TMI Blog2018 (5) TMI 757X X X X Extracts X X X X X X X X Extracts X X X X ..... elkar For The Revenue : Shri Vidhyadhar (Sr.DR) ORDER PER RAMIT KOCHAR, Accountant Member This appeal, filed by the assessee, being ITA No. 2730/Mum/2016, is directed against appellate order dated 25.01.2016 passed by learned Commissioner of Income Tax (Appeals)-24, Mumbai (hereinafter called the CIT(A) ), for assessment year 2011-12, the appellate proceedings had arisen before learned CIT(A) from penalty order dated 30.09.2014 passed by learned Assessing Officer (hereinafter called the AO ) u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter called the Act ) for AY 2011-12. 2. The grounds of appeal raised by the assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called the tribunal ) read as under:- 1. On facts, in circumstances of the case and in law, learned Commissioner of Income Tax (Appeals) erred in confirming levy of penalty of ₹ 30,40,000/- by A.O. in respect of claim for depreciation on building amounting to ₹ 91,31,916/- given up in course of assessment proceedings. 2. The appellant craves leave to add, alter, modify or delete the above Ground of Appeal. 3. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect to the aforesaid claim of excess depreciation to the tune of ₹ 91,31,916/- w.r.t. Building for which notices u/s. 271(1)(c) r.w.s. 274 were issued to the assessee by AO on 13.03.2014. 5. The assessee submitted during course of penalty proceedings u/s 271(1)(c) that the assessee was incorporated on 30.03.2010 and is engaged in jewellery business. It was submitted that the main object of the assesssee company as stated in the Memorandum of Association is to takeover of running business of the said firm M/s Waman Hari Pethe Sons as a going concern along with all its liabilities and assets. It was submitted that the partnership firm M/s Waman Hari Pethe Sons was taken over by the assessee with all its assets and liabilities as on 31.03.2010 w.e.f. 01-04-2010 and the assessee started its business w.e.f. 01-04-2010. The partners of the partnership firm M/s Waman Hari Pethe Sons were paid net consideration by the assessee by issuance of shares of the assessee company. It was submitted that the company filed its first return of income for AY 2011-12 with income to the tune of ₹ 11.66 crores which was computed after taking into effect depreciation on revaluation of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails of income in the return of income filed with the Revenue. It was observed by the AO that there is no merit in the argument of the assessee that it sought opinion of the Advocate and acted as per Advocate opinion. Thus the AO levied penalty to the tune of ₹ 30,40,000/- u/s 271(1)(c), which was later confirmed by learned CIT(A). The view of learned CIT(A) was that the takeover of assets took place w.e.f. 01-04-2010 while the first opinion of the Advocate is dated 12.08.2010 which was confirmed by second opinion on 08-02-2013 and hence it could not be said that the revaluation of the two shops were done by the assessee based on the Advocate opinion. Thus, it was held by both the AO and by learned CIT(A) that it is only after the assessee was cornered by Revenue that the assessee withdrew its claim of excess depreciation and the explanation offered by the assessee is not bonafide to take it out of clutches of penalty provisions within mandate of Section 271(1)(c). 6. Aggrieved by losing at both the forums viz. AO and learned CIT(A), the assessee has come in an appeal before the tribunal. The Ld. Counsel for the assessee submitted before the tribunal that assessee was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complete particulars were filed in the return of income filed with the Revenue. It was submitted that the valuation was based on the valuation report and the said revaluation report was not doubted by revenue. It was submitted that Section 43 defines the actual cost of asset but does not talk about any bar on valuation/cost in case the assets are acquired by one entity from another entity and hence this a is debatable issue and no penalty can be levied under these circumstances as it was a bona-fide claim which was subsequently withdrawn by the assessee. It was submitted that on the date of filing of the claim of excess depreciation vide return of income filed with Revenue on 29-09-2011, the advocate opinion was very much in possession of the assessee on which the assessee relied and which form the basis/foundation for making such claim of excess depreciation. The assessee relied upon on the decision of Hon ble Supreme Court in the case of CIT v. Reliance Petroproducts Private Ltd.(2010) 322 ITR 158(SC) and submitted that making of claim which is not accepted by revenue does not lead automatically to levy of penalty u/s 271(1)(c). The Ld. DR relied upon decision of authorities bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of said Advocate. The said advocate again gave opinion on 08-02-2013 reconfirming its stand that the assessee is entitled for depreciation on the two shops on its cost of acquisition which was undisputedly ₹ 12.80 crores. The assessee also filed its revised return of income on 18-06-2012 but did not withdrew its claim for excess depreciation. The agreement which the assessee entered into with the said firm namely M/s. Waman Hari Pethe Sons and the two opinions given by the Advocate are placed in paper book. During the course of assessment proceedings, the assessee withdrew its claim for excess depreciation to the tune of ₹ 91,31,916/- taking a conservative view to end litigation and buy peace. The assessee paid due taxes of ₹ 39.40 lacs to Revenue on withdrawal of said claim of excess depreciation. However, the said claim could not be withdrawn by filing revised return of income as the time had expired for filing of revised return as is provided u/s. 139(5). However for subsequent years i.e. assessment years 2012-13 and 2013-14 returns of income were revised by the assessee wherein the said claim of excess depreciation was withdrawn by the assessee and due taxes ..... 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