2018 (10) TMI 184 - AT - Income Tax

Penalty u/s. 271(1)(c) - disallowing the depreciation on account of excessive depreciation and addition on account of internal and tax audit fees for non deduction of TDS u/s. 40(a) - Held that - We find that there is only the application of law as to the depreciation and other disallowance on which no penalty should be maintained. We further note that instead of carry forward loss the action of the AO allows the carry forward of the depreciation. Therefore, all the particulars on which the assessee claimed the depreciation were furnished alognwith return of income and it is not the case of the Revenue that any new facts were unearthed during the assessment proceedings so that a reasonable conclusion could be drawn that the assessee either concealed income or furnished inaccurate particulars of income. It is only a question of allowing the depreciation in this year or next year. As a matter of fact if the depreciation is not allowed this year the same will be carried forward and if depreciation is allowed, the loss will be carried forward. In these circumstances, we are of the considered opinion, that there is no element of concealment of income or furnishing of inaccurate particulars of income and the assessee does not stand the gain by claiming depreciation at a higher rate this year. The assessee has neither concealed the income nor furnished inaccurate particulars of income and there are no findings of the Assessing Officer and the CIT (Appeals) that the details furnished by the assessee in his return are found to be incorrect or erroneous or false. Under these circumstances, in our view the penalty in dispute is totally unwarranted and deserves to be deleted. - Decided in favour of assessee.

Summary

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

Analysis:
The appeal was filed by the Assessee challenging the penalty upheld by the Ld. CIT(A) under section 271(1)(c) of the Income Tax Act, 1961. The original assessment was completed at a loss, with certain additions made by the AO. The Ld. CIT(A) confirmed some additions but deleted others. Subsequently, penalty proceedings were initiated, and the AO concluded that the Assessee furnished inaccurate particulars and concealed income, leading to the imposition of a penalty of ?2,41,56,197. The Assessee appealed this penalty order before the Ld. First Appellate Authority, who upheld the penalty citing the sub-judice status of the quantum appeal in the Delhi High Court.

The Assessee then appealed to the Tribunal against the penalty order. Despite notice, neither the Assessee nor their representative appeared for the hearing. The Tribunal proceeded ex-parte and considered the arguments of the Ld. DR. Upon examination, the Tribunal found that the additions made by the AO were related to depreciation and other disallowances, which did not warrant a penalty under section 271(1)(c). The Tribunal noted that the Assessee had not concealed income or furnished inaccurate particulars, as the depreciation claimed was in line with the return of income. The Tribunal referenced the decision in CIT vs. Reliance Petroproducts Pvt. Ltd., highlighting that a mere claim of expenditure not accepted by the Revenue does not attract a penalty under section 271(1)(c).

Based on the above considerations and legal precedent, the Tribunal concluded that the penalty imposed on the Assessee was unwarranted and should be deleted. Therefore, the Tribunal allowed the appeal filed by the Assessee, quashing the penalty of ?2,41,56,197 imposed under section 271(1)(c) of the Income Tax Act, and overturned the decisions of the authorities below on this issue.