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Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH
Before: Shri Mahavir Prasad & Shri Amarjit Singh
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: Shri Mahavir Prasad, Judicial Member And Shri Amarjit Singh, Accountant Member ITA No. 1504/Ahd/2015 Assessment Year 2007-08
M/s Abhishek Engineers The DY CIT, Pvt. Ltd., Circle-1 5, Shrimali Society, Vs Ahmedabad Nr. Navrangpura Jain (Respondent) Derasar, Navrangpura, Ahmedabad-380009 PAN: AAACA9827E (Appellant)
Revenue by: Shri Mudit Nagpal, Sr. D.R. Assessee by: Shri Rajesh C Shah, A.R. Date of hearing : 06-10-2017 Date of pronouncement : 11-10-2017 आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This assessee’s appeal for A.Y. 2007-08, arises from order of the CIT(A)-1, Ahmedabad dated 23-02-2015, in proceedings under section 271(1)(c) of the Income Tax Act, 1961; in short “the Act”.
The assessee has raised following grounds of appeal:-
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“1. That the C.I.T.(Appeals) erred in upholding the order passed by the A.O. u/s 271(1)(c) of the I. T. Act imposing the penalty for furnishing inaccurate particulars of income although the penalty proceedings were initiated in the original assessment order u/s 143(3) for concealment of income as well as furnishing of inaccurate particulars of income whereas the penalty has now been levied for furnishing of inaccurate particulars of income since both the defaults are different as held by the Honourable Gujarat High Court. It is therefore, submitted the order u/s 271(1)(c) of the Act be cancelled. 2. That the C.I.T.(Appeals) also erred n confirming the levy of penalty u/s 271(1)© of the Act in respect of the disallowance of depreciation of Rs. 1311225 though the pre- requisites for levy of the penalty u/s 271(1)(c) of the Act are not at all fulfilled and the depreciation was claimed on the basis of the Tax Audit Report u/s 44AB of the Act since the rental income is being taxed as Business Income as in the past and the properties in question were ready for use. It is, therefore, submitted that the appellant had not furnished any inaccurate particulars of income or concealed any income and, hence, the penalty retained by the CIT(A) in respect of the disallowance of depreciation of Rs. 1311225 be cancelled as bad-in-law and on the facts of the case.”
In this case, return of income was filed by the assessee on 31st 3. October, 2007 declaring total income of Rs. 42,27,427/-. Assessment u/s. 143(3) of the act was made on 31tst December, 2009 at Rs. 82,63,407/-. The assessee has preferred appeal before the Ld. CIT(A).The ld. CIT(A) has provided part relief to the assessee and sustained the addition of disallowance of depreciation on building of Rs. 13,11,225/- and disallowance made by the assessing officer u/s 40(a)(ia) of Rs. 13,485/- relating to non- deduction of tax. The assessing officer made disallowance of depreciation on the ground that during the year under consideration, the assessee had made addition to the assets under the head building but it failed to furnish any details and evidence with respect to the date with effect from which the aforesaid assets were put to use in the business. Consequently, on these two additions, the assessing officer has levied penalty of 4,45,897/- u/s. 271(1)(c) of the act vide order dated 22nd March, 2013.
