D.C.I.T. - 12(3)(2), Mumbai v. MOVIDA INDIA PVT. LTD., Mumbai

ITA 640/MUM/2018 | 2012-2013
Pronouncement Date: 22-11-2019 | Result: Dismissed

Appeal Details

RSA Number 64019914 RSA 2018
Assessee PAN AAFCM8455K
Bench Mumbai
Appeal Number ITA 640/MUM/2018
Duration Of Justice 1 year(s) 9 month(s) 19 day(s)
Appellant D.C.I.T. - 12(3)(2), Mumbai
Respondent MOVIDA INDIA PVT. LTD., Mumbai
Appeal Type Income Tax Appeal
Pronouncement Date 22-11-2019
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 22-11-2019
Last Hearing Date 19-03-2019
First Hearing Date 18-03-2019
Assessment Year 2012-2013
Appeal Filed On 02-02-2018
Judgment Text
P A G E | 1 ITA NO.640/MUM/2018 AY. 2012 - 13 DCIT - 12(3)(2) VS. M/S MOVIDA INDIA PRIVATE LIMITED IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH MUMBAI BEFORE SHRI S. RIFAUR RAHMAN ACCOUNTANT MEMBER AND SHRI RAVISH SOOD JUDICIAL MEMBER ITA NO.640 /MUM/2018 (ASSESSMENT YEAR: 2012 - 13 ) DCIT - 12(3)(2) ROOM NO.147B 1 ST FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI 400 020 VS. M/S MOVIDA INDIA PRIVATE LIMITED 903 SHREENATH CHS LTD. LIBERTY GARDEN MALAD (W) MUMBAI 400 064 PAN AAFCM8455K (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. JOTHILAKSHMI NAYAK D.R RESPONDENT BY: MS. DINKLE HARIYA A.R DATE OF HEARING: 1 7.10.2019 DA TE OF PRONOUNCEMENT: 2 2 .1 1 .2019 O R D E R PER RAVISH SOOD JM THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 20 MUMBAI DATED 16.10.2017 WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 271(1)(C) OF THE INCOME TAX ACT 1961 (FOR SHORT ACT) DATED 27.09.2016 FOR A.Y 2012 - 13 . THE REVENUE HAS ASSAIL ED THE IMPUGNED ORDER ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US : 1. WHETHER ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT 1961 WITHOUT APPRECIAT ING THE FACT THAT : - P A G E | 2 ITA NO.640/MUM/2018 AY. 2012 - 13 DCIT - 12(3)(2) VS. M/S MOVIDA INDIA PRIVATE LIMITED I. ROI F OR A. Y. 2012 - 13 WAS FILED ON 30.09.2012 IN WHICH FALSE CLAIM OF DEPRECIATION OF RS.7 02 47 028/ - WAS MADE BY THE ASSESSEE AND THE SAME WAS CLAIMED TO BE CARRIED FORWARD IN THE RO I . II. THE ASSESSEE WITHDREW CLAIM OF DEPRECIATION ONLY WHEN THE CASE WAS SELECTED FOR SCRUTINY VIDE NOTICE U/S 143(2) OF THE INCOME TAX ACT 1961. III. IN THIS CASE THE ASSESSEE HAD DELIBERATELY FURNISHED INACCURATE PARTICULARS OF INCOME BY CLAIMING DEPRECIATION DESPITE THERE BEING NO COMMUNICATION OF BUSINESS D URING THE YEAR UNDER CONSIDERATION. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. BRIEFLY STATED THE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME FOR A.Y 2012 - 13 ON 30.09.2012 DECLARING ITS TOTAL LOSS AT RS.( - )7 02 47 028/ - . SUBSEQUENTLY THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2) OF THE ACT. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE COMPANY HAD NOT COMMENCED ITS COMMERCIAL OPERATIONS DURING THE YEAR UNDER CONSIDERATION. IT WAS NOTICED BY THE A.O THAT DESPITE THE FACT TH AT THE ASSESSEE HAD NOT YET COMMENCED ITS BUSINESS DURING THE YEAR IT HAD RAISED A CLAIM FOR DEPRECIATION LEADING TO A CONSEQUENTIAL CLAIM OF A BUSIN ESS LOSS OF RS.7 02 47 029/ - . IN THE BACKDROP OF THE AFORESAID FACTS THE ASSESSEE WAS CALLED UPON TO JUST IFY ITS CLAIM OF DEPRECIATION . IN REPLY IT WAS ADMITTED BY THE ASSESSEE THAT IT HAD NOT COMMENCED ITS BUSINESS OPERATIONS DURING THE YEAR AND WAS IN FACT IN ITS NASCENT STAGE IN INDIA . AS REGARDS THE VARIOUS COMMERCIAL COSTS WHICH WERE INCURRED BY THE ASS ESSEE DURING THE YEAR IT WAS SUBMITTED THAT THOSE WHICH WERE INCURRED IN RELATION TO THE DEVELOPMENT TECHNOLOGY WERE CAPITALISED. INSOFAR THE OTHER COSTS WERE CONCE RN ED IT WAS SUBMITTED BY THE ASSESSEE THAT THOSE WERE TREATED AS SUNK COSTS AND DISALLOW ED IN ITS COMPUTATION OF INCOME. IT WAS SUBMITTED BY THE ASSESSEE THAT THOUGH IT HAD NOT COMMENCED ITS BUSINESS OPERATIONS DURING THE YEAR UNDER CONSIDERATION THE DEPRECIATION ON THE ASSETS WAS CALCULATED AND WAS INADVERTENTLY CLAIMED AS A DEDUCTION IN T HE COMPUTATION OF INCOME AND CONSEQUENTLY IN THE RETURN OF INCOME. