2015 (9) TMI 651 - AT - Income Tax

Tribunal Upholds CIT(A) Decision on Penalty, Emphasizes Bona Fide Explanations

The Tribunal upheld the CIT(A)'s decision to delete the penalty imposed under section 271(1)(c) of the Income Tax Act on the assessee for disallowing ... Levy of penalty u/s 271(1)(c) - disallowance of claim of depreciation on land - assessee submitted that he had computed and claimed the depreciation on land due to misconception and confessed the mistake at the time of hearing by submitting a fresh depreciation chart - CIT(A) deleted penalty levy - Held that:- Order of the Ld. CIT(A) finds support from the order of the Tribunal passed in the case of the assessee itself in the immediately preceding assessment year 2005-06 on identical set of facts. No specific error could be pointed out by the Ld. D.R. in the above-quoted order of the CIT(A). The Ld. DR could not bring any materials on record to show that the order of the Tribunal in assessee’s own case, relied on by him, for deleting the levy of penalty was varied in appeal by any higher forum. We find that the order of the Ld. CIT(A) is supported by the decision of the Hon’ble Supreme Court in the case of CIT-vs- Reliance Petro Products Pvt. Ltd.(2010 (3) TMI 80 - SUPREME COURT) wherein held a mere making of an claim not sustainable in law, would not invite penalty. - Decided in favour of assessee. Issues Involved:Levy of penalty under section 271(1)(c) of the Income Tax Act for disallowing claim of depreciation on land.Detailed Analysis:Issue 1: Levy of PenaltyThe primary issue in this case revolved around the levy of penalty under section 271(1)(c) of the Income Tax Act. The Assessing Officer (AO) disallowed the claim of depreciation on land by the assessee company, leading to an addition of Rs. 54,92,794 to the income. Subsequently, a notice was issued under section 271(1)(c) by the AO, alleging deliberate furnishing of inaccurate particulars of income and concealment of income to reduce tax liability.Assessee's Submission and AO's DecisionThe assessee contended that the depreciation claim on land was due to a misconception, and the mistake was acknowledged during the hearing by submitting a revised depreciation chart. However, the AO, not satisfied with this explanation, held that the assessee deliberately furnished inaccurate particulars and concealed income, thereby levying a penalty of Rs. 18,77,731 under section 271(1)(c).Appellate ProceedingsThe assessee appealed before the Commissioner of Income Tax (Appeals) [CIT(A)], citing a previous decision in the assessment year 2005-06 where a similar penalty was deleted in favor of the assessee by the CIT(A) and upheld by the Tribunal. The CIT(A) in the present case also referred to the earlier decision and observed that the penalty imposed by the AO was not in accordance with the law, ultimately deleting the penalty.Judgment and ConclusionThe Tribunal upheld the CIT(A)'s order, emphasizing that the order was consistent with the decision in the assessee's previous assessment year. The Tribunal found no specific error in the CIT(A)'s order and dismissed the appeal of the Revenue. The Cross Objection filed by the assessee was deemed infructuous as there was no grievance against the CIT(A)'s order. The appeal by the Revenue was dismissed, and the Cross Objection by the assessee was also dismissed as infructuous.In conclusion, the Tribunal's judgment focused on the consistent application of legal principles across assessment years, leading to the dismissal of the Revenue's appeal and the Cross Objection by the assessee. The decision highlighted the importance of bona fide explanations and the absence of evidence supporting deliberate concealment or furnishing of inaccurate particulars of income in determining the levy of penalties under the Income Tax Act.