No concealment when all information for determining income  given voluntarily by assessee

No concealment when all information available for determining income  given voluntarily by assessee either in return or at the time of assessment

ABACUS Case Law Citation
ABCAUS 3380 (2020) (08) ITAT

Important case law relied upon by the parties:
CIT vs. Samson Perinchery 392 ITR 4 (Bom). 
Ventura Textiles Ltd., vs. CIT
Price Water Coopers (P) Ltd., vs. CIT 348 ITR 306
CIT vs. Reliance Petro Products Pvt. Ltd. 322 ITR 158

In the instant case, the assessee had challenged the order passed by the Commissioner of Income Tax (Appeals) in the matter of imposition of penalty u/s 271(1)(c) of the Income Tax Act, 1961 (the Act).

The appellant assessee was a private limited company engaged in trading. The assessee also acted as a commission agent.

The assessee filed its return of income for the relevant Assessment Year declaring total income comprising of income from house property and income from business. 

During the year under appeal, assessee had let out five office premises and income earned from the same had been offered to tax under the head ‘income from house property’.

The said properties were purchased by the assessee in the earlier years and was used as office premises for the purpose of its business.

The purchase of these properties duly formed part of fixed assets in the balance sheet of the assessee and also in the ‘block of assets’ for the purpose of claiming depreciation under the Income Tax Act.

These details were duly provided by the assessee before the Assessing Officer (AO).

The assessee claimed depreciation on these properties u/s 32 of the Act. 

The assessment was completed u/s 143(3) of the Act determining making few additions to the income of the assessee.

However, in the first appeal, the income of the assessee was enhanced by the CIT(A) on account of disallowance of depreciation claimed on those properties.

The CIT(A)  disallowed  the  said depreciation on the ground  that since the rental income derived from those properties were taxed under the head ‘income from house property’ and  assessee  would  be  entitled  for  statutory  deduction  @30%  towards repairs alone and no further deduction  was permissible under the head ‘income from house property’. 

The Tribunal while disposing off the quantum appeal, upheld the action of the CIT(A) in principle, in disallowing the depreciation thereon.

Subsequently, the AO issued notice u/s 274 r.w.s.  271(1)(c) of the Act for the alleged offence of furnishing of inaccurate particulars of income. The said penalty was sustained by the CIT(A).

The Tribunal observed that there was no satisfaction recorded by the Assessing Officer in the quantum assessment order   framed u/s143(3) of the Act specifying the offence committed by the assessee. However, the penalty made u/s 271(1)(c) of the Act had been ultimately levied by the CIT(A) for concealment of income.

The Tribunal opined that as per the decisions of the Hon’ble Jurisdictional High Court it could be safely concluded that this was a case where penalty had been initiated on one limb of the offence and penalty levied ultimately on a different limb of the offence. Therefore, the penalty levied deserved to be cancelled.

Accordingly, following the said decision, the Tribunal held that the penalty levied was not sustainable in the eyes of law.

Further, on merits, the Tribunal observed that the assessee had pleaded that the properties under question formed part of block of assets which could not be identified once asset entered into the block. However, the assessee took efforts in furnishing the purchase cost of the respective properties and the written down value before the lower authorities which enabled the CIT(A)  to  actually identify the written down value of respective properties  that were let out and calculate the depreciation amount.

The Tribunal found that it was the very same details that were furnished by the assessee which was placed reliance by the CIT(A) while levying the penalty. Hence, there could not be any concealment of particulars of income on the part of the  assessee. 

The Tribunal stated that when all the information available for  determining the income  of  the  assessee was placed on  record voluntarily by the assessee either in the return or before the authorities at the time of assessment or appellate   proceedings,  then  there  could not be  any  concealment  of particulars of income that can be attributed on the assessee.

Placing reliance on the judgments of the Hon’ble Supreme Court, the Tribunal held that the penalty levied  deserved to be cancelled. Accordingly, the ground raised by the assessee was allowed.  

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