Excess Depreciation Claim Voluntarily Submitted and not by Prior Detection of Revenue: Gujarat HC deletes Penalty levied on Axis Bank [Read Order]

While dismissing the appeal filed by the Revenue, the Gujarat High Court observed that the claim of excess depreciation was not detected by the department but the assessee voluntarily submitted the same. Thus, the bench deleted the penalty levied under the Section 271 of the Income Tax Act, 1961.

The appellant, the Principal of Income Tax has filed the appeal against the order of Income Tax Tribunal (ITAT) under Section 260A of Income Tax Act.

The Counsel of the appellant submitted that the respondent assessee, Axis Bank Ltd filed its return of income on 24.11.2015 by declaring total income of Rs.11721,80,75,240/-. Thereafter, the respondent filed a revised return of income dated 30.3.2017 declaring revised income of Rs.11253,09,30,950/-.

The case was selected for scrutiny. The assessment order came to be passed by AO on 12.12.2017 and thereby assessed total income at Rs.11733,85,52,868/-. Being aggrieved and dissatisfied by the said assessment order, the respondent assessee preferred an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)].

The CIT(A) dismissed the appeal of the respondent assessee and penalty order under Section 271(1)(c) of the Income Tax Act, came to be passed. The first appellate authority observed that the assessee filed inaccurate particulars of income and hence liable for penalty.

Further, the respondent assessee filed the appeal before the ITAT, where the appeal was allowed. Thus, the appellant-department appealed before the High Court. The bench observed the submission of the advocate for the appellant was that the ITAT has without appreciating that the assessee had furnished inaccurate particulars of the income in the return of income has allowed the appeal of the assessee. 

Conversely, the respondent's Counsel, R. K. Patel, has requested the tax appeal's dismissal on the grounds that the purported substantial question of law is not genuinely substantial and that the matter raised in the proposed question of law has already been settled and is no longer open for reconsideration.

The ITAT has observed that the addition made in the impugned case on account of excess depreciation claimed having been surrendered by the assessee itself without any prior detection of the Revenue and the excess claim having been demonstrated to have been made for the bonafide reasons and hence, the ITAT has held that the case is not for the levy of penalty.

It was further observed by the ITAT that the assessee itself to align its books of accounts with MCA notification disclosed all particulars relating to the excess claim.

The bench of Justice Vipul M. Pancholi and Justice D.M. Desai observed that in the present case, the revenue has failed to establish that there was a concealment of particulars of the income of the assessee. The revenue has also failed to establish that the assessee had furnished inaccurate particulars of its income.

Based on the Supreme Court's verdict in the case of M/s. Bell Ceramics Limited and the remarks made by the ITAT, the High Court concluded that no legal issues were raised, leading to the dismissal of the appeal.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates