TaxTMI 
TaxTMI 
2019 (12) TMI 1152
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....nal return and in spite of the quantum addition being confirmed by the CIT(A). (ii) On facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty levied on account of confirmation of quantum addition regarding disallowance of additional depreciation claimed in the return u/s 153A vis-a-vis the claim made in the return u/s 139(1) disregarding the fact that the assessee has withdrawn the claim of depreciation based on regrouping of assets in the Statement of Facts filed before the Settlement Commission for A. Y 2007-08 and A. Y 2008-09. 3. Briefly stated, the facts of the case are that the assessee-company filed its return of income for the assessment year (AY) 2004-05 on 31.10.2004 declaring total income of Rs. 5,45,17,923/-. The Assessing Officer (AO) completed the assessment u/s 143(3) on 23.11.2006 at a total income of Rs. 5,74,26,842/-. Subsequently, it was revised u/s 251 to income of Rs. 5,67,92,399/-. A search u/s 132(1) was conducted on 30.05.2008 in the business and office premises of Dorf Ketal group. As a result of the search, the group declared undisclosed income of Rs. 7.54 crores for various assessment years in the hands of the ....
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....s wrong per se. The AO had also disallowed the claim on the ground that claim was not verifiable. The appellant submitted that from A.Y. 2006-07 onwards, the appellant was following the revised groupings for the purpose of computation of the depreciation. For the A.Y. 2006-07, the appellant had claimed the depreciation on the basis of revised grouping in the original return filed u/s 139. The AR submitted that when the notice u/s 153A was issued for A.Y. 2004-05, the appellant claimed depreciation on the basis of the new groupings of the assets in its return. On going through the statement of the regrouped assets and depreciation, I find that the claim cannot be considered mala fide in as much as the claim was neither absurd nor without any basis. Therefore, in my view, the AR of the appellant has been able to prove that the claim was bona fide. The AO had disallowed the claim on the ground that claim was not verifiable. The CIT(A) held that the revised claim of depreciation is not admissible because the issue had attained finality prior to initiation of the search. Thus, the claim was disallowed by CIT(A) on technical ground there was no finding by the CIT(A) that the claim itself....
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....bay HC), CIT v. Brahmaputra Consortium Ltd. [2011] 12 taxmann.com 486 (Delhi HC), CIT v. Manibhai & Bros [2007] 294 ITR 501 (Gujarat HC), ITO v. Vaidangi Techno Management Consultants (P) Ltd. [2017] 88 taxmann.com 832 (Jaipur- Trib) (UO) and DCIT v. Apollo Hospitals Enterprise Ltd. [2013] 35 taxmann.com 196 (Chennai-Trib)] ; that disallowance of expenditure/deduction cannot automatically lead to penalty [CIT v. Reliance Petroproducts (P) Ltd. [2010] 322 ITR 158 (SC)] ; that mere confirmation of disallowance in quantum appeal cannot invite penalty [ACIT v. VIP Industries Ltd. [2009] 30 SOT 254 (Mumbai)] ; that simply because the assessee did not challenge the addition/disallowance in quantum appeal cannot lead to penalty [CIT v. Manjunatha Cotton & Ginning Factory [2013] 35 taxmann.com 250 (Karnataka HC), Rai Industrial Power Pvt. Ltd. v. DCIT ITA No. 4862/Del/2013 (Delhi-Trib)]; that voluntary withdrawal of depreciation claim cannot invite penalty [Waman Hari Pethe Sons Private Ltd. v. DCIT ITA No. 2730/Mum/2016 (Mumbai-Trib)]; that later or subsequent events do not affect imposition of penalty [Manjunatha Cotton & Ginning Factory [2013] 35 taxmann.com 250 (Karnataka HC), HPCL Mit....
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....on by CBDT) which prohibited the assessee from making a fresh claim in the return u/s 153A. So the issue whether a fresh or new claim could be made in return u/s 153A was open when return was filed. It is thus argued by the Ld. counsel that at best one can say that the issue was debatable or that two views could be had about it or it involved a difference of opinion. Reliance is placed by him on the decision in CIT v. Petals Engineers (P.) Ltd. (2014) 42 taxmann.com 433 (Bom) and CIT v. Harshvardhan Chemicals & Mineral Ltd. (2003) 259 ITR 212 (Raj) in support of the proposition that when two views are possible or debatable issue is involved, then penalty cannot be imposed. Further, it is submitted that the claim of the assessee was bona fide on the ground that it was consistent in claiming depreciation even for later years (AYs 2006-07, 2007-08 and later years) on the basis of revised (lower) WDV which was lower for those later years. So, even though the assessee could claim lower (than the claim based on original WDV), it followed a consistent approach. It is argued that nothing mala fide was found about the revised claim of depreciation. Further, it is stated that nothing adv....
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.... a difference between the returned and assessed income, there is an inference of concealment as a rule, is not a correct contention. Finally, the Ld. counsel submits that the decision in the case of Zoom Communication Pvt. Ltd. (supra) relied on by the AO is distinguishable from the instant case on facts. 7. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. We may mention here that the case laws relied on by the Ld. counsel in respect of the satisfaction in notice u/s 274 does not arise from the instant appeal and also the fact remains that no cross objection has been filed by the assessee. The point in dispute herein is the claim of additional depreciation amounting to Rs. 75,80,338/- by the assessee on account of reclassification of certain assets resulting in change of rate of depreciation disclosed in the return of income filed u/s 153A of the Act vis-à-vis the return filed u/s 139(1) of the Act. Before the Income Tax Settlement Commission, Mumbai, (ITSC) the assessee had filed an application and disclosed 'Depreciation' as under : "10. Issue No. 8-Depreciation Regrouping of asse....
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....70,765/- towards adjustment in depreciation pursuant to withdrawal of claim of regrouping of the assets, whereas as per the subsequent application it has offered (-) Rs. 42,89,617/-. 7.2 The ITSC held the application as invalid u/s 245D(2C) on the ground that there has been no true and full disclosure by the applicant and also it failed to explain the manner of deriving such additional income. 7.3 As mentioned hereinabove, the assessee while filing the return of income u/s 153A of the Act for AY 2004-05 to AY 2009-10 had regrouped/reclassified its assets to the rate of depreciation which had resulted in the excess depreciation claim of Rs. 1,23,51,251/- for AYs 2004-05 to 2006-07. In the instant case, we are concerned with AYs 2004-05 and 2005-06. The application filed by the assessee has since been rejected by the ITSC u/s 245D(2C) of the Act, treating it as invalid. 7.4 In the case of Jain Bros v. UoI (1970) 77 ITR 107, 116 (SC), it is held that although penalty has been regarded as an additional tax in a certain sense and for certain purposes, it is not possible to hold that penalty proceedings are essentially a continuation of the proceedings relating to assessment where ....