M/s. B.L. International, New Delhi V. ACIT, New Delhi

ITA 1590/DEL/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2974 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 18-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH ARORA
• Assessee Lawyers: S L ANURAGI
• Keywords: Depreciation; Wrong claim

Judgement Text

\IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA : JUDICIAL MEMBER ITA NO. 1590/DEL/2014 ASSTT. YRS: 2009-10 M/S B.L. INTERNATIONAL, VS. ACIT, CIRCLE 24(1), 50/7, YUSUF SARAI, NEW DELHI. NEW DELHI. PAN: AAAF 5312 N ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI RAJESH ARORA CA ASSESSEE BY : SHRI S.L. ANURAGI DR DATE OF HEARING : 17/02/2016. DATE OF ORDER : 03/03/2016. O R D E R PER S.V. MEHROTRA, A.M: THIS IS ASSESSEES APPEAL AGAINST THE ORDER DATED 15.01.2014, PASSED BY THE LD. CIT(A)-XXIII, NEW DELHI, RELATING TO A. Y. 2009-10. 2. BRIEF FACTS OF THE CASE ARE THAT DURING THE YEA R UNDER CONSIDERATION THE ASSESSEE HAD SHOWN INCOME FROM BUSINESS OR PROFESSI ON, INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES AND HAD FILE D RETURN DECLARING INCOME OF RS. 3,27,79,273/-. IN COURSE OF ASSESSMEN T PROCEEDINGS THE AO NOTICED THAT DURING THE YEAR ASSESSEE HAD SHOWN RE NTAL INCOME OF RS. 29,26,000/- IN RESPECT OF PROPERTY AT A-78, SECTOR 63, NOIDA. THIS INCOME 2 ITA 1590/DEL/2014 WAS SHOWN UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND 30% DEDUCTION THEREOF HAD BEEN CLAIMED U/S 24(A) OF THE I.T. ACT. THE AO FURTHER NOTICED THAT THIS PROPERTY WAS APPEARING IN THE FIXED ASSET S OF THE ASSESSEES FIRM AND DEPRECIATION OF RS. 7,87,734/- HAD BEEN CLAIMED THE REON. THIS FACT, WHEN CONFRONTED TO ASSESSEE, IT VIDE LETTER DATED 13.12. 2011, SUBMITTED THAT DEPRECIATION HAD INADVERTENTLY BEEN CLAIMED ON THE SAME AND WITHDREW THE CLAIM. THE AO INITIATED PENALTY PROCEEDINGS U/S 271 (1)(C). THE ASSESSEE, IN REPLY TO PENALTY NOTICE, REITERATED THAT DEPRECIATI ON HAD INADVERTENTLY BEEN CLAIMED ON THE SAID PROPERTY, WHICH, ON REALIZATION BY THE ASSESSEE, WAS VOLUNTARILY OFFERED TO BE ADDED TO THE RETURNED INC OME OF THE ASSESSEE. THE ASSESSEE SUBMITTED THAT THE ADDITION MADE BY THE AO WAS INSTANTLY AGREED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT BEC AUSE THE ASSESSEE REALIZED THAT ACCOUNTING ERROR HAD CREPT IN THE CO MPUTATION AND, THEREFORE, NO PENALTY SHOULD BE LEVIED. THE AO, HOWEVER, DID N OT ACCEPT THE ASSESSEES CONTENTION BASED ON VARIOUS CASE LAWS AND LEVIED A PENALTY OF RS. 2,67,751/- U/S 271(1)(C), WHICH WAS THE MINIMUM IMPOSABLE BEI NG 100% OF THE TAX SOUGHT TO BE EVADED. 3. IN APPEAL, THE LD. CIT(A) CONFIRMED THE AOS ACT ION. 4. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E US. SOLE EFFECTIVE GROUND TAKEN IS AS UNDER: 3 ITA 1590/DEL/2014 THE LD. CIT(A) HAS ERRED IN LAW AND FACTS OF THE C ASE IN CONFIRMING PENALTY OF RS. 2,67,751/- U/S 271(1)(C) OF THE INCOME TAX ACT, 1961, IGNORING THE SUBMISSION AND EXPLANATIONS OF ASSESSEE, WHICH IS HIGHLY UNJUSTIFI ED, ARBITRARY, BAD IN LAW AND UNCALLED FOR. 5. LD. COUNSEL REFERRED TO PAGE 2 OF THE PB, WHEREI N THE COMPUTATION OF TOTAL INCOME IS CONTAINED AND POINTED OUT THAT ASSE SSEE HAD CLEARLY GIVEN DETAILS IN REGARD TO INCOME FROM HOUSE PROPERTY AND SEPARATELY CONSIDERED THE DEPRECIATION ALLOWABLE AS PER SECTION 32. HE PO INTED OUT THAT THE COMPUTATION WAS PREPARED BY A PROFESSIONAL AND DUE TO INADVERTENCE THE DEPRECIATION CLAIMED ON PROPERTY IN BOOKS OF A/C W AS LEFT TO BE INCLUDED IN THE TOTAL INCOME, AS ASSESSEE HAD ALREADY CLAIMED DEDUCTION U/S 24(A) WHILE COMPUTING INCOME FROM HOUSE PROPERTY. HE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PRICE WATERHOU SE COOPERS (P) LTD. VS. CIT 348 ITR 306, WHEREIN IT HAS BEEN HELD THAT IF THERE WAS A BONA FIDE AND INADVERTENT ERROR, THEN THE PENALTY IS NOT LEVI ABLE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E PERUSED THE RECORD OF THE CASE. FACTS ARE NOT DISPUTED. ADMITTEDLY, WH EN THE ASSESSEE WAS CONFRONTED WITH THE DEPRECIATION BEING CLAIMED ON T HE PROPERTY, THE INCOME FROM WHICH HAD BEEN RETURNED UNDER THE HEAD INCOME FROM HOUSE PROPERTY, IT IMMEDIATELY REALIZED ITS MISTAKE OF COMPUTATION OF TOTAL INCOME AND AGREED FOR THE ADDITION TO ITS TOTAL INCOME. THE MISTAKE WAS INADVERTENT, IS EVIDENT 4 ITA 1590/DEL/2014 FROM THE FACT THAT ASSESSEE HAD FURNISHED RETURN OF INCOME OF RS. 3,27,79,273/- AND, THEREFORE, THERE WAS NO REASON T O MAKE A FALSE CLAIM OF A PETTY SUM OF RS. 7,87,734/-. THE PROPERTY WAS APPEA RING IN THE FIXED ASSETS SCHEDULE ALONG WITH OTHER PROPERTIES, THEREFORE, FO R ALL PRACTICAL PURPOSES, IT WAS TREATED AS A BUSINESS ASSET AND THE DEPRECIATIO N WAS, ACCORDINGLY, CLAIMED IN THE BOOKS OF ACCOUNT. THIS ASPECT IS NOT DISPUTED. IT WAS ONLY AT THE TIME OF COMPUTATION OF INCOME THAT THE ASSESSEE SHOULD HAVE MADE THE ADDITION TO THE PROFITS AS PER P&L A/C BECAUSE THE INCOME FROM THIS PROPERTY WAS RETURNED UNDER THE HEAD INCOME FROM HOUSE PROPE RTY. UNDER SUCH CIRCUMSTANCES IT CANNOT BE DISPUTED THAT HUMAN ERRO R COULD HAVE CREPT INTO WHILE MAKING THE COMPUTATION. THUS, IT IS EVIDENT T HAT ASSESSEE DID NOT MISREPRESENT THE FACTS AT ANY STAGE OF PROCEEDING. 7. THE HONBLE SUPREME COURT IN THE CASE OF PRICE W ATERHOUSE COOPERS (P) LTD. (SUPRA), UNDER SIMILAR CIRCUMSTANCES, HAS OBSERVED AS UNDER: THE CONTENTS OF THE TAX AUDIT REPORT SUGGEST THAT THERE IS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOME. THE RE IS ALSO NO QUESTION OF THE ASSESSEE FURNISHING ANY INACCURATE PARTICULARS. IT APPEARS THAT ALL THAT HAS HAPPENED IN THE PRESEN T CASE IS THAT THROUGH A BONA FIDE AND INADVERTENT ERROR, THE ASSE SSEE WHILE SUBMITTING ITS RETURN, FAILED TO ADD THE PROVISION FOR GRATUITY TO ITS TOTAL INCOME. THIS CAN ONLY BE DESCRIBED AS A H UMAN ERROR WHICH WE ARE ALL PRONE TO MAKE. THE CALIBER AND EXP ERTISE OF THE ASSESSEE HAS LITTLE OR NOTHING TO DO WITH THE I NADVERTENT ERROR. THAT THE ASSESSEE SHOULD HAVE BEEN CAREFUL C ANNOT BE DOUBTED, BUT THE ABSENCE OF DUE CARE, IN A CASE SUC H AS THE 5 ITA 1590/DEL/2014 PRESENT, DOES NOT MEAN THAT THE ASSESSEE IS GUILTY OF EITHER FURNISHING INACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. 8. IN VIEW OF ABOVE DISCUSSION, THE PENALTY LEVIED U/S 271(1)(C) IS DELETED. 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCEMENT IN OPEN COURT ON 03/03/2016. SD/- SD/- (SUDHANSHU SRIVASTAVA) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 03/03/2016. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI.