If you true in paying the Tax, CIT can also be wrong as clear from this case. The assessee filed the appeal in disagreement with the Order endorsed by the Ld. CIT (A) on account of the Assessment Year 2010-11. The assessee raised the following grounds:
The degree of declared income of Rs 34.94 crores and the tax paid (i.e., Rs10.85 crores) versus the disallowance of Rs thirteen lakhs stipulate that there might have been the disingenuous intention to hide. Delay of the depreciation concession is not the solution for concealment of the income, and it may not result in the furnishing of any erroneous particulars. There is no penalty for merely an inaccuracy found in accounts for the deficit incurred on the sale of the fixed asset due to the inadvertent error that caused CIT to put the penalty on the assessee under Section 271(1)(c).
Facts of the Case
The assessee submitted the documents for the return of income for the mentioned year dated 14th Oct 2010 and declared his total revenue of Rs 34, 74, 20,950. Other than this, he also filed the reappraised return of income on 31st Mar 2012 and announced his full income as Rs 34, 94, 15,822. However, the Assessing Officer completed the assessment in Jan 2013 and made an addition of Rs 11, 40,000 making it a total of Rs 35, 10, 91, 350 on account of disallowance of the depreciation of the Bentley car. The depreciation allowance for this vehicle was added to the calculation of the total income to prevent litigation. As per assessee, this Bentley car was being used for professional reasons, and that the car was bought in May 2009 for the official purpose.
But, there was no documentation to prove that the car was bought in May as the registration of the vehicle was done in November 2009. The assessee mentioned that when he bought the car in May, he paid Rs 9 lakhs to the car dealer at the time. Then in September, he paid him an amount of Rs 22 lakhs and the final payment was made in November, which was Rs 40 lakhs. Now since the total amount of car was given by November, all the documentation of the car including registration and fulfilling custom requirements was done in November.
The reversal of the office work fee provided to the tax of the previous years mentioned as payment not received. The amount specified was Rs. 3, 66,027. The assessee provided all the documents that supported the facts that there was a dispute, mainly the depreciation an account of the Bentley car that was waived and the benefit of 50% depreciation was added back.
Besides, the claim of the depreciation is also delayed to subsequent years if it is claimed for the half year. Thus, the deferral of the depreciation allowance, in any way, does not lead to the depreciation of the income.
In addition to this, an accounting error was also found in the computation. Loss of the fixed asset got skipped, but later it was added. The amount included was Rs. 1, 69,498. Tax consultant and Tax auditor both did not notice this error and it was overlooked while computing the total income. This simple mistake debited the loss subject to the sale of the fixed asset to the profit loss account rather than lowering the sale. A separate line item mentioned this loss of fixed asset here in the income and expenditure account.
Now the degree to which the assessee is paying the tax clearly shows that he is tax compliant. When he is paying tax worth Rs 10.85 crores with the returned income of Rs 34.94 crores, there is not even a slight indication that he wants to conceal his income of Rs 13.09 lakhs, which is not even 0.4 percent of his return income. It does not seem that he intended to evade the tax of Rs 4 lakhs when he is already paying in crores.
Hence, looking at the facts and circumstances of the case, it was found that the assessee did not have any mala fide purpose of hiding his total income or providing the inaccurate particulars. Therefore, the penalty in the dispute was asked to be deleted. Thus, If you true in paying the Tax, CIT can also be wrong as clear from this case.