April 2009
S. 271(1)(c) of the Income-tax Act, 1961 — Penalty for concealment — Claim made under bona fide belief rejected and penalty imposed — Whether penalty can be levied — Held, No.
By Jagdish D. Shah, Jagdish T. Punjabi, Chartered Accountants
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4 Kisanlal Sarda v. ACIT
ITAT Pune Bench ‘A’ Pune
Before Pramod Kumar (AM) and Mukul Shrawat (JM) ITA No. 241/PN/2006
A.Y. : 1994-95. Decided on : 29-8-2008 Counsel for assessee/revenue : B. V. Jhaveri/
S. Bains
S. 271(1)(c) of the Income-tax Act, 1961 — Penalty for concealment — Claim made under bona fide belief rejected and penalty imposed — Whether penalty can be levied — Held, No.
Per Mukul Shrawat :
Facts :
The case before the Tribunal was about a penalty being levied on account of the claim of inadmissible higher rate of depreciation. The facts of the case were, the assessee in the earlier two years had claimed depreciation @ 40% in respect of two vehicles which were given on hire and the same was allowed. The assessee’s claim for the same in the year under appeal was negatived by the AO on the ground that during the year, the main activity of the assessee was not that of running the vehicles on hire, hence he was entitled to depreciation @ 25% only. On appeal the CIT(A) confirmed the AO’s order. For claiming depreciation at the higher rate, the AO levied penalty of Rs.4.68 lacs, which was confirmed by the CIT(A).
Before the Tribunal the Revenue relied on the decision of the Bombay High Court in the case of Ramesh Chandra & Co. and contended that once the addition was accepted by not filing appeal against the same, the assessee has no right to challenge the levy of penalty.
Held :
The Tribunal noted that the claim by the assessee of depreciation at the higher rate was based on the advice given by his chartered accountant. Secondly, it was not the case of the Revenue that there was a deliberate attempt to conceal the vital facts of the case pertaining to the claim of depreciation, and all the necessary information on the basis of which the correct claim of depreciation had to be allowed was on record and furnished by the assessee. Accordingly, relying on the ratio in the decisions listed at S. Nos. 2 to 6 below, it held in favour of the assessee. Further, it also referred to the recent Supreme Court decision in the case of Dilip N. Shroff, where in the context of the penalty u/s.271(1)(c), the Court had observed that the AO was required to arrive at a finding that the explanation offered by the assessee was false. Based on the same, the Tribunal reversed the orders of the authorities below and allowed the appeal.
Cases referred to :
- Dilip N. Shroff 291 ITR 519 (SC)
- Orion Travels Pvt. Ltd. v. ACIT, 87 TTJ 246 (Mum.)
- Kalyani Enterprises v. ACIT, 86 TTJ 767 (Mad.)
- ITO v. Tolaram Phusanan, 88 TTJ 1040
- Udan Research & Flying Institute Pvt. Ltd. v. JCIT, (2007) 17 SOT 494 (Mum.)
- ACIT v. Malhotra Mukesh Satpal, (2008) 113 TTJ 401 (Pune)
