TMI Blog2017 (8) TMI 1694X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed assessee's claims of 'provisions for warranties debited in P L account holding that they are unascertained liabilities - The assessee has admitted the income for the period for which the ITAT has decided the appeals ie for ays 1997 1998 in its revised return. It s explanation that its appeals for ays, 1999-00 and 2000-01 was pending before the ITAT as on the date of filing the revised return for ay 2003-04 and hence it did not admit the income related to those ays is a fact, as per the chronological events extracted, supra. Neither the AO nor the CIT (A) found that this explanation of the assessee to be false. Hence, on this issue, there is no ground to levying penalty u/s 271(1) (c) read with Explnation1. In view of that the penalty levied on this issue is directed to be deleted. All the grounds of appeal on this issue is allowed. Assessee s appeal is allowed partly. - I.T.A. No. 1279/Mds/2014 - - - Dated:- 18-8-2017 - Shri N.R.S. Ganesan, Judicial Member And Shri S. Jayaraman, Accountant Member For the Appellant : ShriG. Baskar, Advocate. For the Respondent : Ms. Ann Mary Baby, JCIT. ORDER \ PER S. JAYARAMAN, ACCOUNTANT MEMBER: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . e. The Commissioner of Income Tax (Appeals) erred in confirming the levy of penalty on the basis of non-reversal of provisions for warranty relating to assessment years 1999-2000 and 2000-01. The authorities have noted the position that the appeals in this regard were still pending before the Income Tax Appellate Tribunal. Thus, there was no finality with regard to the issue till the order of the Jurisdictional High Court in T.C.(A) No.263 of 2007 dated 9.6.2009 and 7.12.2009. Upon pronouncement thereof, the provisions stand reversed in full. The levy of penalty in such circumstances is wholly unjustified. f. The order of the Commissioner of Income-tax (Appeals) confirming the levy of penalty proceeds on assumptions and presumptions. This is wholly contrary to law. The levy of tax and penalty is to be completed de novo in respect of every assessment year and observations in regard to other periods cannot form the basis of levy of penalty for other periods. This is all the more so in the case of levy of penalty. 4. The facts on the first issue is that the assessee owned a factory building at Arakkonam which was not used for its business from the assessment year 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claimed deduction of 30% of the rentals u/s.24(a). At the same time, it has also claimed depreciation on the same letout buildings under section 32 . This is a clear double deduction, which is not permitted in the Act. Further, the fact of claiming depreciation on the let-out buildings has come to the notice of the Assessing Officer only during the course of assessment proceedings. Thus, there is a clear concealment of taxable income, by furnishing inaccurate particulars, on account of claiming depreciation of Rs.4,32,251/- on the let-out buildings. Therefore ,the Assessing Officer has rightly concluded that the claim of depreciation on letout buildings is a concealment of income by furnishing inaccurate particulars, for levying penalty u/s. 271 (1)(c) . 5. We heard the rival submissions and gone through relevant orders and material.From the above, it is clear that the assessee, on one hand, by admitting the rental income under the head income from 'house property', has claimed deduction of 30% of the rentals u/s.24(a) . At the same time, it has also claimed depreciation on the same let-out buildings under section 32. Thus, there is a double deduction claim, which is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 74,691/- pertaining to ays.1999-00 and 2000-01, which was claimed as deduction in the computation of income, as the income and added to the taxable income. The CIT (A) confirmed the disallowance, on which the AO levied the penalty and the CIT (A) confirmed the levy. 6.1 In this regard, the AR pleaded that the assessee's claim is that the amount added as income represents the 'provisions for warranties' created in a ys.1999-00 and 2000-01, against such additions it filed appeals before the ITAT which was pending at the time of filing the revised return and submitted the chronological events as under : 12.12.2002 ITAT dismissed appeals of AYs 1997-98 1998-99 thus confirming the disallowance of provision for warranty 24.11.2003 ROI of A.Y. 2003-04 was filed on 24.11.2003, wherein the reversal of the warranty provisions of AYs. 1997-98 to 2000-01 was reduced in computation statement. In that the provision for warranties created debited in P L a/c of this year was not claimed as deduction 21.07.2014 ITAT allowed the Miscellaneous Petition of assessee and dele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered and claimed the current year's provisions for warranty as expenditure (deduction) of the year. While considering and offering the reversal of warranty provisions of the earlier years as the income of F.Y.2003-04, the assessee company has taken the provisions claimed in the ays.1997-98 and 1998-99 only. The reversal of warranty provisions of Rs 87,74,696/-, pertaining to the ays.1999- 2000 and 2001-02, were not considered by the assessee as income in the revised return as the corresponding appeals were still pending before the ITAT as on the date of filing the revised return. The AR further argued on the lines of ground nos (e) (f) of the appeal grounds extracted above. 6.2 Per contra, the DR submitted relying on the order of the CIT(A) stating that firstly, though the appeals of ays.1999- 2000 and 2000-01 are still pending before the ITAT, the issue has been decided in favour of the assessee in the immediate two preceding ays.1997-97 and 1998-98. Since the facts are common and the issue in recurring and in continuation the said decision, by all probability, would have been followed in following ays.1999- 2000 and 2000-01 also. Hence the assessee was well awar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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