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Judgment
PER KRINWANT SAHAY A.M.
Appeal in these two cases have been filed by the assessee in ITA No. 6138/Del/2025 and 6139/Del/2025 against the order dated 10.07.2025 passed by the CIT(A)-29, New Delhi for A.Ys. 2017-18 and 2018-19 respectively.
Since common issues are involved in both these appeals, therefore, they are heard together and disposed of by this common order for the sake of convenience and brevity.
The grounds raised by the assessee in both these appeals are as under but figure may different :-
1.That having regard to the facts and circumstances of the case, the Ld. CIT(A) has erred both in law and on facts in not deleting the penalty of ₹44,20,536/-imposed by the Ld. AO.
2.That having regard to the facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts in passing the impugned appellate order without properly considering the submissions filed by the appellant.
3.That having regard to the facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts in upholding the order of the Ld. AO, ignoring the specific contention of the appellant that the penalty order was barred by limitation as per section 275 of the Act. The Ld. CIT(A) rejected the contention of the appellant without verifying the date of receipt of the Hon'ble ITAT order by the CIT.
4.That having regard to the facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts in confirming the order of the Ld. AO while ignoring the specific contention of the appellant that proper opportunity of being heard was not provided.
5.That having regard to the facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts in upholding the Id. AO, ignoring the specific contention of the appellant that the notice issued under section 270A of the Act merely mentioned "under-reporting/misreporting of income" in a mechanical manner without specifying the specific charge. Accordingly, the penalty proceedings are void ab initio.
6.That having regard to the facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts in confirming the order of the Ld. AO, ignoring the specific contention of the appellant that the allowance of depreciation at the rate of 15% instead of 30% as claimed by the appellant, resulting in partial disallowance of depreciation i.e. 0.69% of total income, represents merely a difference of opinion and timing difference and not concealment or misreporting of income. The appellant had duly disclosed all material particulars in the return of income, tax audit report, financial statements, and during proceedings before the Ld. AO, CIT(A), and the Hon'ble ITAT. In such circumstances, the bona fide claim of depreciation, made on the basis of interpretation of law, cannot be treated as "misreporting of income" within the meaning of section 270A of the Act. It is a settled law that where the claim is made in a bona fide manner and all material facts are duly disclosed, penalty is not leviable.
7.That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.
Although the assessee has taken seven grounds of appeal but the main issue involved in both these appeals are that the ld. CIT(A) erred in law and on facts in confirming the order of the Ld. AO ignoring the specific contention of the appellant that the allowance of depreciation @ 15% instead of 30% as claimed by the appellant. The confirmation of the Ld. CIT(A) is of AO’s order of levying penalty for the same u/s.270A of the Act. Dismissal of the appeal by the Ld. CIT(A) in both these appeals are the main ground of appeal in both the years.
During proceedings before us the Ld. Counsel for the assessee argued that there was neither concealment of income nor filing of any inaccurate particulars before the AO, everything was on record. The assessee claimed depreciation @ 30% but according to AO depreciation was allowable for @15% only and addition on account of disallowable depreciation by the AO was confirmed by the Ld. CIT(A).
The Ld. AO has initiated penalty proceedings u/s.270A of the Act and levied penalty which has been confirmed by the Ld. CIT(A).
Per contra the Ld. DR relied on the order of the authorities below.
We have considered the findings given by the AO in both the penalty orders and we have also considered the arguments and facts brought on record during proceedings before us by the ld. Counsel for the assessee. We find that only difference of opinion whether depreciation is allowable @ 30% or @ 15% is the issue involved in this case.
The assessee claimed depreciation @ 30% and the A.O. allowed depreciation @ 15%. The difference amount of extra depreciation claimed was added by the AO and on this very addition the penalty proceedings u/s.270A of the Act has been initiated and levied which has further been upheld by the Ld. CIT(A).
We find that there was no act of concealment for filing of inaccurate particulars on the part of the assessee before the AO. There was also not any suppression or mis-representation of income before the AO. It was only the difference of opinion regarding claim of percentage of depreciation claimed. In our considered opinion the difference on allowability of depreciation cannot be considered as suppression or misrepresentation of income by the assessee, therefore, the penalty u/s.270A of the Act cannot be levied in such cases. Disallowance on the rate of depreciation cannot be termed as suppression of income. So, no penalty u/s.270A of the Act can be imposed in such case. Thus, the action of the Ld. CIT(A) in confirming the penalty levied by the AO u/s.270A of the Act cannot be sustained.
In the result, the appeals filed by the assessee are allowed.