2016 (7) TMI 2 - AT - Income Tax

Penalty u/s 271(1)(c) - depreciation on the entire cost of factory building and land sold - admission of the additional evidences - Held that - In the present case, it appears that the assessee was claiming depreciation on the entire cost of factory building and land at Sivakashi, Tamilnadu. Later on when the factory was sold, its value was reduced from the block of fixed assets and no long term capital gain was shown on the land. The assessee furnished additional evidences by way of computation of income for the assessment years 2010-11 to 2014-15 with balance sheet and the assessment orders. These documents are vital to decide the issue under consideration and go to the root of the matter, therefore, these are admitted. However, since these documents were not available to the ld. CIT(A) for his consideration, we, therefore, deem it appropriate to set aside this issue back to the file of the Ld. CIT(A) to be adjudicated afresh in accordance with law, after considering the additional evidence furnished by the assessee first time before the ITAT and by providing due & reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Appeal against penalty under section 271(1)(c) of the Income Tax Act, 1961.

Detailed Analysis:

1. Background and Assessment: The appellant filed its income tax return declaring an income of ?1,31,77,350, which was later scrutinized by the Assessing Officer (AO). The AO made various additions, including long term capital gain, interest on FBT, and depreciation on computer peripheral. Subsequently, the AO initiated penalty proceedings under section 271(1)(c) of the Act.

2. Assessee's Submissions: The appellant claimed that it deducted the full amount of consideration from the block under a bona fide belief and offered the long term capital gain as soon as the mistake was realized. The appellant argued that no concealment or inaccurate particulars were furnished, citing the judgment of the Supreme Court in a similar case. However, the AO considered the added amount as concealed income and levied a penalty.

3. First Appeal: The appellant appealed to the CIT(A), stating that it was not possible to segregate the cost of land from the total cost of the factory building. The appellant reduced the amount from the WDV block of factory buildings upon sale, showing the profit under 'Other Income.' The CIT(A) upheld the penalty, noting discrepancies in the appellant's treatment of depreciation and capital gains over the years.

4. Additional Evidence and ITAT Decision: The appellant submitted additional evidence showing consistent treatment of reduced WDV in subsequent years. The ITAT admitted the evidence, deeming it crucial to the case. As the CIT(A) did not have the opportunity to consider this evidence, the ITAT remanded the issue back to the CIT(A) for fresh adjudication, ensuring a fair hearing for the appellant. The appeal was allowed for statistical purposes.

This detailed analysis covers the background, submissions, appellate process, additional evidence, and the ITAT's decision, providing a comprehensive understanding of the legal judgment.