2020 (9) TMI 669 - AT - Income Tax

Tribunal Upholds CIT(A)'s Decision to Delete Penalties for AY 1997-98

The Tribunal upheld the CIT(A)'s decision to delete penalties imposed by the Assessing Officer, relating to various sections for Assessment Year 1997-98. ... Penalty u/s 271(1)(c) - disallowance of depreciation on leased asset - HELD THAT:- This issue has already been set aside by the coordinate bench to the file of Ld. AO for re-examination. Further, the penalty on identical issue has been deleted by Tribunal for AY 1995- 96,[2018 (8) TMI 1981 - ITAT MUMBAI]wherein it was held that since the addition on the basis of which the penalty was levied does not survive, the penalty would not be sustainable.Respectfully following the same, we confirm the deletion of penalty, albeit on a different ground. Penalty on disallowance of deduction u/s 80M - We find that penalty on identical issue has been deleted by the Tribunal in the case of ICICI Limited [2017 (4) TMI 1509 - ITAT MUMBAI]. Respectfully following the same, we confirm the deletion of penalty. This ground stand dismissed. Disallowance of expenditure for increase in share capital - We find that penalty on identical issue has been deleted by the Tribunal in assessee’s own case for AY 1993-94 wherein it was held that the issue was debatable one and the same would not constitute concealment of income or furnishing of inaccurate particulars of income by the assessee. Respectfully following the same, we confirm the stand of Ld. CIT(A) in deleting the penalty on this issue. Disallowance of claim u/s 35D - We find that the assessee claimed deduction of preliminary expenses u/s 35D which was rejected by AO in terms of decision of Hon’ble Madras High Court in Agro Cargo Transport Ltd. V/s CIT [1997 (8) TMI 31 - MADRAS HIGH COURT]. We find that this issue was debatable one and the mere rejection of assessee’s claim would not necessarily tantamount to concealment of income or furnishing of inaccurate particulars of income as held in CIT V/s Reliance Petroproducts Ltd. [2010 (3) TMI 80 - SUPREME COURT] The assessee made a bona-fide claim which was not accepted by the revenue. However, same would not be good ground for levy of penalty unless it was demonstrated that there was any concealment of income / furnishing of inaccurate particulars of income by the assessee. - Decided in favour of assessee. Issues:Appeal against deletion of penalties under various sections by the CIT(A) for Assessment Year 1997-98.Analysis:1. The appeal by the revenue challenges the deletion of penalties under different sections by the CIT(A). The penalties were imposed by the Assessing Officer (AO) and contested by the Assessee. The Assessee's counsel argued that most additions/disallowances leading to penalties were either deleted by the Tribunal or sent back to lower authorities for review, making the penalties unsustainable in law.2. The material on record was considered, and it was noted that penalties were imposed based on disallowances/additions during the assessment of M/s Anagram Finance Limited. The CIT(A) deleted penalties related to depreciation, deduction u/s 80M, premium on debentures, increase in share capital, and expenses u/s 35D. The revenue appealed against these deletions.3. Regarding the disallowance of depreciation on leased assets, the Tribunal had previously set aside similar issues for re-examination, leading to the deletion of penalties. The same applied to the sale and leaseback transaction, where quantum additions were already deleted, rendering the penalties unsustainable.4. Penalties related to deduction u/s 80M, premium on debentures, and increase in share capital were also deleted following precedents and the debatable nature of the issues. The Tribunal confirmed the deletion of penalties on these grounds.5. The disallowance of claim u/s 35D was also a debatable issue, and the rejection of the claim did not imply concealment of income. The Tribunal upheld the deletion of penalty in this regard as well.6. Consequently, the Tribunal dismissed the appeal, affirming the CIT(A)'s decision to delete the penalties. The appeal was concluded on 16th September 2020.