2020 (9) TMI 1124 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - whether the assessee is entitled for depreciation on properties which were let out, income from which is taxed under the head income from house property ? - CIT(A) had disallowed the said depreciation on the ground that since the rental income derived from those properties were taxed under the head income from house property and assessee would be entitled for statutory deduction @30% towards repairs alone and no further deduction is permissible under the head income from house property - HELD THAT - This is a case where penalty has been initiated on one limb of the offence and penalty levied ultimately on a different limb of the offence. In these type of cases, the Hon ble Jurisdictional High Court had held that when there is no satisfaction recorded by the ld. AO in the quantum assessment order and penalty initiated on one limb and ultimately levied on different limb of the assessee, then in such cases, the penalty levied deserved to be cancelled. Reliance in this regard is placed on the decision of SHRI SAMSON PERINCHERY 2017 (1) TMI 1292 - BOMBAY HIGH COURT . Similar view has also been taken by the Hon ble Jurisdictional High Court in the recent decision in the case of Ventura Textiles Ltd., vs. CIT 2020 (6) TMI 305 - BOMBAY HIGH COURT . Respectfully following the aforesaid decision, we hold that the penalty levied in the instant case is not sustainable in the eyes of law. We find that it was the assessee which has actually provided all the details in respect of value of properties which were purchased from Financial Year 1990-91 onwards and the respective written down value at the end of each year before the lower authorities. It was the very same details that were furnished by the assessee which was placed reliance by the ld. CIT(A) while levying the penalty. Hence, there cannot be any concealment of particulars of income on the part of the assessee. When all the information available for determining the income of the assessee is placed on record voluntarily by the assessee either in the return or before the authorities at the time of assessment or appellate proceedings, then there cannot be any concealment of particulars of income that can be attributed on the assessee. See RELIANCE PETROPRODUCTS PVT. LTD. 2010 (3) TMI 80 - SUPREME COURT - Decided in favour of assessee.

Summary

Issues:
Imposition of penalty u/s.271(1)(c) of the Income Tax Act, 1961.

Analysis:

1. Penalty for Concealment of Income:
The case involved the imposition of a penalty u/s.271(1)(c) of the Income Tax Act, 1961, amounting to ?92,716. The primary issue was whether the penalty was justified in the given circumstances. The Tribunal examined the facts, where the Assessing Officer had issued a penalty notice for furnishing inaccurate particulars of income, but the penalty was ultimately levied for concealment of income by the Commissioner. Notably, the penalty was initiated on one limb of the offense and levied on a different limb, leading to a legal question of the penalty's validity. Citing relevant judicial decisions, the Tribunal concluded that in such cases, where the penalty is based on a different ground than the one initiated, the penalty cannot be sustained. The Tribunal relied on precedents to support its decision, emphasizing the importance of consistency in the grounds for penalty imposition.

2. Treatment of Depreciation on Let-Out Properties:
Another crucial aspect of the case was the treatment of depreciation on properties let out by the assessee. The Tribunal noted that the assessee had let out office premises, and the rental income was taxed under the head 'income from house property.' The dispute centered on whether the assessee was entitled to claim depreciation on these properties. The Tribunal examined the arguments presented by the assessee regarding the treatment of these properties as part of the block of assets, which raised questions about the identification of assets for depreciation purposes. Despite the assessee's efforts to provide details, the Commissioner disallowed the depreciation, citing statutory deductions already claimed. The Tribunal delved into the intricacies of asset identification within the block and upheld the Commissioner's decision on disallowing depreciation, emphasizing the specific circumstances of the case.

3. Merits of the Penalty and Judicial Precedents:
On the merits of the penalty, the Tribunal analyzed the details provided by the assessee regarding the properties and their written down values. It highlighted that the information furnished by the assessee was crucial in determining the penalty amount. Citing judicial precedents and legal definitions, the Tribunal emphasized that the mere making of a claim not sustainable in law does not amount to furnishing inaccurate particulars. Relying on Supreme Court decisions and legal definitions, the Tribunal concluded that no concealment of income could be attributed to the assessee when all relevant information was voluntarily disclosed. Based on these observations and legal principles, the Tribunal held that the penalty levied on the assessee was not sustainable, both on procedural and substantive grounds.

4. Conclusion:
In the final verdict, the Tribunal allowed the appeal of the assessee, setting aside the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The detailed analysis of the issues surrounding the penalty imposition and the treatment of depreciation on let-out properties formed the basis for the Tribunal's decision, ensuring a comprehensive examination of the legal and factual aspects of the case.

This detailed analysis of the judgment highlights the key legal issues, the Tribunal's reasoning, and the application of relevant judicial precedents in arriving at the final decision to allow the appeal and cancel the penalty imposed on the assessee.