J K FOOTWEAR P.LTD, MUMBAI V. ITO 10(2)(1), MUMBAI

ITA 3563/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2497 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 16-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Assessee Lawyers: AMBRISH MEHTA
• Keywords: Depreciation; Bonafide mistake
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO. 3563 / MUM . /2017 ( ASSESSMENT YEAR : 20 12 13 ) J.K. FOOTWEAR PVT. LTD. PLOT NO.61, MAROL CO OPERATIVE INDUSTRIAL ESTATE, SAKINAKA ANDHERI (E), MUMBAI 400 058 PAN AACCR8689R . APPELLANT V/S INCOME TAX OFFICER WARD 10(2)(1), MUMBAI . RESPONDENT ASSESSEE BY : SHRI AMBRISH MEHTA REVENUE BY : SHRI RAJEEV GUBGOTRA DATE OF HEARING 13 . 1 2 .201 8 DATE OF ORDER 08.03.2019 O R D E R PER SAKTIJIT DEY, J.M. A FORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 2 8 TH FEBRUARY 201 7 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 17 , MUMBAI , CONFIRMING PENALTY IMPOSED OF ` 2,28,458, UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) FOR THE ASSESSMENT YEAR 20 1 2 13 . 2 J.K. FOOTWEAR PVT. LTD. 2 . BRIEF FACTS ARE, THE ASSESSEE IS A COMPANY. AS STATED BY THE ASSESSING OFFICER, IT WAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORTING LEATHER FOOTWEA R. HOWEVER, SUBSEQUENTLY THE ASSESSEE STOPPED ITS BUSINESS ACTIVITY AND LET OUT ITS BUSINESS PREMISES AND IS EARNING RENTAL INCOME WHICH HAS BEEN OFFERED TO TAX AS INCOME FROM HOUSE PROPERTY . IN COU RSE OF ASSESSMENT PROCEEDINGS, W HILE VERIFYING THE RETURN OF INCOME FILED BY THE ASSESSEE , THE ASSESSING OFFICER NOTICED THAT THOUGH THE ASSESSEE HAS OFFERED THE RENTAL INCOME RECEIVED FROM LETTING OUT THE BUSINESS PREMISES AS INCOME UNDER THE HEAD HOUSE PROPERTY, HOWEVER, IT HAS CLAIMED DEPRECIATION @ 10% AMOUNTING TO ` 7,39,347, ON THE SAID BUILDING. HE, THEREFORE, CALLED UPON THE ASSESSEE TO EXPLAIN WHY THE DEPRECITION CLAIMED SHOULD N OT BE DISALLOWED. AS OBSERVED BY THE ASSESSING OFFICE R, THE ASSESSEE AGREED TO THE PROPOSED DISALLOWANCE. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED THE DEPRECIATION CLAIMED OF ` 7,39,347. ON THE BASIS OF SUCH DISALLOWANCE THE ASSESSING OFFICER INITIATED PR OCEEDING FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ALLEGING FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. THOUGH, THE ASSESSEE FILED ITS EXPLANATION OPPOSING IMPOSITION OF PENALTY, HOWEVER, THE ASSESSING OFFICER PASSED AN ORDER ON 28 TH SEPTEMBER 2015, IMPOSING PENALTY OF ` 2,28,458 UNDER SECTION 271(1)(C) OF THE ACT ALLEGING FURNISHING OF INACCURATE PARTICULARS OF INCOME. THOUGH, THE ASSESSEE CHALLENGED THE PE NALTY ORDER SO PASSED BEFORE LEARNED 3 J.K. FOOTWEAR PVT. LTD. COMMISSIONER (APPEALS), HOWEVER, IMPOSITION OF PENALTY UNDER SECTION 271(1 )(C) OF THE ACT WAS CONFIRMED. 3 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , FOLLOWING ITS EARLIER YEARS PRACTICE, IN THE IMPUGNED ASSESSMENT YEAR ALSO THE ASSESSEE FILED RETURN OF INCOME CLAIMING DEPRECIATION INADVERTENTLY. HE SUBMITTED , ONCE THE ASS ESSING OFFICER BROUGHT TO THE NOTICE OF THE ASSESSEE THAT DEPRECIATION IS NOT ALLOWABLE, THE ASSESSEE IMMEDIATELY ACCEPTED ITS MISTAKE AND AGREED FOR THE DISALLOWANCE DEPRECIATION . HE SUBMITTED , TO PROVE ITS BONAFIDE THE ASSESSEE HAD REVISED ITS RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2014 15 BY ADDING BACK DEPRECATION CLAIMED IN THE ORIGINAL RETURN OF INCOME. HE SUBMITTED , IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2015 16, THE ASSESSEE HAD NOT CLAIMED ANY DEPRECIATION. THUS, HE SUBMITTED , THE MISTAKE/ ERROR IN CLAIMING DEPRECATION BEING BONAFIDE, PENALTY UNDER SECTION 271(1)(C) OF THE ACT SHOULD NOT HAVE BEEN IMPOSED. 4 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE ASSESSIN G OFFICER AND LEARNED COMMISSIONER (AP PEALS). 5 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. UNDISPUTEDLY, THE ASSESSEE HAS WRONGLY CLAIMED DEPRECIATIO N ON THE BUILDING LET OUT BY IT. H OWEVER, THE FACTS ON RECORD REVEAL THAT 4 J.K. FOOTWEAR PVT. LTD. SIMILAR CLAIM WAS MADE BY THE ASSESSEE IN PREC EDING ASSESSMENT YEARS AS WELL . FURTHER, IT IS SEEN FROM THE MATERIALS PLACED BEFORE US, THE RETURN OF I NCOME FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2014 15 CLAIMING DEPRECIATION WAS SUBSEQUENTLY REVISED DISALLOWING THE DEPRECIATION. FURTHER, IN THE RET URN OF INCOME FILED FOR THE ASSESSMEN T YEAR 2015 16, THE ASSESSEE HAS NOT CLAIMED ANY DEPRECIATION. KEEPING IN VIEW THE AFORESAID FACT S, ASSESSEES EXPLANATION THAT DEPRECIATION CLAIMED IN THE IMPUGNED ASSESSMENT YEAR WAS DUE TO AN INADVERTENT AND BONAFIDE MISTAKE IS ACCEPTABLE. THAT BEING THE CASE, WE ARE INCLINED TO DELETE THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING TO ` 2,28,458. GROUND RAISED IS ALLOWED. 6 . I N THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COUR T ON 08.03.2019 SD/ N.K. PRADHAN ACCOUNTANT MEMBER SD/ SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 08.03.2019 5 J.K. FOOTWEAR PVT. LTD. COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI