CLR Editorial Notes: The assessee in this case, had filed a return declaring a loss of Rs. 16 lakhs in which it had made a wrong claim of depreciation. The Assessing Officer disallowed this claim and levied 100% penalty which was upheld by the CIT(A). When this case was brought before the Tribunal, the assessee claimed that the Directors of the said company, were technical persons and did not know the intricacies of the various provisions of the IT Act. They were in fact dependent on the advice of professionals for preparing income tax returns. The assessee claimed that it had committed a bona fide mistake and that there was no intention to evade taxes. The Tribunal held upholding the plea:
A mere mistake in making of a claim in the return of income would not ipso facto reflect concealment or furnishing of inaccurate particulars of income in terms of s. 271(1)(c). The wrong claim of depreciation cannot be said to be made with an intention to evade taxes in as much as even after the disallowance of depreciation, the resultant income of the assessee remains a loss. The assessee had been incurring losses since the year 2003 due to the market forces. Considering the entirety of circumstances, the claim on account of depreciation was a mistake, and did not invite the provisions of s. 271(1)(c).
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Amruta Organics Pvt. Ltd vs. DCIT (ITAT Pune)