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Income Tax Appellate Tribunal, ‘’ B’’ BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED
आदेश/O R D E R
PER WASEEM AHMED ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals), Ahmedabad, (in short “Ld. CIT(A)”) arising in the matter of penalty order passed under s. 271(1)(c) of the Income Tax Act 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2011-12.
The only issue raised by the assessee is that the Ld. CIT(A) erred in confirming the penalty of Rs. 13,83,130/- under the provisions of section 271(1)(c) of the Act.
The assessee in the year under consideration has claimed loss on sale of machinery amounting to Rs. 43,72,582/- which was not eligible for deduction in the profit and loss account and therefore penalty was levied by the AO at Rs. 13,83,130/- being 100% of tax amount sought to be evaded on account of furnishing inaccurate particulars of income. On appeal, the Ld. CIT(A) was also pleased to uphold the order of the AO.
Being aggrieved by the order of Ld. CIT(A), the assessee is in appeal before us.
The Ld. AR before us submitted that the assessee has made adjustment on the sale of plant and machinery in the block of asset which evidences that the assessee has not claimed any excessive depreciation therein. However, such loss on the sale of machinery was inadvertently not added back in the computation of income. Thus, there was inadvertent error and therefore the penalty can be levied u/s 271(1)(c) of the Act.
On the other hand, the ld. DR vehemently supported the order of the authorities below.
7. We have heard the rival contentions of both the parties and perused the materials available on record. From the above discussion, we note that the assessee has made necessary adjustments in the block of assets of the plant and machinery which was also not doubted by the authorities below. For this purpose, we refer the relevant submission of the assessee made before the Ld. CIT(A), which is reproduced as under: During the year under consideration, the appellant had sold coal based power plant at Value of Rs.40.08 lacs. The WDV of Plant was Rs.8.81 lacs which was sold at a value of Rs.40.08 lacs and as result ther was a books loss of Rs.43.73 lacs. While filing return of income, the appellant had reduced the WDV of plant, however, by mistake the loss debited to the profit and loss account on account of sale was not added back in return of income under head business and profession from the Net loss. 7.1 From the above, it is transpired that the assessee on one hand has adjusted the gross block of asset but on the other hand omitted to make the addition on the loss of sale of machinery to the total income of the assessee. Thus, we find there is a contradictory stand taken by the assessee as evident from the financial statement and computation of income. This contradictory stand of the assessee gives reason to believe that such mistakes has been committed by the assessee due to oversight and inadvertently, therefore we are of the view that the assessee should not made to suffer if such bona-fide mistake is committed by the assessee. In holding so, we draw support and guidance from the order of the Co- ordinate bench of Delhi ITAT in the case of Best Buildwell (Pvt) vs. DCIT vide dated 04.03.2016 which held as under:
a. Decision of Best Buildwell (Pvt) Limited Vs. DCIT vide dated 04.03.2016 which held as under: 6. Ld. AR for the assessee, while reiterating the submissions made before the lower authorities, submitted that...... He submitted that the sale consideration has been reduced from the block of fixed assets for computing depreciation under the Act. He further submitted that while computing the taxable income the loss on fixed assets aggregating to Rs.5.79.374/-, on the basis of which the penalty was imposed, has inadvertently been omitted to be added. The mistake being clerical since in the computation the said ITA No.5167/Del/2013 disallowance has been mentioned but the figure was inadvertently omitted from the column due to linking. He submitted that these facts have already been brought to the knowledge of the AO during the course of assessment proceedings vide letter dated 18.08.2011. He also drew our attention to page 19 and page 6 of the paper book to justify this mistake.
We have heard both the parties and perused the material on record. We note that the assessee participated in the penalty proceedings and brought to the knowledge of the AO that the loss on sale of fixed asset of Rs.5,79,374/- was reflected in Schedule 18 of the audited accounts.
We also note that while computing the depreciation under the Act, the gross sale consideration was reduced and the depreciation has been claimed at the reduced WDV However, due to clerical mistake, the said amount was omitted in the computation. We find that in the copy of the Income-tax computation, the said disallowance had been mentioned but inadvertently the amount was omitted.
We are of the opinion, given the peculiar facts of this case, that the imposition of penalty on the assessee is not justified. We are satisfied that the assessee had committed an inadvertent and bona fide error and had not intended to or attempted to either conceal its income or furnish inaccurate particulars. Having regard to the above principles laid down, the claim of the assessee could not be regarded either as "false" or not "bonafide" so as to conclude that assessee has furnished inaccurate particulars of income. Therefore, we set aside the orders of the authorities below and allow the appeal of the assessee. 7.2 In view of the above, we hold that the assessee should not be visited to the penalty u/s 271(1)(c) of the Act on account of bonafide mistake committed by it (the assessee). Hence, we set aside the findings of the Ld.CIT(A) and direct the AO to delete the penalty levied by him u/s 271(1)(c) of the Act. Hence, the appeal filed by the assessee is allowed.
In the result, the appeal filed by the assesee is hereby allowed.
Order pronounced in the Court on 22/03/2024 at Ahmedabad.