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TMI Blog2023 (2) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided the details of such vendor to the Department so as to enable it to ascertain the factual position. The assessee not having done so, an adverse inference was correctly drawn against the assessee and the penalty was rightly levied. However, the penalty ought to have been levied at the minimum rate, i.e., 100% and not @ 111.5%, as has been done. The AO is directed to scale down the levy of penalty on this count accordingly. On the first issue, i.e., wrong claim of depreciation of Rs. 15,31,989/-, the penalty levied is deleted. The penalty levied on the second issue, i.e., of disallowance of depreciation of Rs. 2,09,550/-, is directed to be scaled down from the rate of 111.5% to the rate of 100%. Ordered accordingly. - ITA No. 114/CHD/2020 - - - Dated:- 27-1-2023 - SHRI A.D. JAIN, VICE PRESIDENT And SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER For the Assessee : Sh. Tej Mohan Singh, Advocate For the Revenue : Smt. Amanpreet Kaur, Sr.DR ORDER Per A. D. Jain , Vice President : This is assessee's appeal for assessment year 2012-13 against the CIT(A) order dated 19.12.2019 confirming the levy of penalty u/s. 271(1)(c) of the Income Tax Act, 1961 (here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were dated 7.10.2011 on three items, the assessee had claimed that the assets had been put to use on 25.09.2011. Thus, the AO found the assessee to be claiming depreciation @ 15%, i.e., for the full year, whereas it was eligible for depreciation @ 7.5%, i.e., for half year only. As such, depreciation of Rs. 15,31,989, was disallowed and was added to the income of the assessee. 6. The AO further observed that the assessee had not been able to produce invoices for the assets purchased for Rs. 27,94,120/-. The assessee had stated that it had lost the bills. The AO observed that as per the tax Audit Report, the items had been booked under the head 'Plant and Machinery'. From this, the AO was of the view that the assessee's auditor had not verified as to which item had been purchased, as there was neither any bill number, nor any party name, which could have helped the assessee to establish the purchase to be genuine. Thus, the AO observed that the assets had in fact not been purchased and were not put to use. As such, depreciation of Rs. 2,09,559/- was disallowed and added back to the income of the assessee. The WDV of the total fixed assets was reduced by an amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concealment of income or furnishing of inaccurate particulars of income and as such penalty imposed and upheld by the Commissioner of Income Tax (Appeals) in pursuance of an invalid notice is illegal, arbitrary unjustified. 14. The ITAT, vide order dated 05.07.2019, remitted the matter to the file of the Ld. CIT(A), for passing a speaking order on the additional legal ground. It was further directed that in the eventuality of the assessee not succeeding on the legal ground, the issue be decided on merits. 15. By virtue of the impugned order dated 19.12.2012, the Ld. CIT(A) dismissed the appeal of the assessee in toto, i.e., on both, the legal as well as the regular ground on merits. 16. Aggrieved, the assessee is again in appeal before us. 17. Challenging the impugned order, the ld. counsel for the assessee has contended that while wrongly confirming the penalty levied on the assessee, the ld. CIT(A) has erred in brushing aside lightly the directions issued by the Tribunal in the first round, without appreciating the facts and legality of the case; that the ld. CIT(A) failed to appreciate that the assessee did not furnish any inaccurate particulars of its income, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the given circumstances, the assessee could be held to have furnished inaccurate particulars of income, thereby ratifying the levy of the impugned penalty. Qua the first issue, it remains undisputed that the depreciation was claimed by the assessee, as worked out by the auditors. It is also not in question that the assessee company is running in profit from year to year and if depreciation were to be reduced in one year, it would have led to increase in depreciation in the subsequent year. Thus, there is no case of furnishing of inaccurate particulars of income. The claim was a bona fide claim made by the assessee on the working of the auditors. 21. In 'Price Waterhouse Coopers (P) Ltd. Vs. CIT', 348 ITR 306 (SC), the assessee firm filed its return of income along with tax Audit Report. In the Audit Report, it was indicated that provision towards payment of gratuity was not allowable. However, the assessee failed to add provision for gratuity to its total income. It was held that this was a bona fide and inadvertent error; that the assessee was not guilty of either furnishing of inaccurate particulars or attempting to conceal its income; and that, therefore, imposition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had acted on the advice of his counsel, the Hon'ble High Court held it to be a case of bona fide mistake and not a fit case for levy of penalty u/s. 271(1)(c) of the Act. The present assessee before us, to reiterate, had, likewise, acted on the advice of the auditors and it was not held to be a mala fide action. 26. In 'Pawan Garg Vs. ACIT', 94 ITR (AT) 159 (Chd. Trib.), the assessee had wrongly claimed long-term capital loss in respect of a property which had been gifted by him to his son. Since the amount of capital loss had been duly disclosed in the computation of income and the assessee had also accepted at the time of assessment proceedings, that by mistake, he had considered the gift made to his son as a transfer, the assessee was held not to have concealed any material fact, and levy of penalty u/s. 271(1)(c) of the Act was held not justified. In the case at hand, similarly, the assessee had claimed depreciation on the advice of its auditors. This was a bona fide claim, may be a wrong claim. Otherwise too, the assessee earning profits year to year, reduction of depreciation in one year would have had the impact of higher depreciation in the subsequen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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