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2024 (4) TMI 979 - AT - Income TaxPenalty u/s 270A - allegation of misreporting as per section 270A(9) - Penalty@ 200% in respect of excess claim of depreciation - HELD THAT:- During the course of assessment proceedings, AO accepted the claim related to depreciation, however, as regards quantum of depreciation is concerned, he was of the view that depreciation should be charged on WDV as computed in accordance with explanation to section 43(1). AO thus partly disallowed the claim of depreciation, against which appeal was preferred by the assessee. Based on that pretext the return of income for A.Y. 2017-18 was filed by the assessee by claiming depreciation as was done in earlier years in normal course on 29.10.2017 before the due date of 31.10.2017 as till then the assessee was not advised and was able to decide the course of action in relation to the issue raised for A.Y. 2013-14 in respect of depreciation disallowed. In the scrutiny assessment proceedings for A.Y. 2017-18 i.e. the year under consideration, the revised calculation of depreciation was submitted before ld. AO as per the CIT(A)’s order as by that time it was already finalized for not to agitate the matter of depreciation before the income tax tribunal against the order of CIT(A) of A.Y. 2013-14. Thus, with that back ground as argued by assessee has disclosed all the facts in return of income and also revised the depreciation claimed at the very first opportunity i.e. during assessment proceedings and therefore this act cannot be treated as “misreporting” by any stretch of imagination, more particularly when the issue on which disallowance has been made was debatable. For disallowance of interest paid on TDS amounting it is submitted that interest on TDS is paid for the duration for which payment of TDS is delayed and is thus basically compensatory in nature and not penal in nature and therefore same is allowable u/s 37(1) - It was also submitted by the AR that there is no allegation about suppression of some facts or misrepresentation of some facts by the assessee and moreover this claim was also based on certain judicial pronouncements in favour of assessee at the time of making the claim. Thus, the claim of depreciation and interest on TDS was made accordingly. It is also submitted that it is not the case that the claimed any bogus or excessive or unrelated expenses or has misrepresented the facts. On this issue our attention was invited to the decision of the apex court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] and M/s Price Waterhouse Coopers Pvt. Ltd [2012 (9) TMI 775 - SUPREME COURT] which are though decided in respect of penalty u/s 271(1)(c), but the ratio related to furnishing of inaccurate particulars of income is pari materia with provisions of section 270A dealing with misreporting of income. In addition asseseee also invited our attention to the the latest case laws related to penalty u/s 270A namely Chambal Fertilizers & Chemicals Ltd. [2024 (1) TMI 316 - RAJASTHAN HIGH COURT] wherein Hon’ble Court has confirmed the requirement of clearly specifying the sub-clause of section 270A(9) prior to concluding that assessee has misreported the particulars of income. Similarly, in the case of GR Infraproject Ltd. [2024 (1) TMI 163 - RAJASTHAN HIGH COURT] as observed that neither in the assessment order nor in the subsequent show cause notice, the AO has specified that the assessee is covered by section 270A(9) of the Act. Even in the order imposing penalty, it is not specified which part of sub-section (9) of section 270A is attracted in this case. The bench noted from the evidence placed on record that the assessee neither in the show cause notice nor in penalty order, it was specified as to under which particular clause of section 270A(9), the case of assessee is covered. Thus, the levy of penalty for misreporting of income is not justified on the facts as mentioned and discussed herein above and respectfully following the binding judicial decision. Depreciation on certain house property was claimed by assessee first time in A.Y. 2013-14 on showing the rental income under the head “Business Income” which was hitherto shown under the head “Income from House Property” - In the case of Schneider Electric South East Asia (HQ) PTE Ltd., [2022 (3) TMI 1295 - DELHI HIGH COURT] considering that in the penalty order there was no mention about which limb of section 270A is attracted and how ingredients of section 270A(9) are satisfied and in absence of such particulars the mere reference to the word “misreporting” makes the impugned penalty order manifestly arbitrary. Considering the facts of the case under consideration and the various case laws as discussed as above, we are of the considered view that penalty so imposed by ld. AO does not stand on merits and is therefore directed to be quashed. Decided in favour of assessee.
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