SACS POWER PVT. LTD.,MADURAI V. ACIT, CIRCLE-2(1), TRICHY

ITA 2159/CHNY/2024

AI Insights

The case involves SACS Power Pvt. Ltd., which appealed against the penalty imposed by the Assistant Commissioner of Income Tax for an excess claim of depreciation in the Assessment Year 2016-17. The company had initially claimed a higher Written Down Value (WDV) for depreciation purposes, leading to an excess depreciation claim. This discrepancy was attributed to a clerical error where the WDV as per the Companies Act was mistakenly used instead of the WDV as per the Income Tax Act. The Assessing Officer (AO) initiated a penalty under section 271(1)(c) for furnishing inaccurate particulars of income, which was later sustained by the CIT(A) but reduced in amount. The Tribunal, referencing a Supreme Court decision, found that the penalty was not applicable as the mistake was bona fide and corrected promptly.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 29871 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Other Referred Cases: Pricewaterhousecoopers Pvt. Ltd. vs. CIT 348 ITR 306 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G. SARATHA
• Assessee Lawyers: T.VASUDEVAN
• Keywords: Depreciation; Bonafide mistake
• Section: 143(3)

Judgement Text

" आयकर अपीलीय अिधकरण, ‘ए’ \u0011ा यपीठ, चे\u0016ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI \u0019ी एबी टी. वक\u001e, \u0011ा ियक सद! एवं \u0019ी जगदीश, लेखा सद! क े सम( BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2159/Chny/2024 िनधा:रण वष: /Assessment Year: 2016-17 SACS Power Pvt. Ltd., 3/314, Chinthamani Road, Rajaman Nagar Bus Stop, Madurai – 625 009. [PAN: AAHCS 4952P] Vs. The Asst. Commissioner of Income Tax, Circle-2(1), Trichy. (अपीलाथ\u0007/Appellant) (\b\tयथ\u0007/Respondent) अपीलाथ\u001e की ओर से/ Appellant by : Shri T. Vasudevan, Advocate IJथ\u001e की ओर से /Respondent by : Mrs. G. Saratha, Addl. CIT सुनवाई की तारीख/Date of Hearing : 19.11.2024 घोषणा की तारीख /Date of Pronouncement : 14.02.2025 आदेश / O R D E R PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2016-17 arises out of the order of Learned Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi [hereinafter “CIT(A)”] dated 18.06.2024 in the matter of assessment framed by the Assessing Officer [AO] u/s. 143(3) r.w.s 143(3A) of the Income-tax Act,1961 (hereinafter “the Act”) on 24.12.2018. ITA No.2159/Chny/2024 :- 2 -: 2. The effective ground of appeal in this appeal of assessee is against in confirming the penalty levied u/s. 271(1)© of the Act on excess claim of depreciation of Rs. 11,49,603/-. 3. The brief facts of the case are that the assessee-company has filed its return of income declaring loss of Rs.1,07,12,560/- on 15.10.2016. During the course of assessment proceedings, the A.O found that assessee has taken opening WDV as on 01.04.2015 of Rs. 4,53,34,421/- as against WDV of Rs. 3,76,00,374/-as on 31.03.2015 . The A.O accordingly computed excess claim of depreciation by assessee by Rs. 37,10,697/- and initiated penalty u/s. 271(1)© of the Act. The assessee has explained the difference in WDV due to clerical by wrongly copying WDV as per Companies Act in place of WDV as per Income tax Act. The A.O rejected the assessee’s explanation and levied penalty of Rs. 11,46,605/- u/s. 271(1)© of the Act for furnishing inaccurate particulars of income. Aggrieved, the assessee filed an appeal before Ld. CIT(A). The Ld. CIT(A) has reduced the excess claim of depreciation at Rs. 11,49,603/- in quantum appeal and accordingly sustained penalty to the extent of tax sought to be evaded on Rs.11,49,603/-. 4. The Ld. Authorized Representative (A.R) of the assessee has argued that the accountant incorrectly copied WDV as per Companies ITA No.2159/Chny/2024 :- 3 -: Act , while preparing depreciation chart for income tax purposes. The Ld AR argued that this was merely a mistake which was subsequently corrected as soon as it was brought in its notice. The Ld. AR relied on the decision of Hon’ble Supreme Court in the case of Pricewaterhousecoopers Pvt. Ltd. vs. CIT 348 ITR 306 (SC), wherein it was held that penalty cannot be levied in cases of bonafide mistakes. The Ld. AR further submitted that upon noticing the incorrect claim during the course of assessment, assessee has revised the return of income for subsequent years. The Ld. AR has submitted that there was no malafide intention behind the excess depreciation, as the assessee company was already reporting a loss. 5. The Ld. Departmental Representative (DR), on the other hand, relied on the orders of lower authorities. 6. We have heard the rival submissions, and perused the materials available on record. The assessee-company has claimed depreciation of Rs. 55,47,326/- in the income tax return. The assessee , whiling computing depreciation has taken WDV as on 01.04.2015 at Rs.4,53,34,421/- instead of the correct WDV as on 31.03.2015 at Rs.3,76,00,374/-. The assessee has explained it as clerical mistake due to copying WDV as per Company Act while computing depreciation for income tax purposes. The assessee has explained ITA No.2159/Chny/2024 :- 4 -: that there is no malafide intention behind the incorrect claim, as the assessee-company was already incurring a loss, and it has revised the return of income for subsequent year correcting the WDV. We find that the A.O has levied penalty for furnishing inaccurate particulars of income on excess claim of depreciation of Rs. 37,10,697/-, which was later reduced by Ld. CIT(A) to Rs.11,49,603/-. The assessee has attributed the incorrect depreciation claim to clerical mistake in copying WDV as per Companies Act instead of the correct WDV as per income tax Act. The correct claim of depreciation was clearly reported in audit report. In light of this, the case is covered by the decision of Hon’ble Supreme Court in the case of Price Water housecoopers Pvt. Ltd. vs. CIT, supra. The penalty levied is, accordingly cancelled. 7. In the result, the appeal filed by the assessee is allowed. Order pronounced on 14th February, 2025. Sd/- Sd/- (एबी टी. वक\u001e) (ABY. T. Varkey) \u0011ाियक सद! / Judicial Member (जगदीश) (Jagadish) लेखा सद! /Accountant Member चे\u0010नई/Chennai, \u0013दनांक/Dated: 14th February, 2025. EDN/- ITA No.2159/Chny/2024 :- 5 -: आदेश क\u0016 \bितिल\u0019प अ\u001aे\u0019षत/Copy to: 1. अपीलाथ\b/Appellant 2. \t थ\b/Respondent 3. आयकर आयु\u0010/CIT, Chennai 4. िवभागीय \tितिनिध/DR 5. गाड\u0019 फाईल/GF "