DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 4(2), NEW DELHI, NEW DELHI V. CLEAN WIND POWER (MANVI) PVT LTD., DELHI

ITA 2607/DEL/2024

AI Insights

The case involves two appeals by the Revenue against Clear Wind Power [Manvi] Pvt Ltd concerning the assessment years 2015-16 and 2016-17. The core issue was the penalty levied under section 271(1)(c) for furnishing inaccurate particulars of income, which was based on a higher depreciation claim on fixed assets. The Assessing Officer had disallowed a part of the claimed depreciation, leading to a penalty. However, the CIT(A) deleted the penalty, referencing a co-ordinate bench decision that had deleted the quantum addition. The Tribunal upheld the CIT(A)'s decision, emphasizing the principle that if the foundation (quantum addition) is removed, the superstructure (penalty) must also fall.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 33609 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-09-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 22-05-2024
• Other Referred Cases: ITA No. 4568/DEL/2019
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEHA CHOUDHARY
• Assessee Lawyers: SOMIL AGRAWAL
• Keywords: Revised return; Depreciation
• Section: 143(3); 271(1)(c)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘B’ BENCH, NEW DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER, AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 2607/DEL/2024 [A.Y 2015-16] ITA No. 2608/DEL/2024 [A.Y 2016-17] The Dy. C.I.T Vs. Clear Wind Power [Manvi] Pvt Ltd Circle – 4(2) 201, Third Floor, Phase – III, Okhla New Delhi Industrial Estate, New Delhi PAN: AAFCC 7065 D (Applicant) (Respondent) Assessee By : Shri Somil Agrawal, Adv Shri Deepesh Garg, Adv Department By : Ms. Neha Choudhary, CIT-DR Date of Hearing : 12.09.2024 Date of Pronouncement : 24.10.2024 ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:- The above captioned two appeals by the Revenue are preferred against two separate orders of the NFAC, Delhi dated 28.03.2024 pertaining to A.Ys 2015-16 and 2016-17. 2 2. Since the underlying facts in the issues raised by the revenue in both these appeals pertain to same assessee and were heard together, these are being disposed of by this common order for the sake of convenience and brevity, though the quantum may differ. ITA No. 2607/DEL/2024 [A.Y 2015-16] 3. The solitary grievance of the Revenue reads as under: “Whether the ld. CIT(A) has erred in law and facts in allowing the penalty u/s 271(1)(c) of the Act for furnishing inaccurate particulars of income on the ground that the quantum addition was allowed by the ITAT without considering that the department has filed appeal against the ITAT order.” 4. Representatives of both the sides were heard at length. Case records carefully perused. 5. The roots for the levy of penalty lie in the assessment order dated 26.12.2017 framed u/s 143(3) of the Income-tax Act, 1961 [the Act, for short]. During the course of scrutiny assessment proceedings, the Assessing Officer on observation of the 3 balance sheet and Schedule of Fixed assets of the assessee company revealed that the assessee has shown addition of fixed assets totaling to Rs. 362,47,16,622/- during the year on which depreciation of Rs. 1,31,23,89,126/- was claimed by the assessee. The assessee was asked to justify the claim of depreciation. 6. In response, the assessee submitted that out of total addition to fixed assets, the addition worth Rs. 3,20,87,76,823/- was on account of acquisition of wind Turbine Generators and allied machineries on which the assessee was eligible to depreciation @ 80%. The assessee further submitted that since the machines were used for less than 180 days it had charged depreciation @ 40% only. 7. The assessee was show caused to explain as to why depreciation claimed by the assessee at a higher rate of 80% may not be disallowed and restricted to the rates applicable to those assets as per the provisions of the Act. In response, the assessee replied that such expenditure is part of wind mill, eligible for escalated deprecation. 4 8. However, the Assessing Officer was of the view that depreciation of 80% should be restricted only to the actual renewal energy devices and disallowed depreciation of Rs. 16,95,41,149/-and assessed the income at (-) 114,63,94,560/- as against income of Rs. (-) 131,59,35,708/- declared in the revised return. The AO simultaneously initiated the penalty proceedings u/s 271(1)(c). 9. In the penal proceedings, the Assessing Officer was convinced that the assessee has deliberately furnished inaccurate particulars of his income rendering itself liable for penalty u/s 271(1)(c) of the Act. Accordingly, penalty of Rs. 5,50,07,625/- was levied u/s 271(1)(c) of the Act. 10. The assessee carried the matter before the CIT(A) and was successful in convincing the first appellate authority that the decision of the co-ordinate bench in assessee’s own case in ITA No. 4568/DEL/2019 squarely apply. 5 11. The ld. CIT(A), after considering the facts and submissions, deleted the penalty amounting to Rs. 5,50,07,625/-. 12. Now the aggrieved Revenue is in appeal before us. 13. Before us, the ld. AR vehemently stated that merely because the claim of depreciation was denied, would not lead to furnishing of inaccurate particulars of income. Further, the ld. counsel for the assessee relied upon the decision of the co-ordinate bench in its own case in ITA No. 4568/DEL/2019 order dated 26.03.2022 relied upon by the ld. CIT(A), where the quantum addition has been deleted. Therefore, the ld AR submitted that the penalty so levied u/s 271(1)(c) of the Act is bad on facts of the case and should be deleted. 14. Per contra, the ld. DR strongly supported the findings of the Assessing Officer. 6 15. We have heard the rival submissions and have perused the relevant material on record. We find that this issue in quantum appeal has been decided in favour of the assessee and against the Revenue by the decision of the co-ordinate Bench [supra] as is evident from the finding of the ld. CIT(A) at Para 6.2.1 wherein the ld. CIT(A) has cancelled the penalty so levied by relying upon the order of the co-ordinate bench [supra] and allowed the appeal of the assessee. In view of the above facts, the legal dictum of “Sublato Fundamento Cadit Opus”, applies meaning thereby, that in case the foundation is removed, the super structure falls. Since the foundation [quantum addition] has been removed, the super structure i.e. penalty must fall. Accordingly, we direct the AO to delete the penalty. 16. Appeal of the Revenue is, therefore, dismissed. ITA No. 2608/DEL/2024 [A.Y 2016-17] 17. The facts of the A.Y 2016-17 are pari materia with the facts of the AY 2015-16 considered and decided by us hereinabove. In view of the above, this appeal of the Revenue is also dismissed. 7 18. To sum up, both the appeals of the Revenue in ITA Nos. 2607 & 2608/DEL/2024 are dismissed. The order is pronounced in the open court on 24.10.2024. Sd/- Sd/- [CHALLA NAGENDRA PRASAD] [NAVEEN CHANDRA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 24th October, 2024. VL/ Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) Asst. Registrar, 5. DR ITAT, New Delhi 8 Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order "