2019 (3) TMI 733 - AT - Income Tax

Penalty u/s 271(1)(c) - disallowance depreciation on building let out - Assessee accepted its mistake and agreed for the disallowance depreciation - revised subsequent year return also - bonafide mistake - HELD THAT - Undisputedly, the assessee has wrongly claimed depreciation on the building let out by it. The facts on record reveal that similar claim was made by the assessee in preceding assessment years as well. Further, it is seen from the materials placed before us, the return of income filed by the assessee for assessment year 2014 15 claiming depreciation was subsequently revised disallowing the depreciation. Further, in the return of income filed for the assessment year 2015 16, the assessee has not claimed any depreciation. Keeping in view the aforesaid facts, assessee s explanation that depreciation claimed in the impugned assessment year was due to an inadvertent and bonafide mistake is acceptable. That being the case, we are inclined to delete the penalty imposed under section 271(1)(c) - Decided in favour of assessee.

Summary

Issues:
Challenge to penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for assessment year 2012-13.

Analysis:
The appeal was filed by the assessee against the order confirming the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The Assessing Officer disallowed the depreciation claimed by the assessee on the building let out by it. Subsequently, penalty proceedings were initiated alleging furnishing of inaccurate particulars of income. The assessee opposed the penalty imposition but it was confirmed by the Commissioner (Appeals).

The learned Authorised Representative argued that the depreciation claim was made inadvertently and was accepted by the assessee once brought to their notice. The assessee revised its return for the assessment year 2014-15 by adding back the depreciation claimed. Additionally, in the return for the assessment year 2015-16, no depreciation was claimed, showing the bonafide nature of the mistake. It was contended that the penalty should not have been imposed.

After considering the submissions and evidence, it was found that the assessee had indeed wrongly claimed depreciation on the building let out, but similar claims were made in preceding years as well. The assessee revised the return for 2014-15 by disallowing the depreciation and did not claim any depreciation in the return for 2015-16. The explanation provided by the assessee that the depreciation claimed was due to an inadvertent and bonafide mistake was accepted. Consequently, the penalty imposed under section 271(1)(c) of the Act was deleted, and the appeal of the assessee was allowed.

In conclusion, the penalty imposed under section 271(1)(c) of the Income Tax Act for the assessment year 2012-13 was deleted based on the bonafide nature of the mistake made by the assessee in claiming depreciation on the building let out by them. The order was pronounced in the open court on 8th March 2019.