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2022 (5) TMI 109 - AT - Income TaxPenalty u/s. 271(1)(c) - claim of deduction u/s 24(a) - HELD THAT - There is no straight jacket formula to say that particular act was a bonafide error or another a deliberate act. The assessee is required to demonstrate from the records that such error occurred due to inadvertent and was not deliberate to avoid tax liability. In the case in hand the assessee has successfully demonstrated that claim of deduction u/s 24(a) of the Act was made as the rent was offered for tax under the income from house property. Therefore in the light of the judgement of Price Waterhouse Coopers (P) Ltd. 2010 (3) TMI 80 - SUPREME COURT the penalty imposed by the AO on this issue cannot be sustained. The AO is therefore directed to delete the penalty. Addition sustained on account of disallowance of claim of depreciation - One of the averments of the assessee before the authorities below was that under the identical facts the Ld.CIT(A) allowed the claim of depreciation in succeeding year. This fact is not rebutted by the Revenue. It was further contended that the assessee had disclosed and furnished true and correct particulars of its income at the time of filing of return. The assessee had not acted in defiance of law and did not act on conscious in this regard to the law. We find merit into the contention of the assessee merely because if a claim is rejected by the Assessing Officer would not ipso facto made the assessee liable for penalty. In the present case the Ld.CIT(A) himself allowed the claim of depreciation under the identical facts in the succeeding year. The Revenue has not pointed out any change into the facts and circumstances of the case in the year under appeal. Therefore in the light of the judgement of Hon ble Supreme Court in the case of CIT vs Reliance Petroproducts (P.) Ltd. 2010 (3) TMI 80 - SUPREME COURT the levy of penalty was not justified. Appeal of assessee allowed.
Issues involved:
1. Initiation of penalty proceedings without specifying the charge in the notice under section 271(1)(c) of the Income Tax Act. 2. Imposition of penalty under section 271(1)(c) for alleged concealment of income and inaccurate particulars. 3. Validity of penalty on the grounds of bonafide error in claiming deductions. 4. Justification of penalty for disallowance of claim of depreciation. 5. Consideration of additional grounds raised by the assessee regarding the legality of penalty proceedings. Analysis: Issue 1: Initiation of penalty proceedings without specifying the charge The assessee contended that the notice issued under section 271(1)(c) did not specify the charge for which the penalty was being imposed, citing legal precedents. The tribunal agreed that the notice lacked specificity, following the judgment of the Hon'ble Delhi High Court. Consequently, the initiation of penalty proceedings was deemed not in accordance with the law. Issue 2: Imposition of penalty for concealment of income and inaccurate particulars The assessee challenged the penalty imposed under section 271(1)(c) for alleged concealment of income and furnishing inaccurate particulars. The tribunal examined the facts and found that the claim of deduction was made in good faith, supported by the Supreme Court's judgment. As a result, the penalty imposed by the Assessing Officer was directed to be deleted. Issue 3: Validity of penalty based on bonafide error in deductions Regarding the disallowance of claim of depreciation, the assessee argued that the claim was legitimate, as evidenced by the allowance in the succeeding year under similar circumstances. The tribunal agreed that the penalty was not justified, citing the Supreme Court's judgment, and directed the Assessing Officer to delete the penalty. Issue 4: Consideration of additional grounds raised by the assessee The assessee raised additional grounds questioning the legality of the penalty proceedings. The tribunal upheld the contention that the penalty proceedings suffered from a legal flaw due to the lack of specificity in the charge specified in the notice. Relying on legal precedents, the tribunal allowed the additional ground raised by the assessee. In conclusion, the tribunal allowed the appeal of the assessee, directing the deletion of the penalties imposed under section 271(1)(c) based on the lack of specificity in the notice and the bonafide nature of the errors in deductions. The tribunal emphasized the importance of demonstrating inadvertent errors and following legal procedures in penalty proceedings.
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