M/S. PRESARIO PROPERTIES PRIVATE LIMITED ,MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 3(2)(1), MUMBAI

ITA 4011/MUM/2024

AI Insights

The case involves M/s. Presario Properties Private Limited, which appealed against a penalty imposed by the Deputy Commissioner of Income Tax, Mumbai, for the assessment year 2013-14. The penalty was levied following the disallowance of a depreciation claim of Rs.50,25,575, which was initially recorded in the profit and loss account despite the absence of business income. The Assessing Officer (AO) disallowed the depreciation on grounds that it was excessive compared to the income reported. The Tribunal, referencing the principles laid down by the Hon'ble Jurisdictional High Court in the case of Reliance Utilities and Power Ltd., concluded that the penalty was not justifiable as the claim was made in good faith and was consistent with previous years' practices.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 473420 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 30-10-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 12-08-2024
• Other Referred Cases: Reliance Utilities and Power Ltd. v. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KRISHNA KUMAR
• Assessee Lawyers: TARANG MEHTA
• Keywords: Business income; Depreciation

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, ‘C’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI GIRISH AGARWAL, ACCOUNTANT MEMBER ITA No. 4011/Mum/2024 (Assessment Year : 2013-14) M/s. Presario Properties Private Limited 81, 8th Floor, Maker Chambers – III, 223, Nariman Point, Mumbai – 400021. Vs. Deputy Commissioner of Income Tax, Circle 3(2)(1), Mumbai 6th Floor, Aayakar Bhavan, M. K. Road, Mumbai – 400020. PAN/GIR No. AAECP4425D (Appellant) .. (Respondent) Assessee by Shri. Tarang Mehta Revenue by Shri. Krishna Kumar (Sr. DR) Date of Hearing 30/10/2024 Date of Pronouncement 07/11/2024 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 21/06/2024 by NFAC, Delhi in relation to the penalty proceedings u/s.271(1)(c) for the A.Y.2013-14. 2. The assessee is merely aggrieved by levy of penalty of Rs.15,52,965/- on disallowance of depreciation. Besides this assessee has also challenged the validity of notice u/s.271(1)(c) ITA No. 4011/Mum/2024 M/s. Presario Properties Private Limited; A.Y. 2013-14 2 on the ground that in the notice, ld. AO has not specified the charge. 3. The brief facts are that in the profit and loss account, assessee had shown revenue from operation at ’Nil’, i.e., no business income was shown during the year and only interest on term deposit with bank and other expenses were claimed. Assessee has also shown claim of depreciation of fixed assets of Rs.50,25,575/- which ld. AO had disallowed on the ground that huge depreciation had been claimed against such had meager ’other income’ and there is no income from business. The assessee withdrew the claim of depreciation during the course of assessment proceedings. However, the ld. AO initiated penalty u/s.271(1)(c) for filing inaccurate particulars of income. Accordingly, he has also levied penalty of Rs.15,52,965/- of disallowance of depreciation of Rs.50,25,575/- holding that assessee has furnished inaccurate particulars of income and thereby concealed its income within the meaning of Section 271(1)(c). The ld. CIT(A) too has confirmed the said penalty. 4. We have heard both the parties and also perused the relevant material placed on record. It is seen that the assessee claimed depreciation on the fixed assets and claimed depreciation of property which was treated as fixed asset in the balance sheet. Since assessee did not have any business income therefore, ld. AO has disallowed the said depreciation. Even if assessee has made a claim which was bonafide as the property was classified as ’fixed asset’ and has claimed depreciation in ITA No. 4011/Mum/2024 M/s. Presario Properties Private Limited; A.Y. 2013-14 3 accordance with the rules in the earlier years also and this year, it cannot be said that assessee has furnished any inaccurate particulars of income and merely the claim has been disallowed, it does not lead to an inference that assessee has furnished any inaccurate particulars of income. Thus, following the principle laid down by the Hon'ble Jurisdictional High Court in the case of Reliance Utilities and Power Ltd., reported in 313 ITR 340, no penalty can be levied by the ld. AO merely assessee has made a claim of depreciation on fixed asset, which has been disallowed merely on the ground that there was no business income in this year. Accordingly penalty is deleted. Since, we have deleted the penalty on merits, we are not going into the issue of quashing the penalty notice on the ground that ld. AO has not struck off the relevant charge in the notice. 5. In the result, appeal of the assessee is allowed. Order pronounced on 7th November, 2024. Sd/- (GIRISH AGARWAL) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 07/11/2024 KARUNA, sr.ps ITA No. 4011/Mum/2024 M/s. Presario Properties Private Limited; A.Y. 2013-14 4 Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// "