Subject: Form 3CD was filed by the Chartered Accountant and income tax return were filed on the advice of the Chartered Accountant.
Referred Sections:
Section 143(3) of the Act.
Section 271 (1)( c).
Section 271(1)©
Referred Cases / Judgments:
Waterhouse Coopers Pvt. Ltd. vs. CIT,
ITO vs. Silk City Petrofiles Co. Ltd.
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "C", NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
AND
SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER
I.T.A. No. 6534/DEL/2014
A.Y. : 2010-11
DR. GEETA SHROFF, VS. DCIT, CIRCLE 37(1),
487, HARDEV PURI, NEW DELHI
NEAR FATHER ANGEL
SCHOOL,
GAUTAM NAGAR,
NEW DELHI 110 049
(PAN: AATPS8326G)
(ASSESSEE) (RESPONDENT)
Assessee by : Sh. D.V. Taneja, CA
Revenue by : Sh. Hauthang, Sr. DR.
ORDER
PER H.S. SIDHU : JM
This appeal by the Assessee is directed against the order of the
Ld. Commissioner of Income Tax (Appeals)-XXVIII, New Delhi dated
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01.10.2014 pertaining to assessment year 2010-11 on the following
grounds:-
1. Ld.CIT (A) erred in facts and in confirming
Penalty imposed u/s 271 (1) (c) at Rs.3,35,850/- by
Ld. A.O.
2. Ld. CIT (A) completely overlooked the fact.
a. The mistake in claiming Depreciation on land
was never intentional. It was a Bonafide and
inadvertent error.
b. Assessee had furnished all the particulars in
Return filed.
c. Assessee never concealed the particulars of
income nor submitted false information.
d. Assessee had cooperated with Ld. A.O during
the Assessment proceedings and submitted the
information and documents as asked for:-
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e. Assessee had voluntarily computed and
surrendered the Depreciation claimed on Land and
gave complete working to arrive at cost of Land.
In fact, the Assessing Officer did not even contradict
the plea of the Assessee that excess claim of
depreciation was an inadvertent error. That part,
other element present in the instant case gave a
strong indication that the error was genuine and
bonafide and thus levy of Penalty is Bad in Law.
3. That Ld.CIT (A) confirmed levy of Penalty by
completely overlooking decided Case Laws cited and
thus penalty imposed is bad in Law.
4. That penalty confirmed and consequent tax
demand is bad in law.
2. The brief facts of the case are that Assessing Officer made
disallowance of depreciation on property No. H-8, Green Park Extn.,
New Delhi. This property was purchased by the assessee on
16.3.2007 for a total consideration of Rs. 6 crores after execution of
two purchase deeds. The assessee had at the time of purchase of
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property also purchased the land rights therein. The building comprise
of ground floor, first floor, second floor, third floor, terrace and
basement alongwith fixtures. The assessee has claimed depreciation
on the entire value of land and building. A show cause notice was
issued by the AO with regard to non-allowability of depreciation on the
value of land included in the total consideration. The assessee in
response to show cause enclosed a sheet showing the expense
depreciation claimed. For the relevant year the amount of excess
depreciation worked out to Rs. 10,86,880/-. The AO added
Rs. 10,86,880/- towards disallowance of depreciation on land and
Rs. 3,00116/- towards capitalization of patents, besides making other
disallowances. Thereafter, penalty proceedings were initiated for
disallowance of depreciation on land and capitalization of patents. In
response thereto, the Assessee submitted its reply and after
considering the reply of the assessee the AO was not satisfied with the
assessee's that the assessee had voluntarily agreed to surrender the
tax on value of the depreciation wrongly taken on land and
accordingly, the penalty of Rs. 3,35,850/- was levied upon the
assessee by the AO vide his order dated 20.09.2013 u/s. 271(1)© of
the I.T. Act.
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3. Against the above Penalty Order dated 20.9.2013 passed by the
Assessing Officer, assessee appealed before the Ld. First Appellate
Authority, who vide his impugned order dated 01.10.2014 dismissed
the appeal of the assessee by confirming the penalty imposed by the
AO.
4. Against the impugned order of the Ld. CIT(A) dated 01.10.2014,
assessee is in appeal before the Tribunal.
5. Ld. Counsel of the assessee reiterated the contents of grounds
of appeal and submitted that the assessee is a professional and senior
lady Gyne Doctor and filed income tax return at Rs. 10,58,44,690/- for
assessment year 2010-11. It was further submitted that the accounts
were audited and Form 3CD was filed by the Chartered Accountant and
income tax return were filed on the advice of the Chartered
Accountant. The bonafide/inadvertent error on claiming depreciation
on composite value of building purchased for medical profession as no
bifurcation of land and building was available. It was further submitted
that the assessee on the advice of Chartered Accountant and Auditor
carried out bifurcation cost of land and cost of building and
surrendered excess depreciation claimed at Rs. 10,86,880/- on land
with and paid tax thereon. However, assessee had furnished all the
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particulars in return filed and never concealed the particulars of
income nor submitted false information. It was the further submissions
of the ld. Counsel for the assessee that the assesse voluntarily
agreed to surrender the tax on value of depreciation wrongly taken on
land and the this mistake was never intentional. It was further
submitted that the assessee has voluntarily bifurcated the value of
land and building and surrendered the values of depreciation on land.
In view of peculiar facts of the case, Ld. Counsel of the assessee
submitted that imposition of penalty is not justified. He further
submitted that where declaration was made by the assessee under
the advice of Chartered Accountant and subsequently, the same was
rectified, it was not a case of willful concealment warranting penalty
u/s. 271(1)© of the Act. To support his aforesaid contentions, he
relied upon the judgment of the Hon'ble Supreme Court of India
dated 25.9.2012 in the case of Price Waterhouse Coopers Pvt. Ltd. vs.
CIT, Kolkata passed in Civil Appeal No. 6924 of 2012; Judgement of
the Hon'ble Suerme Court of India in the case of Dharmendra Textile
Processors (2008) 322 ITR 158 and the Hon'ble Gujarat High Court
decision in the case of ITO vs. Silk City Petrofiles Co. Ltd. reported 396
ITR 191 (Gujarat).
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6. Ld. Departmental Representative controverted the arguments
advanced by the Ld. Counsel of the assessee and he relied upon the
orders of the revenue authorities and the case laws discussed therein.
He submitted that the explanation furnished by the assessee before
the AO was not substantiated by it by bringing any evidence. He
further submitted that the assessee has concealed his income and has
furnished inaccurate particulars by claiming unallowable depreciation
on land. It was further submitted that in the said case, had the
scrutiny of the case not taken place the concealment of such income
would not have surfaced. It is as a result of the scrutiny proceedings
and analysis of the AO that the veil on concealment of income and
furnishing of inaccurate of particulars could be taken off and hence,
the concealment is unearthed by the Department by its own efforts. It
was further submitted that the it is clear that the intention of the
assessee is malicious and not to offer its full income for taxation by
taking all probable escape routes and there is a clear of concealment
of income by furnishing inaccurate particulars of income. Hence, the
AO has rightly imposed the penalty and Ld. CIT(A) has rightly
confirmed the same.
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7. We have heard both the counsel and perused the orders passed
by the lower authorities as well as the case laws cited before us. We
find that assessee is a professional and senior lady Gyne Doctor and
filed income tax return at Rs. 10,58,44,690/- for assessment year
2010-11. The accounts were audited and Form 3CD was filed by the
Chartered Accountant and income tax return were filed on the advice
of the Chartered Accountant. The bonafide/inadvertent error on
claiming depreciation on composite value of building purchased for
medical profession as no bifurcation of land and building was available.
However, on the advice of Chartered Accountant and Auditor, the
assessee carried out bifurcation cost of land and cost of building and
surrendered excess depreciation claimed at Rs. 10,86,880/- on land
with and paid tax thereon. The assessee voluntarily agreed to
surrender the tax on value of depreciation wrongly taken on land and
the this mistake was never intentional. The assessee has voluntarily
bifurcated the value of land and building and surrendered the values of
depreciation on land and the act of the assessee under the bonafide
belief. We further find that Assessee had furnished all the particulars
in return filed and never concealed the particulars of income nor
submitted false information. We also note that depreciation on full
value was allowed in AY 2008-09 u/s. 143(1) of the Act and further
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depreciation was allowed on full value in AY 2009-10 under section
143(3) of the Act. However, during the assessment proceedings fpr
AY 2010-11 u/s. 143(3) of the Act, assessee was asked to segregate
the value of land and building and accordingly, the assessee
segregated the value of land based upon circle rate. In view of above,
discussions, we find that penalty imposed by the AO and confirmed by
the Ld. CIT(A) is not tenable. Our aforesaid view is fortified by the
following case laws:-
- Hon'ble Supreme Court Judgment dated
25.9.2012 in the case of Price Waterhouse Coopers
Pvt. Ltd. vs. CIT, Kolkata passed in Civil Appeal No.
6924 of 2012 wherein the Hon'ble Court has held that
"we are satisfied that the assessee had committed an
inadvertent and bonafide error and had not intended
to or attempted to either conceal its income or
furnish inaccurate particulars.
- Hon'ble Suerme Court of India in the case of
Dharmendra Textile Processors (2008) 322 ITR 158
has held that that merely because the assessee had
claimed the expenditure, which claim was not
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accepted or was not acceptable to the Revenue that
by itself would not attract the penalty under section
271 (1)( c).
- Hon'ble Gujarat High Court decision in the case
of ITO vs. Silk City Petrofiles Co. Ltd. reported 396
ITR 191 (Gujarat) has held " For concealment of
income (disallowance of claim effect of) Where
declaration was made by assessee under advice of
Chartered Accountant and subsequently, same was
rectified, it was not a case of willful concealment
warranting penalty under section 271(1)© (in favour
of assessee) (Head Notes Only)
7.1 In the background of the aforesaid discussions and respectfully
follow the precedents, as aforesaid, we are of the considered view
that the assessee has neither concealed the income nor furnished
inaccurate particulars of income and there are no findings of the
Assessing Officer and the Ld. CIT (Appeals) that the details furnished
by the assessee in his return are found to be incorrect or erroneous or
false. Under these circumstances, in our view the penalty in dispute is
totally unwarranted and deserve to be deleted. Accordingly, we delete
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the penalty of Rs. 3,35,858/- made u/s. 271(1)(c) of the I.T. Act and
quashed the orders of the authorities below on the issue in dispute.
8. In the result, the appeal filed by the Assessee stands allowed.
Order pronounced on 05/10/2018.
Sd/- Sd/-
[ANADEE NATH MISSHRA] [H.S. SIDHU]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date 05/10/2018
SRBHATNAGAR
Copy forwarded to: -
1. Assessee -
2. Respondent -
3. CIT
4. CIT (A)
5. DR, ITAT TRUE COPY
By Order,
Assistant Registrar, ITAT, Delhi Benches
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