2011 (8) TMI 1268 - AT - Income Tax

ITAT cancels penalty for claiming full depreciation on trucks, deeming it a genuine mistake

Oscar Freight P. Ltd. Versus Income Tax Officer - 8 (2) (4), Mumbai

The ITAT allowed the appeal, canceling the penalty imposed on the assessee for claiming full depreciation on trucks not put to use before a specified ... - Issues involved: Levy of penalty u/s 271(1)(c) on restriction of depreciation to 50% of claimed amount due to trucks not being put to use before a specified date.Summary:The appeal was against the order of the CIT(A) regarding the penalty imposed on the assessee for claiming full depreciation on three trucks purchased in August and September 2003, despite not being put to use before 30th September 2003. The A.O. restricted depreciation to 50% and levied a penalty, which was sustained by the CIT(A) based on findings that the trucks were registered and insured in October 2003, indicating they were not in use before the specified date. The assessee argued that the claim was a bonafide mistake and cited various case laws to support their position.The ITAT considered the facts, noting that the trucks were purchased before 30th September 2003 and body building work was initiated before that date. The registration of the trucks on 14th October 2003 indicated they were ready for use before that date. The ITAT opined that the claim of full depreciation was a bonafide mistake and did not warrant a penalty under section 271(1)(c). Citing judicial principles and case laws, the ITAT concluded that the higher claim of depreciation due to a genuine mistake did not amount to furnishing inaccurate particulars or concealment of income, thus canceling the penalty levied.In light of the above analysis, the ITAT allowed the appeal, canceling the penalty imposed on the assessee.