2019 (1) TMI 1466 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - assessee claimed additional depreciation under section 32(1)(iia) on fixed assets under the head plant and machinery - Held that - It is a case where penalty is levied, on a issue, in respect of which Hon ble Delhi High Court in assessee s own case for relevant assessment year under consideration, has framed substantial question of law. It thus becomes apparent that addition is debatable. We draw support in respect of aforestated view from order dated passed by Hon ble Delhi High Court in case of CIT vs Liquid Investment and Trading Co., (2010 (10) TMI 1021 - DELHI HIGH COURT ). We are, therefore, inclined to delete the penalty. - Decided against revenue

Summary

Issues:
1. Whether the penalty imposed under section 271(1)(c) for a specific amount should be deleted.
2. Whether the addition of additional depreciation under section 32(1)(iia) on fixed assets was correctly disallowed.

Analysis:
Issue 1: The Appellant, the Revenue, filed a penalty appeal against the order passed by Ld.CIT (A)-4, New Delhi, for the assessment year 2006-07. The primary contention was the deletion of the penalty imposed under section 271(1)(c) amounting to a specific sum. The Ld.CIT (A) had deleted the penalty, and the Revenue challenged this decision.

Issue 2: The case involved the disallowance of additional depreciation claimed by the Assessee, a manufacturing company, on fixed assets under the head plant and machinery. The Ld.AO did not allow the claim of additional depreciation, leading to an appeal by the Assessee before Ld. CIT (A). The Ld. CIT (A) confirmed the addition, prompting the Assessee to appeal before the Tribunal. The Tribunal upheld the Ld.AO's order. Subsequently, a penalty under section 271(1)(c) was imposed by the Ld.AO, which the Assessee challenged before Ld.CIT (A). The Ld.CIT (A) deleted the penalty based on precedents from the Hon'ble Delhi High Court, citing cases such as CIT vs Raul Mehta and CIT vs. Liquid Investments Ltd.

In the final judgment, the Tribunal considered the debatable nature of the addition in question, as highlighted by the Hon'ble Delhi High Court's framing of substantial questions of law in similar cases. Drawing support from the precedent set by the Hon'ble Delhi High Court in the case of CIT vs Liquid Investment and Trading Co., the Tribunal decided to delete the penalty imposed by the Ld.AO. The Tribunal dismissed the grounds raised by the Revenue, ultimately dismissing the appeal filed by the Revenue.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, relevant legal provisions, and the reasoning behind the Tribunal's decision to delete the penalty imposed under section 271(1)(c) in this case.