M/s Udhera Mechanical Works, Ludhiana V. ITO, Ludhiana

ITA 882/CHANDI/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9810 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 07-07-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 07-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Depreciation; Additional depreciation; Bonafide mistake

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 882/CHD/2015 (ASSESSMENT YEAR : 2007-08) M/S UDHERA MMECHANICAL WORKS, VS. THE INCOME TAX OFFICER, (CARD BOARD UNIT), 66-C, PHASE-V, WARD 1 (3), FOCAL POINT, LUDHIANA. LUDHIANA. PAN: AAAFU2844G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI S.K. MITTAL, DR DATE OF HEARING : 07.07.2016 DATE OF PRONOUNCEMENT : 08.07.2016 O R D E R THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-1, LUDHIANA DATED 28.9.2015 FOR ASSESSMEN T YEAR 2007-08, CHALLENGING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN S HORT THE ACT). 2. I HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE FINDINGS OF THE AUTHORI TIES BELOW. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMIT TED THAT THE ACCOUNTS OF THE ASSESSEE ARE AUDITED AND T HERE WAS A MISTAKE IN CLAIMING THE ADDITIONAL DEPRECIATI ON ON 2 THE BASIS OF AUDITED ACCOUNTS AND RELIED UPON DECIS ION OF THE HON'BLE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT,348 ITR 306. 3. ON THE OTHER HAND, THE LEARNED D.R. RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F UNION OF INDIA VS. DHARMENDRA TEXTILES & PROCESSORS , 306 ITR 277 AND CIT VS. ATUL MOHAN BINDAL , 317 ITR 1, IN WHICH IT WAS HELD THAT THE PENALTY IS STRICTLY A CI VIL LIABILITY. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED ADDITIONAL DEPRECIATION AT RS.21,61,389/- O N MACHINERY. THE ASSESSEE WAS ASKED TO EXPLAIN THE C LAIM OF ADDITIONAL DEPRECIATION. THE ASSESSEE SUBMITTED THAT THE ADDITIONAL DEPRECIATION AMOUNTING TO RS.16,16,1 18/- MAY BE CONSIDERED INSTEAD OF RS.21,16,389/-, WHICH HAVE BEEN CLAIMED BY MISTAKE. THE CALCULATION TO THAT E FFECT WAS ALSO FILED BEFORE THE ASSESSING OFFICER. THE A SSESSING OFFICER ACCEPTED THE RECTIFICATION OF THE ADDITIONA L DEPRECIATION AND MADE AN ADDITION OF RS.5,45,271/- ON ACCOUNT OF EXCESS ADDITIONAL DEPRECIATION. THE ASS ESSING OFFICER NOTED THAT THE SAME HAS BEEN WITHDRAWN BEIN G WRONGLY CLAIMED. THE ASSESSING OFFICER VIDE SEPARA TE ORDER LEVIED THE PENALTY ON THIS ADDITION. 3 5. THE ASSESSEE REITERATED THE SAME SUBMISSIONS BEFORE THE LEARNED CIT (APPEALS) AND IT WAS SUBMITT ED THAT THE ABOVE CLAIM WAS MADE WITHOUT ANY INTENTION OF CONCEALMENT OF INCOME. THE ASSESSING OFFICER WAS REQUESTED TO RECTIFY THE MISTAKE ITSELF. THE ACCOU NTS OF THE ASSESSEE ARE AUDITED. THE CLAIM OF ADDITIONAL DEPRECIATION HAD INCLUDED IN RESPECT OF NEW MACHINE RY, WHICH WAS UNDER INSTALLATION ON 31.3.2006 AS WELL A S NEW MACHINERY PURCHASED AND PUT TO USE IN THE YEAR ENDI NG 31.3.2007. THE CLAIM OF ADDITIONAL DEPRECIATION WA S DISALLOWED IN RESPECT OF MACHINERY ACQUIRED PRIOR T O 31.3.2005, THOUGH THE SAME WAS INSTALLED AND PUT TO USE IN THE YEAR UNDER APPEAL. THEREFORE, IT WAS SUBMIT TED THAT THERE WAS NO MISTAKE/INACCURATE PARTICULARS HAVE BE EN FURNISHED IN THE RETURN OF INCOME. THE ASSESSEE RE LIED UPON SEVERAL DECISIONS IN SUPPORT OF THE CONTENTION . 