed by the revenue against the order of CIT(A)- Mumbai, for the assessment year 2007-200, in the matter of penalty imposed u/s.271(1)(c) of I.T.Act.
No body appeared on behalf of the assessee even after service of notice, the bench, therefore, decided to dispose of the appeal after considering the submission of ld. DR and material placed on record.
From the record we found that the AO also levied penalty u/s.271(1)(c) with regard to the addition of deferred maintenance charges. The AO completed the assessment u/s.143(3) on 30.12.2009 determining the total income at Rs. 4,38,15,930/- after making an addition of Rs.49,77,206/- on account of deferred maintenance reserve of Rs.49,77,206/ - and disallowing depreciation on vehicles of Rs.10,33,33,337/-. The assessee filed an appeal before the CIT(A)
2 against the order passed by AO. The CIT(A) deleted the disallowance of depreciation on vehicles and confirmed the addition of deferred maintenance charges of Rs.49,77,206/-.
By the impugned order, the CIT(A) deleted the penalty after observing as under :- 5. The issue relates to the levy of penalty of Rs. 15,23,025/- by the AO u/s. 271(1)(c) on disallowance of deferred maintenance reserve of Rs.49,77,206/-. I find from the financial statement for the year ended 31st March, 2007 filed by the assessee during the course of assessment proceedings before the AO and also during the course of appellate proceedings before me that at schedule 13; notes to accounts it has mentioned the following :-
"2(g) Revenue recognition Maintenance reserve is created against the fleet management charges recognized as revenue in proportion to the estimated future maintenance costs over the period of lease. Provisions Deferred Maintenance Reserve Opening balance 1,971,208 Add: Addition during the year 4,977,206 1,971,208 Less: Used during the year Closing Balance 6,948,414 1,971,208 Thus, there is no suppression of information in respect of deferred maintenance reserve of Rs. 49,77,206/ - by the assessee. In the case of CIT Vs Reliance Petroproducts Put. Ltd. 322 ITR 158, the Hon'ble Supreme Court held that penalty cannot be imposed on account of different views taken on the same set of facts. In the case of Sesa Resources Ltd. us ACIT (2013) 38 taxmann.com 224 the Hon'ble Bombay High Court held that since the assessee has disclosed all facts relating to claim and merely because claim for such deduction was denied, the assessee could not be subjected to penalty u/s. 271(1)(c). In the case of Bennett Coleman and Co Vs. ACIT, it was held by the !TAT Mumbai B' Bench that penalty cannot be imposed when debatable and arguable issue is decided against the assessee and the assessee had disclosed full and correct facts in the return of income. In view of the above position of law, the penalty of Rs. 15,23,025/- imposed by AO u/s. 271(1)(c) is deleted.
In the result, the appeal is allowed.