2010 (5) TMI 717 - AT - Income Tax

Summary

Issues involved: Imposition of penalty u/s 271(1)(c) of the Income-tax Act, 1961 amounting to Rs. 60,000 upheld by the Commissioner of Income-tax (Appeals).

The judgment pertains to the appeal against the imposition of penalty under section 271(1)(c) of the Income-tax Act, 1961, amounting to Rs. 60,000. The case involved two main issues: first, regarding the incorrect claim of depreciation on the building without reducing the value of the land, and second, the disallowance of a claim under section 80HHD for not utilizing the reserve amount for specified purposes. The Assessing Officer imposed the penalty, which was confirmed by the Commissioner of Income-tax (Appeals) citing relevant legal precedents.

Regarding the first issue of depreciation, the Assessing Officer disallowed the excess depreciation claimed on the land component of the building. The assessee had claimed depreciation without bifurcating the value of land and building, leading to the identification of excess depreciation. However, the Tribunal noted that the assessee had cooperated, rectified the mistake, and offered the excess depreciation for taxation, showing no deliberate intent to evade tax.

On the second issue of the claim under section 80HHD, the Assessing Officer disallowed the claim for purchasing motor cycles, stating that only new cars and coaches qualified for the deduction. The Tribunal found that the assessee had a bona fide belief that motor cycles were eligible, and the disallowance was not due to concealment or furnishing inaccurate particulars of income.

The Tribunal, after considering the facts and legal precedents, concluded that the assessee's actions did not amount to concealment or furnishing inaccurate particulars under section 271(1)(c) of the Income-tax Act. Citing relevant case laws, including the decision in Hindustan Steel Ltd. v. State of Orissa, the Tribunal set aside the penalty imposed by the authorities below and ruled in favor of the assessee, deleting the penalty of Rs. 60,000.

In conclusion, the appeal filed by the assessee was allowed, and the penalty was deleted based on the inadvertent nature of the mistakes made by the assessee and the absence of deliberate intent to evade tax. The judgment was pronounced in open court on May 14, 2010.