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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI RAMIT KOCHAR
Aforesaid appeal of the assessee is directed against the order dated 6th July 2011, passed by the learned Commissioner of Wealth Tax (Appeals)–24, Mumbai, confirming imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961 (for short "the Act").
Briefly stated the facts are, assessee, a partnership firm is engaged in the business of transportation of goods. For the 2 Shah Bector And Sons assessment year under consideration, assessee filed its return of income on 30th October 2007, declaring total income of ` 5,42,301. In the course of assessment proceedings, Assessing Officer noticed that during the relevant previous year, assessee had purchased two galas (shops) and claimed depreciation of ` 7,83,665. He further noticed that these two galas were given on rent and rental income derived therefrom was offered for taxation under the head income from house property. Assessing Officer was of the view that as the income from galas were offered for taxation under the head income from house property, the claim of depreciation is not allowable. Accordingly, he disallowed depreciation claimed of ` 7,60,000, on the two galas. Assessee also accepted the disallowance by not preferring any further appeal. On the basis of addition made as aforesaid, the Assessing Officer initiated penalty proceedings under section 271(1)(c) by issuing notice under section 274 of the Act. In response to the said notice, though, assessee objected to the initiation of proceedings under section 271(1)(c) but the Assessing Officer rejecting the explanation of the assessee passed an order imposing penalty of ` 2.60 lakh. Being aggrieved of the penalty order, assessee preferred appeal before the learned Commissioner (Appeals). The learned Commissioner (Appeals) also confirmed the penalty. The assessee being further aggrieved, is in appeal before the Tribunal.
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Learned Authorised Representative submitted, though the assessee had not contested the disallowance of depreciation made by the Assessing Officer, however, certain discrepancies in facts which are very much relevant for the purpose of penalty including needs to be considered. He submitted, though the assessee had purchased two galas during the relevant previous year, but he had given on rent only one gala, that too, not for the entire previous year. He, therefore, submitted imposition of penalty on the basis that depreciation is not admissible on rental income derived from two galas which were offered for tax under the head income from house property, is factually incorrect. In support of such contention, he relied upon the ledger account of rent received which he sought to produce as additional evidence. He, therefore, submitted that when the rental income offered is not in respect of both the galas, assessee’s claim of depreciation cannot be considered to be totally inadmissible. He, therefore, submitted, the issue may be restored back to the file of the Assessing Officer for deciding afresh after considering the additional evidence.
Learned Departmental Representative has no objection for restoring the matter back to the file of the Assessing Officer.
4 Shah Bector And Sons 5. We have considered the submissions of the parties and perused the material available on record. It is evident that the Assessing Officer has disallowed assessee’s claim of depreciation on two galas primarily for the reason that income from galas have been offered under the head income from house property. However, the assessee has claimed before us that during the relevant previous year, if assessee had given on rent only one gala, therefore, the conclusion drawn by the Assessing Officer that depreciation claimed on both the galas is inadmissible, is not correct. As it appears, this is a completely new plea taken by the assessee before us which was not taken either before the Assessing Officer or before the learned Commissioner (Appeals). The additional evidence in the form of ledger account, as it appears, was also not produced before the Departmental Authorities. However, considering the fact that the plea taken by the assessee and the additional evidence sought to be produced may have crucial bearing on the ultimate decision making process relating to imposition of penalty under section 271(1)(c) of the Act, we are inclined to set aside the impugned order fo the learned Commissioner (Appeals) and restore the matter back to the file of the Assessing Officer for deciding afresh after considering the additional evidence submitted by the assessee and the submissions to be made by the assessee on the issue.4
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In the result, appeal stands allowed for statistical purposes. Order pronounced in the open Court on 11.03.2016