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Aggrieved against the order of the assessing officer, the assessee preferred appeal before the ld. CIT(A). The ld. CIT(A) has sustained the penalty levied by the assessing officer by observing as under:- “5. I have perused the facts of the case as enumerated by A.O. and as submitted by appellant. I have perused the case laws relied on by A.O. as well as appellant. After careful consideration of facts, submission and contention of both A.O. as well as of appellant, ground wise adjudication is as follows: The appellant before A.O. contended that notice issued for penalty is vague since not clear about whether the same is for furnishing inaccurate particulars of income or concealment of income. The A.O. aptly demonstrated in the impunged penalty order that it is inaccurate particulars of income which led to concealment of income to the extent the particulars are inaccurately furnished. The appellant also contended that addition/disallowances made by A.O. are on account of a different view adopted though appellant claimed the same on the basis of evidence available and supported from the provision of law. As discussed above at para 4A, the A.O. in the impunged penalty order considered two disallowances for imposition of penalty. The first such disallowances was disallowance of depreciation of Rs. 1311225 on building while second disallowance is of Rs. 13485 u/s. 40(a)(ia) of the Act for non deduction of IDS. The appellant in ground no.1 raised technical issue about vague notice issued by A.O. The appellant except relying on legal preposition as discussed at para 4B, has not substantiated the ground. With due regard, the A.O. after the impunged asst. order u/s. 143(3) of the Act dt. 21/12/2009 initiated penalty proceedings for various additions & disallowances (already discussed by A.O. in the impunged penalty order and elaborated at para 4A above) and used the phrase that penalty proceedings are initiated for furnishing inaccurate particulars of income for such disallowances leading to concealment of income. As discussed in previous para, the A.O. dealt with this issue in the impugned penalty order with the ratio of Hon'ble Gujarat High Court judgment in the case of A.M. Shah & co. (supra). The assessment order, Ld. CIT(A) order against such order and impugned penalty order clearly reflect that penalty were initiated for furnishing inaccurate particulars. It is therefore, this ground is dismissed. Ground No. 2 is against the levy of penalty of Rs. 4,45,897/- on the ground that disallowance of Rs. 13,11,225/- and Rs. 13,485/- were made on account of difference of opinion. As far as disallowance of Rs. 13,485/- are concerned, the disallowances are made u/s 40(a)(ia) of the Act for non deduction of TDS. As per settled legal proposition, I am inclined with appellant that provisions of section 40(a)(ia) of the Act are deeming provisions and all the material facts were disclosed before A.O. hence penalty u/s 271(1)(c) of the Act is not exigible. But, I am not inclined with appellant that disallowance of depreciation of Rs. 13,11,225/- on building is on change of opinion though claimed on the preposition that A.O. treated rental income from properties as 'Business Income' and this property was ready to let out. As discussed by A.O. in impugned penalty order (Discussed of para 4A above) the A.O. called for details from appellant about" Details regarding addition to block of assets of building and evidence regarding such asset being put to use" But, appellant failed to submit the details about when the property was taken into possession and whether the same was ready to be used. The appellant further failed to submit such evidences before Ld. CIT(A) in appeal proceedings. Even the appellant failed to submit any of such evidences in penalty proceeding before A.O. as well as before me. It is therefore, though as per legal proposition any assessee is entitled for depreciation for the asset ready to use but in the absence of any evidences about
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possession and its readiness for use, such legal preposition cannot be given effect. In the absence of any such detail of possession of building and readiness for use, made the claim of depreciation ab initio a false claim. It is not the disallowance of any genuine or bonafide claim but a false claim because appellant failed to substantiate through evidences the claim as well as its bonafide. It is therefore, ratio of Hon'ble Supreme Court judgment in the case of Reliance Petro products Pvt, Ltd. (supra) as relied on by both A.O. as well as appellant, does not in favor of appellant because facts of appellant's case are different. The satisfaction so drawn by A.O. and penalty so levied by A.O. on disallowance of depreciation of Rs. 13,11,225/- is upheld and confirmed. The appellant gets part relief of penalty on disallowance of Rs. 13,485/-. This ground is treated as partly allowed.” 5. During the course of appellate proceedings before us, ld. counsel has contended that ld. CIT(A) has erred in sustaining the penalty levied by the assessing officer as the assessee has not furnished any inaccurate particulars of income and the depreciation was claimed on the basis of tax audit report u/s. 44AB of the act in which full particulars of transactions were disclosed. The Ld. Counsel has also contended that the assessing officer has not specified in penalty notice whether the penalty was initiated for concealment of income or furnishing inaccurate particulars of income. On the other hand the Ld. DR has supported the order of the Ld. CIT(A).
We have heard both the sides and perused the material on record. The depreciation on building was claimed as building was ready for letting out and in the past the rental income was assessed as business income. During the year under consideration the rental income was also assessed as business income. We observed that the assessee has claimed depreciation on the ground that the building was ready to use and the rental income was being assessed as business income in the case of the assessee. The assessee was of the view that when the building was ready to use it is admissible
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for depreciation because the rent in the case of the assessee is taxed as business income. The assessing officer found that the this claim of the assessee was not correct. We observed that it was wrong claim of the assessee and not case of furnishing of inaccurate particulars of income. Regarding non-deduction of tax of expenditure of 13485/-, we find that assessee has furnished complete particulars of expenses and omission to deduct the tax at source cannot be considered as furnishing of inaccurate particulars of income. In view of the facts and circumstances, we are not inclined with the decision of the ld. CIT(A), therefore, the appeal of the assesse is allowed.
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 11-10-2017
Sd/- Sd/- (MAHAVIR PRASAD) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 11/10/2017 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद