ITA No. 254 of 2017 1 IN HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 254 of 2017 Date of decision: 23.08.2017 Pr. Commissioner of Income Tax-I, Chandigarh Appellant Vs. Sh. Mohinder Partap Singla, H.No. 2518, Sector 35-C, Chandigarh ..Respondent CORAM: HON BLE MR. JUSTICE AJAY KUMAR MITTAL HON BLE MR. JUSTICE AMIT RAWAL Present: Ms. Urvashi Dhugga, Senior Standing Counsel for appellant-revenue. Ajay Kumar Mittal,J. 1. appellant-revenue has filed instant appeal under Section 260A of Income Tax Act, 1961 (in short, Act ) against order dated 03.08.2016, Annexure A.5, passed by Income Tax Appellate Tribunal, Chandigarh Bench (in short, Tribunal ) in ITA No. 164(CHD)/2015, for assessment year 2008-09, claiming following substantial questions of law:- (ii) Whether on facts and in circumstances of case, Hon ble ITAT was right in deleting penalty of ` 31,00,000/- including penalty of ` 14,24,600/- levied on account of malafide claim of interest made by assessee without maintenance of proper books of account and there 1 of 5 ::: Downloaded on - 13-11-2017 11:04:08 ::: ITA No. 254 of 2017 2 being no basis for claim of interest against presumptive profits? (iii) Whether on facts and in circumstances of case, Hon ble ITAT was right in deleting penalty of ` 31,00,000/- including penalty of ` 16,75,400/- levied on account of malafide claim of depreciation made by assessee without maintenance of proper books of account and there being no basis for claim of excess depreciation in view of decision of Hon ble Delhi High Court in Zoom Communication Private Limited (327 ITR 510)? 2. few facts relevant for decision of controversy involved as narrated in appeal may be noticed. respondent-assessee is Government Contractor, engaged in road carpeting work. return of income was filed by assessee on 30.09.2008 declaring income of ` 54,66,870/-. assessment was completed under Section 143(3) of Act, on 29.11.2010, Annexure A.1 at assessed income of ` 1,52,12,800/- after making certain additions on account of disallowance of interest, short term capital loss, depreciation claimed at higher rate and depreciation on unproduced bills like mobile phone and laboratories equipment etc. penalty proceedings under Section 271(1)(c) of Act for furnishing inaccurate particulars of income were also initiated. assessee filed appeal against assessment order before Commissioner of Income Tax Appeals [CIT(A)]. Vide order dated 25.08.2011, Annexure A.2, CIT(A) dismissed appeal as assessee had declared 10% profit rate and if interest was allowed as deduction, net profit rate will get reduced substantially and hence interest was not allowable as per law laid down by this Court in Girdhari Lal Vs. CIT(A) and another, (2002) 256 ITR 318. It was concluded that Assessing Officer had rightly disallowed interest 2 of 5 ::: Downloaded on - 13-11-2017 11:04:09 ::: ITA No. 254 of 2017 3 claimed by assessee. Thereafter, Assessing Officer levied penalty under Section 271(1)(c) of Act as assessee had deliberately furnished inaccurate particulars of income vide order dated 25.03.2013, Annexure A.3. Aggrieved thereby, assessee filed appeal before CIT(A). Vide order dated 24.11.2014, Annexure A.4, CIT(A) deleted penalty on basis that grounds taken by assessee were debatable. Not satisfied with order, department filed appeal before Tribunal. Vide order dated 03.08.2016, Annexure A.5, Tribunal dismissed appeal filed by department holding that assessee had made bonafide claim. disallowance was made by Assessing Officer on account of difference of opinion and not on account of detection of any concealment of income. Hence, instant appeal by appellant- revenue. 3. We have heard learned counsel for appellant-revenue. 4. CIT(A) deleted penalty levied under Section 271(1)(c) of Act by Assessing Officer. It was observed by CIT(A) that regarding disallowance of interest claimed out of net profits, though same was not allowable in view of decision of High Court in case of Girdhari Lal s case (supra) whereas Rajasthan High Court in case of CIT Vs. M/s Bhawan Va Path Nirman (Bohra) & Co. (No.1), (2002) 258 ITR 431, had dismissed appeal of department on issue of disallowance of interest. Thus, it was observed by CIT(A) that issue being debatable as two views were possible regarding allowability of interest in cases where profit had been declared on presumptive basis, penalty for concealment could not be levied. Hence penalty levied on addition of interest of ` 42,22,678 was cancelled. With regard to penalty levied on disallowance of depreciation, it was observed 3 of 5 ::: Downloaded on - 13-11-2017 11:04:09 ::: ITA No. 254 of 2017 4 that assessee was being allowed depreciation on these assets i.e. commercial vehicles at rate of 40% in earlier years and in assessment year 2008-09, when Assessing Officer differed, assessee furnished revised depreciation chart and offered amount for taxation. Assessing Officer had questioned assessee regarding rate of depreciation only on basis of information filed by assessee and therefore, it cannot be concluded that there was any intention to conceal income. claim made by assessee was found to be bonafide since he had been allowed depreciation at higher rates in previous years. Accordingly, it was held by CIT(A) that Assessing Officer was not right in levying penalty on this issue and same was cancelled. Thus, it was concluded by CIT(A) that it was neither case of furnishing of inaccurate particulars of income nor of concealment of income. findings recorded by CIT(A) were upheld by Tribunal. relevant findings recorded by Tribunal read thus:- 5. After considering rival submissions and going through records, we find that learned CIT(A) has rightly held that it is not case of furnishing of inaccurate particulars of income or concealment of income for purpose of avoidance or evasion of tax. assessee in this case has made bonafide claim. disallowance on above issues was made by Assessing Officer on account of difference of opinion and not on account of detection of any concealment of income. In view of this, we do not find any infirmity in order of CIT(A) and same is upheld. 5. Learned counsel for appellant-revenue has not been able to point out any illegality or perversity in findings recorded by CIT(A) as well as Tribunal or to show that findings are based on 4 of 5 ::: Downloaded on - 13-11-2017 11:04:09 ::: ITA No. 254 of 2017 5 misreading of evidence. Thus, no substantial question of law arises. Consequently, appeal stands dismissed. (Ajay Kumar Mittal) Judge August 23, 2017 (Amit Rawal) gs Judge Whether speaking/reasoned Yes Whether reportable Yes 5 of 5 ::: Downloaded on - 13-11-2017 11:04:09 ::: Pr. Commissioner of Income-tax-I, Chandigarh v. Mohinder Partap Singla