S P Associates Management Consultants Private Limited, New Delhi V. ACIT(OSD) Ward-22(1), New Delhi

ITA 1807/DEL/2020

AI Insights

The case involves S.P. Associates Management Consultants Private Limited, which appealed against the penalty order issued by the Assessing Officer for the Assessment Year 2016-17. The penalty was imposed due to an incorrect claim of depreciation on fixed assets, where the company mistakenly claimed depreciation on the gross block instead of the net block. The company argued that this was an isolated incident and promptly corrected the mistake, which did not affect the revenue. The Tribunal considered the submissions and evidence provided, including the company's loss return and the corrected depreciation calculation, and found no culpability or intent to mislead on the part of the assessee.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121711 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 07-02-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 02-11-2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 6; 64; 13; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G” DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER I.T.A. No.1807/DEL/2020 Assessment Year 2016-17 S.P. Associates Management Consultants Private Limited, R-700, New Rajender Nagar, New Delhi. Vs. ACIT (OSD), Ward-22(1). TAN/PAN: AAJCS3349G (Appellant) (Respondent) Appellant by: Shri Pavan Tamrakar, CA Respondent by: Shri Jeetandra Kumar, Sr.DR Date of hearing: 08 02 2023 Date of pronouncement: 13 02 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: T he capti oned app eal has b ee n f il ed b y the A sse ssee a gainst the or de r of t he Commissi on er o f Income T ax (Ap peals )-V I II, N ew D elhi ( ‘C IT (A )’ i n s hor t) da te d 17. 08. 2020 a rising fr om the penalt y order da ted 31. 05. 2019 pass ed b y t he Assessing O f fi ce r under Sect io n 271(1)(c ) of the Inco me T ax A ct, 1961 ( th e A ct ) conce rn ing AY 2016-17. 2. A s pe r t h e g ro un d s o f a p p ea l , t he a ss e ss e e h a s cha l l e n ge d t he i mp o si t i o n o f p e n a l t y o f R s. 4, 77 , 5 64 / - a t t r i b ut ab le t o re du c t i on o f c la i m o f d e p r e c i a t i o n a l l o w a n c e s t o R s. 1 3 , 6 1, 85 4/ - i ns t e ad o f Rs. 2 9 , 07, 3 7 0/ - cl a i m e d by th e a s se s se e . 3. W h e n th e ma t t e r w as c a l l e d f o r h e ar i n g, t h e l d . c o u n se l su b mi t t e d t h a t t he a s se ss ee c o m pa n y , by mi st ak e, c la i m e d I.T.A. No.1850/Del/2021 2 de p r e c i a ti on on fi x e d a ss e t s on gr o ss b lo ck i n st e ad o f n e t bl oc k o f a ss et s i n t he A ss es s m e nt Y ea r 2 01 6 - 1 7 i n q ue st i o n. I t w a s fur t h e r st a t e d th at as se ss e e h a s ad op te d t he S t ra i gh t Li ne M e t h o d (S L M ) a s a n a c c o un ti n g p o l i c y o f t h e c o mp a n y u nd e r C o m p a n i e s A c t , 20 13 i n t he a bo v e a ss es s m e nt y e a r a nd t h e s a me m e t h o d o f d ep r e ci a t io n, b y mi st a ke , w a s a d o p t e d fo r c a lc u l a t i o n o f de pr ec i a t i on o n fi x e d a ss et s fo r i n c o m e t a x pu r p os e s i ns t e a d o f w r it t e n dow n v a lu e m e t h o d a t t he ra t e pr e sc ri b e d un de r t h e I nc o m e T a x A c t . It w a s s ub m i t t e d th at ha v i n g r e a l i ze d t h e mi st a k e, t h e o r i gi n a l a nd r ev ise d de p re ci a t i o n c al c u l a t i o n sh ee t a s pe r In co me T a x A c t w e re p r ov i de d t o t h e A sse s si n g O f fi c e r i n t he qu a n t u m p r o ce e di ng s al on g w i t h n o t ic e t o a cc ou nt s s ho w i n g t h e a c c o un ti n g po l i c y o f d e pr e c ia ti o n o n fi x e d a ss et s u n d e r C o m p a ni e s A c t . It w a s fu r t h e r su b mi t t ed t h at de p r e c i a ti on w a s r i ght l y c l ai m e d i n t h e A s s es s m e n t Y ea r s 2 01 7- 1 8 a nd 20 1 8 - 1 9 a n d it i s on l y a n i so l a te d i nc i de nt o f m i st a k e i n A sse s s me nt Y e a r 2 01 6 -1 7 i n q ue st io n fo r w h i c h n o l os s o f re ve nu e ha s o c c ur r e d t o t he D e p ar t m e n t . Th e l d . c ou ns e l furt he r su p p or t ed i t s c as e t ha t t h e a s se sse e h a s fi l ed a l oss re t u r n o f Rs. 34, 8 4, 6 5 8 / - du r i n g th e y e a r a n d t he re be i n g n o t a x l i a bi l i t y a ri si ng due t o s uc h mi st a ke a n d t h u s u r ge d fo r a b e n i g n vi e w b e t a k e n ins o f a r a s t h e i mp o si t i o n o f p e na l t y i s c on ce r n e d. 4. T he l d. D R fo r t h e Re ve nu e r e li e d u p on t h e a c t i on o f t h e Re ve n u e A u t h o ri t i e s. 5. W e h a v e c a re fu l l y c on si d e r e d t h e r iv a l s ub mi ss i on s. W e n ot i c e a t t h e o u ts e t t ha t t h e a ss e s se e ha s fi l e d a lo s s ret ur n o f R s. 34. 4 8 l ak h w hi c h h as b e e n b r o u gh t d o w n t o R s. 19 . 39 l ak h b y th e A sse ss in g O ff ic e r i n th e qu an t u m p ro c e e d i ng s on a c c o un t o f i nc o r re c t c l a i m o f de p r e c i a ti on a l l ow a nc e s . I t i s a l s o m a t t e r o f r e c o rd t ha t a sse ss e e ha s a do p t e d S tr a i g ht L in e M et ho d a s a n ac c o u n t i n g p o l i cy un de r t h e Co m p a n i e s A c t w hi c h w a s a l so a p p li e d f or ta x pu r po ses. T h e I.T.A. No.1850/Del/2021 3 a ss es se e h a s p ro m p t l y a cc e pt ed t h e m i st a ke a n d cl a im e d t h e sa m e t o be bo n a f i d e. 6. I t i s tr it e th at i n c or r ec t cl a i m, w h i c h i s no t sus t a i na bl e i n la w , by i t s e l f, w il l n ot t a nt a mo u nt t o fu r ni s h i n g i n ac c ur a t e p a r t i c u l a rs re g a r d i n g i n c o m e o f t he a sse ss e e . It is a l s o t r it e t h a t p e n a lt y sh o u l d or d i n a r i l y n o t be i mp o se d u n l e s s t h e p a rt y ob li g ed e i t he r a ct e d de l ib er a te l y in d e f ia n c e o f l a w o r w as g u i l t y o f c on t u m a c i o us o r di s ho ne st c o nd uc t or a c t e d i n c o nc io u s d is r e g a r d o f i t s o bl i ga t i o n s. Th e p e n a l ty u n d e r S e c ti on 2 7 1 (1 )( c) s ho ul d n ot b e im po s e d me re l y be c au se i t i s la w fu l t o d o so . 7. I n t he in st a n t c a se, t he as se ss e e de mo n st r a t ed it s b o n a f i d e an d t he mi st ak e c o m m i t t e d by t h e a ss e s se e ha s n o t r e s ult ed in an y l o ss t o t he r e v e n u e p e r s e. U nd er t h e c i rc u m s ta n c e s, w e a re i nc l i n e d t o a gr e e w i th t he c o n t e n t i o n s r a i s e d o n b eh a l f o f t he a s se ss e e to w ar ds a bs e n c e o f a ny c u l p a b i l i t y a nd c o n s eq u e n t e xo n e r a t io n fro m t he c lu tc he s o f pe na l t y . 8. T he o r d e r o f t h e CI T (A ) i s t hu s s e t a s i d e a nd t he A ss e ss in g O ff ic e r i s d i r e c t ed t o de l e t e t h e i m p ug n e d pe na l t y. 9. I n t h e re s ul t , th e a p p e a l o f th e a s se ss e e i s a l lo w ed . Order pronounced in the open Court on 13/02/2023. Sd/- Sd/- [NARENDER KUMAR CHOUDHRY] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /02/2023 Prabhat