Senior Advocate Harish Salve, on Thursday got relief from the Delhi Income Tax Appellate Tribunal (ITAT). The Tribunal, while deleting penalty proceedings against India’s one of the leading advocate, clarified that deferral of depreciation allowance does not result into any concealment of income or furnishing of furnishing of any inaccurate particulars.
Coming to the facts of the case, Assessee derived income from Profession, income from Capital Gain and income from other sources. After completion of assessment proceedings, penalty proceedings were initiated against the assessee under Section 271(1)(c) of the Income Tax Act on the ground that the assessee has concealed his income and has furnished inaccurate particulars by wrongly claimed depreciation on Bentley car and also claimed wrong expenses under the head loss on fixed assets in his return.
Before the authorities, the assessee claimed that he owned the car since May, 2009 as the registration of the car in his name was completed in November, 2009 for which part payment was made in May, 2009. He further stated that assessee was personally driving the car and had never maintained any log books in respect of a car which is under his personal use and in order to avoid any suggestion the assessee had made a claim which was not justified and accordingly he advised his accountant not to pursue the matter any further and to withdraw the claim.
After hearing both the sides, the bench noted that there was no intention to avoid payment of taxes. The car was used for his professional pursuits. Further, there is no documentary evidence which could support the fact that the assessee owned the car since May, 2009 as the registration of the car in his name was completed in November, 2009 for which part payment was made in May, 2009 after the full payment was made and on completion of custom requirements.
“Moreover, the claim for depreciation only gets deferred to subsequent Years by claiming it for half year. In our view the deferral of depreciation allowance does not result into any concealment of income or furnishing of furnishing of any inaccurate particulars. However, it was a sheer accounting error in debiting loss incurred on sale of a fixed asset to profit and loss account instead of reducing the sale consideration from wdv of the block under block concept of depreciation. There was a sheer accounting error in debiting loss incurred on sale of a fixed asset to profit & loss account instead of reducing the sale consideration from wdv of the block under block concept of depreciation.”
“The quantum of assessee tax payments clearly indicates the assessee intention to be tax compliant. Moreover, the assessee with a returned income of 34.94 crores and tax payment of more than Rs.10.85 crores which does not show any mala fide intention to conceal an income of RS.13.09 lacs (not even 0.4% of returned income) with an intention of evading tax of Rs.4 lacs (not even 0.4% of taxes paid).”
Read the full text of the Order below.
