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TMI Blog2011 (3) TMI 1598X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The revenue in its appeal has challenged the order of the CIT (A) in deleting the penalty levied by the AO under section 271(1)(c) of the Income tax Act, 1961 in respect of disallowance of ₹ 1,05,50,000 made under section 40(a)(ia) of the Act. The assessee in its appeal has challenged the order of the CIT (A) in confirming the penalty levied by the AO on account of disallowance of depreciation of ₹ 46,63,818. The cross objection filed by the assessee is merely in support of the order of the CIT (A) in deleting the penalty in respect of disallowance under section 40(a)(ia) of the Act. 3. Facts of the case in brief are that the assessee firm is engaged in the business of civil contracts and transport business. In the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l provisions are for absolute default. Therefore, no penalty is leviable under section 271(1)(c) on account of disallowance of ₹ 1,05,50,000. It was submitted that the disallowance of ₹ 1,05,50,000 is under a deeming fiction and, therefore, such additions are only fictional income and cannot be converted or treated like real income and, therefore, penal provisions are not attracted. 5. As regards the higher claim of depreciation, it was submitted that same was due to technical error since while feeding to the computer, the rate of preceding year was incorporated, for which the mistake was occurred. It was also submitted that the additional depreciation was allowable in respect of commercial vehicles purchased, which varies fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made, the appellant had every opportunity to revise the same through revised return. The AO has accepted the lower claim of depreciation only after his mistake was pointed out by the AO. Under the circumstances, it is correct on the part of the AO to hold that the appellant acted deliberately in making a higher claim of depreciation that what is allowable under the Act. To this extent, the penalty levied is required to be sustained. 4.6 So far as the penalty in respect of disallowance u/s.40(a)(ia) is concerned, the appellant is correct in saying that the claim of expense made is correct and by virtue of the deeming provisions u/s.40(a)(ia) only, allowability of the claim shifts in time. In other words, tax sought to be evaded works ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at source before the due date of filing of return of income under section 139(1), in the light of aforesaid amendment, the disallowance made by the authorities below has to be deleted. Since in the instant case, the assessee has duly paid the tax so deducted before the due date of filing the return of income, therefore, no penalty under section 271(1)(c) is attracted on account of such addition. So far as the addition on account of higher depreciation is concerned, he submitted that same was a technical error due to change in the rate of depreciation and it was a bonafide mistake on the part of the assessee which even could not be detected by the auditors. He, accordingly, submitted that the CIT (A) should have deleted the penalty levied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned the penalty on addition on account of higher claim of depreciation of ₹ 46,63,818. So far as the deletion of levy of penalty on account of addition of ₹ 1,05,50,000 is concerned, we find the same is now covered in favour of the assessee by the decision of the Tribunal in the case of Bansal Parivahan (India) Pvt.Ltd. (supra), wherein, it has been held that where the assessee has paid the amount before the due date of filing the return of income under section 139(1), no disallowance can be made, in the light of amendment made by the Finance Act, 2010 to provisions of section 40(a)(ia). So far as the penalty levied on account of addition on higher depreciation is claimed, we are of the considered opinion that the same was a tec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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