Penalty cannot be imposed for mere disallowance of Additional Depreciation

Bhavani Gems Vs. ACIT (ITAT Mumbai)

We have heard the rival contentions and perused relevant material on record including cited orders of Tribunal in assessee’s case for different years. Upon perusal of the same, we find strength in the argument of Ld. AR since the assessee’s claim for additional depreciation has been allowed in subsequent orders of the Tribunal for preceding as well as succeeding years. Even otherwise, we find that the provisions of Section 271(1)(c) are not attracted since there was no furnishing of inaccurate particulars of income or concealment of income by the assessee. Rather the assessee made a claim with full disclosure which is not accepted by the revenue. These facts do not justify imposition of  penalty in view of the judgment of Hon’ble Apex Court rendered in CIT Vs. Reliance Petroproducts Pvt. Ltd. [322 ITR 158]. Therefore, finding assessee’s explanation a plausible one, we are inclined to delete the impugned penalty.

Full Text of the ITAT Order is as follows:-

1. The captioned appeal by assessee for Assessment Year [AY] 2008-09 assails the order of the Ld. Commissioner of Income-Tax (Appeals)-30 [CIT(A)], Mumbai, Appeal No. CIT(A)- 30/ACIT.19(1)/294/14-15 dated 31/07/2015 qua confirmation of penalty u/s 271(1 )(c) for Rs. 35 Lacs. The assessment for impugned AY was framed u/s 143(3) by Ld. Deputy Commissioner of Income Tax-16(3) on 23/12/2010 whereas penalty was levied by Ld. Assistant Commissioner of Income Tax-16(3) vide penalty order dated 26/06/2014. The effective grounds of appeal raised by assessee reads as follows:-

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