AABHAS SPINNERS PVT. LTD.,LUDHIANA vs. ACIT, C-1, LUDHIANA

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ITA 1230/CHANDI/2017Status: DisposedITAT Chandigarh06 April 2018AY 2007-083 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the assessee's claim for additional depreciation was due to an inadvertent error and not a malafide intention to evade tax. Considering the assessee was already incurring huge losses, the penalty was deemed not fit for levy.

What were the facts?

The assessee claimed additional depreciation on plant and machinery, which the Assessing Officer disallowed. The AO also initiated penalty proceedings under Section 271(1)(c) and imposed a penalty. The assessee's appeal before the CIT(A) was unsuccessful.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when the claim of additional depreciation was made due to an inadvertent error and not with intent to evade tax.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’ CHANDIGARH

Before: SHRI SANJAY GARG & DR. B.R.R. KUMAR

For Respondent: Smt. Chanderkanta Sr.DR
Hearing: 06.04.2018Pronounced: 06.04.2018

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the assessee against

the order dated 01.06.2017 of the Commissioner of Income Tax

[hereinafter referred to as CIT(A)]-2, Ludhiana agitating the levy of

penalty u/s 271(1)(c) of the Act.

2.

The brief facts relating to the issue are that the assessee

claimed additional depreciation on plant and machinery. However,

the Assessing officer found that the assessee was not entitled to the

same. He, therefore, disallowed the claim of additional depreciation

amounting to Rs. 6,01,030/-. The Assessing officer also initiated

ITA No.1230/Chd/2017- M/s Aabas Spinners Pvt Ltd., Ludhiana 2

penalty proceedings u/s 271(1)(c) of the Income-tax Act, 1961 (in

short 'the Act') and imposed penalty of Rs. 2,02,307/- on the

assessee.

3.

Being aggrieved by the above order of the Assessing officer,

the assessee came in appeal before CIT(A) but remained

unsuccessful.

4.

The assessee has now come in appeal before us. Though the

arguments were heard in the appeal on 29.11.2017, however, certain

clarifications were needed. Hence, this case was fixed for today.

5.

We have considered the rival submissions and have also gone

through the records. The contention of the assessee is that claim of

additional depreciation made by the assessee was under bonafide

belief and there was no intention on the part of the assessee to evade

tax. That assessee company had already incurred huge losses of Rs.

77,93,682/-, and even despite the aforesaid addition, the assessee

would not have been liable to pay any tax. That the claim of

additional depreciation on old plant and machinery was out of an

inadvertent error. That the mistake regarding claim of additional

depreciation was admitted by the assessee before assessing officer

during assessment proceedings itself and even the assessee did not

prefer any appeal against the order of the Assessing officer.

6.

The Ld. DR, on the other hand, has relied on the findings of the

lower authorities and has stressed that the assessee had wrongly

ITA No.1230/Chd/2017- M/s Aabas Spinners Pvt Ltd., Ludhiana 3

claimed the additional depreciation which was not allowable; hence, the penalty has been rightly levied by the lower authorities.

7.

We have considered the rival submissions. We find that the assessee has given a bonafide explanation that the claim of additional depreciation was not out of any malafide intention to evade tax. That it was an inadvertent error. The assessee further explained that it was running in huge losses and there was no reason for the assessee to wrongly claim the additional depreciation as due to huge losses even after disallowance of the additional depreciation, there was no tax liability on the assessee for the year under consideration.

8.

Considering the above submissions of the assessee, we do not find it a fit case for levy of penalty u/s 271(1)(c) of the Act. In view of this, the penalty levied by the lower authorities is ordered to be deleted. The appeal of the assessee stands allowed. Order pronounced in the Open Court.

Sd/- Sd/- (B.R.R.KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 06.04.2018 Rkk Copy to: • The Appellant • The Respondent • The CIT • The CIT(A) • The DR

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