Claim of depreciation on land cannot be termed as clerical mistake

Ambience Hospitality Pvt. Ltd Vs DCIT (Delhi High Court)

The brief facts of the present case are that the complainant/Deputy Commissioner of Income Tax, filed a complaint against the petitioner alleging that the false depreciation on land amounting to Rs. 31,80,000 was claimed in the company’s balance sheet in the assessment year 2007-2008 shown under the head ‘property’ along with the depreciation on building and as per IT Act, land is exempted from taxation. After the assessment done by the Assessing Officer, penalty of Rs. 32,11,164/- was imposed for concealment. An appeal was preferred against this before the learned CIT(A), who deleted the imposed penalty by considering the same as sheer mistake on part of the petitioner. Then the department filed an appeal before learned ITAT, who reinstated the penalty and the same was challenged by the accused in this court, which was dismissed thereafter.

Counsel for the petitioner contended that the alleged mistake was mere clerical in nature, not deliberate and no element of mens rea is present, also, does not hold any ground as it has been rightly held by the learned ACMM that no sincere efforts were put in by the petitioner after detection of the alleged mistake by filing the revised return immediately thereafter. It was specifically stated by DW-2 during his cross examination that “The said mistake was detected in or about August 2008 i.e. prior to the finalization of accounts/audit report for assessment year 2008-2009 dated 20.09.2008. The said mistake was corrected in the year 2008-­2009. ……We have suto moto corrected the mistake vide letter dated 08.12.2009…” It makes it apparent that the alleged mistake was detected in the month of August by the company but only on 08.09.2009, the same was informed by the petitioner to the Assessment Officer. The petitioner had ample time to rectify its mistake by either bringing the same into the notice of the Assessing Officers soon after its detection or by filing a revised IT return to that effect. But, no action was taken by the petitioner until 08.12.2009, which casts a serious doubt on the story of the petitioner.

It is a manifest procedure that before filing of the Income Tax return for the assessment year 2007-2008 by the petitioner, the same is scrutinized, firstly, by the auditors of the company. Secondly, by the directors of the company before endorsing their signatures on the final Balance Sheet. Therefore, it cannot be considered as a mere accounting mistake.

On the basis of the above observations, it is viewed that the judgment dated 24.06.2014 and order of sentence dated 25.06.2014, is a well reasoned order and does not suffer from any infirmity. The same is upheld.

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