6. THE LEARNED CIT (APPEALS), HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE LEVY OF PENALTY AND NOTED THAT THE PLEA OF THE ASSE SSEE THAT IT WAS A BONAFIDE MISTAKE, IS NOT MADE OUT FRO M THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APPEAL OF THE ASSESSEE ON THIS COUNT WAS DISMISSED. 7. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE HON' BLE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPE RS PVT. LTD. (SUPRA) CONSIDERED THE ISSUE OF FILING ST ATEMENT OF PARTICULARS WITH THE RETURN OF INCOME SHOWING PROVI SION 4 TOWARDS GRATUITY AS NOT ALLOWABLE BUT DEDUCTION CLA IMED IN RETURN INADVERTENT SILLY MISTAKE. THE ASSESSING OFFICER ALSO DID NOT NOTICE THE SAME. THEREFORE, ON PECULI AR FACTS, PENALTY WAS CANCELLED. THE HON'BLE MADRAS HIGH COU RT IN THE CASE OF CIT VS. NELLAI TRADING AUTOMOBILE AGEN CY, 288 ITR 557 CONSIDERED THE ISSUE OF UNDERVALUATION OF S TOCK. IT WAS FOND THAT THE UNDERVALUATION WAS DUE TO MIST AKE. THEREFORE, IT WAS HELD THAT IT WAS NOT A CASE OF CONCEALMENT OF INCOME AND AS SUCH, NO PENALTY WOULD BE IMPOSED. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE ABOVE DECISIONS, IT IS CLEAR THAT AT THE TIME O F CONSIDERING THE ISSUE EVEN THE ASSESSING OFFICER HA S NOT NOTICED SPECIALLY THE AMOUNT OF EXCESS ADDITIONAL DEPRECIATION CLAIMED BY THE ASSESSEE. THE ASSESSEE FILED DETAILED SUBMISSIONS BEFORE THE ASSESSING OFFICER A ND IN THAT, IT WAS EXPLAINED THAT THE ADDITIONAL DEPRECIA TION WAS CLAIMED ON THE VALUE OF MACHINERY PURCHASED UP TO 31.3.2005 THOUGH PUT TO USE IN 2006-07, OF RS.28,31,491/- BUT BY MISTAKE ADDITIONAL DEPRECIATI ON HAS BEEN CLAIMED. THE ASSESSING OFFICER WAS REQUESTED TO MAKE RECTIFICATION OF ADDITIONAL DEPRECIATION AND C ORRECT CALCULATION OF DEPRECIATION WAS FILED. THE ASSESSI NG OFFICER ACCEPTED THE CALCULATION OF THE ASSESSEE AN D WITHDRAWN THE SAME HOLDING THAT THE SAME IS WRONGLY CLAIMED. THESE FACTS WOULD CLEARLY PROVE THAT IT W AS A BONAFIDE MISTAKE MADE BY THE ASSESSEE IN CLAIMING DEPRECIATION. THE MISTAKE WAS BASED UPON THE AUDIT ED ACCOUNTS PREPARED BY THE AUDITORS. SINCE THE MISTA KE 5 COMMITTED BY THE ASSESSEE HAS BEEN ACCEPTED AT THE ASSESSMENT STAGE ITSELF AND THE MISTAKE IS RECTIFIE D BY MAKING A REQUEST TO WITHDRAW THE EXCESS DEPRECIATIO N, THEREFORE IN MY VIEW, IT IS NOT A FIT CASE OF LEVY OF PENALTY FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCUR ATE PARTICULARS OF INCOME. I, THEREFORE, SET ASIDE TH E ORDERS OF THE AUTHORITIES BELOW AND CANCEL THE LEVY OF PENALT Y. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF JULY, 2016. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED : 8 TH JULY, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH