2015 (4) TMI 1287 - AT - Income Tax

Penalty us 271(1)(c) - assessee company had claimed depreciation @ 100% on the crockery, cutlery, blankets, linen and dresses and @ 10% on furnishings and decorations - Bonafide claim - HELD THAT - The issue whether the depreciation on crockery and cutlery is allowed 100% and 80% in case of blanket and linen is debatable. This claim of the assessee was accepted by the Assessing Officer in A.Y. 2007-08. The assessee s claim is bonafide during the year under consideration but in A.Y. 2008-09, the assessee revised the depreciation claimed during the assessment proceedings. The assets had been disclosed by the assessee, therefore, no inaccurate particulars of income has been furnished. We, therefore, uphold the order of the ld. CIT(A). - Decided against revenue.

Summary

Issues:

1. Deletion of penalty under section 271(1)(c) of the Income Tax Act, 1961 for wrong depreciation claimed by the assessee.

Analysis:

The appeal before the Appellate Tribunal ITAT Jaipur involved the deletion of a penalty of Rs. 20,51,508 imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961. The Assessing Officer had observed that the assessee, running a Luxurious Hotel, had claimed depreciation at higher rates. The assessee filed its return showing NIL income electronically, and during the assessment proceedings, it was found that the depreciation claimed was not in accordance with the Act. The Assessing Officer imposed the penalty after finding the assessee's explanation unsatisfactory.

Upon appeal, the CIT(A) deleted the penalty, noting that the assessee had claimed depreciation at rates similar to the previous year and had revised the claim during assessment proceedings to avoid litigation. The CIT(A) found that there was no deliberate attempt to conceal income or file inaccurate particulars. Various case laws were cited to support the decision, and the Assessing Officer was directed to cancel the penalty order.

The Revenue appealed the CIT(A)'s decision before the Tribunal. The arguments were reiterated by both parties, with the Revenue supporting the Assessing Officer's order and the assessee supporting the CIT(A)'s decision. The Tribunal considered the contentions and the available material, noting that the claim for depreciation was debatable. While the claim was revised during the assessment proceedings, the assets were duly disclosed, indicating no deliberate concealment of income. Consequently, the Tribunal upheld the CIT(A)'s order, leading to the dismissal of the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the decision to delete the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The judgment highlighted the bonafide nature of the assessee's claim and the absence of deliberate concealment of income, ultimately leading to the decision in favor of the assessee.