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS STATED BY THE ASSESSEE THAT ITS AFORESAID CLAIM OF DEPRECIATION WAS UNINTENTIONAL LY RAISED ON ACCOUNT OF A BONAFIDE MISTAKE WHICH COULD SAFELY BE GATHERED FROM THE FACT THAT IT HAD NOT SOUGHT ANY BENEFIT OF SET OFF OF THE LOSS EMERGING THEREF ROM IN ANY SUBSEQUENT YEAR. IN THE SUBSEQUENT QUERIES WHICH WERE RAISED BY THE A.O THE ASSESSEE HAD REITERATED THE AFORESAID P A G E | 3 ITA NO.640/MUM/2018 AY. 2012 - 13 DCIT - 12(3)(2) VS. M/S MOVIDA INDIA PRIVATE LIMITED FACTUAL POSITION AND S UBMITTED THAT THE CLAIM OF DEPRECIATION WAS MERELY BACKED BY AN IN ADVERTENT MISTAKE ON ITS PART AND IT HAD NOT CARRIED FORWARD THE RESULTANT LOSS FOR SET OFF IN THE SUBSEQUENT YEARS. HOWEVER THE AFORESAID EXPLANATION OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O. IN FACT THE A.O WAS OF THE VIEW THAT AS THE ASSESSEE HAD CAPITALISED THE DIRECT COSTS RELATED TO DEVELOPMENT OF TECHNOLOGY THEREFORE IN THE BACKDROP OF HIS AFORESAID CONDUCT IT COULD SAFELY BE GATHERED THAT ITS CLAIM FOR DEPRECIATION FOR THE YEAR UNDER CONSIDERATION WAS NOT BACKED BY A BONAFIDE MISTAKE. AS REGARDS THE REVISED COMPUTATION OF INCOME WHICH WAS FILED BY THE ASSESSEE IN THE COURS E OF THE ASSESSMENT PROCEEDINGS THE SAME WAS DECLINED TO BE ADMITTED BY THE A.O FOR THE REASON THAT AS THE PRESCRIBED TIME LIMIT FOR FILING OF A REVISED RETURN OF INCOME HAD EXPIRED WAY BACK AS ON 31.03.2014 THEREFORE THE AFORESAID REVISED COMPUTA TION OF INCOME HAD NO EXISTENCE IN THE EYES OF LAW. APART THEREFROM THE A.O WAS OF THE VIEW THAT THE CLAIM OF THE ASSESSEE THAT IT HAD NOT CLAIMED SET OFF OF THE BUSINESS LOSS FOR A.Y 2012 - 13 IN ANY OF THE SUBSEQUENT YEARS WOULD NOT ABSOLVE IT FROM THE REPERCUSSION S OF RAISING A WRONG CLAIM IN ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. ON THE BASIS OF HIS AFORESAID DELIBERATIONS THE A.O AFTER INTER ALIA DISALLOWING THE ASSESSES CLAIM FOR DEPRECIATION OF RS.7 02 47 029/ - ASSESSED ITS INCOME A T RS. NIL. 4. AFTER THE CULMINATION OF THE ASSESSMENT PROCEEDINGS THE A.O CALLED UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY UNDER SEC. 271(1)(C) MAY NOT BE IMPOSED ON IT FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN I TS REPLY IT WAS SU BMITTED BY THE ASSESSEE THAT THE AFORESAID CLAIM OF DEPRECIATION HAD OCCASIONED ON ACCOUNT OF AN INADVERTENT MISTAKE ON ITS PART. IN ORDER TO IMPRESS UPON THE A.O THAT THE CLAIM OF DEPRECIATION WAS BACKED BY A BONAFIDE MISTAKE THE ASSESSEE TRIED TO TAKE SUPPORT OF CERTAIN FACTS VIZ. (I) THAT THERE WAS NO INCENTIVE FOR THE ASSESSEE COMPANY TO FURNISH ANY INACCURATE PARTICULARS AS IT HAD NOT EVEN COMMENCED ITS BUS INESS DURING THE YEAR; (II) THAT THE ASSESSEE WHICH WAS INCORPORATED IN THE YEAR 2008 WAS IN ITS NA SCENT STAGE AND HAD OUTSOURCE D ITS TAX RELATED WORK TO A CONSULTANT WHO HAD ERRONEOUSLY FAILED TO DISALLOW THE CLAIM OF DEPRECIATION IN THE RETURN OF INCOME ; (III) THAT THE ASSESSEE COMPANY HAD LEARNT ABOUT THE AFORESAID MISTAKE COMMITTED BY ITS TAX CONSULTANT ONLY WHEN THE SAME WAS BROUGHT TO ITS NOTICE IN THE IMMEDIATELY SUCCE E DING YEAR WHEN A NEW TAX CONSULTANT WAS ENGAGED; (IV) THAT THE FACT THAT THE AS SESSEE HAD NOT CARRIED FORWARD THE LOSS ARISING FROM ITS AFORESAID CLAIM OF DEPRECIATION IN A.Y. 2013 - 14 AND ONWARDS IN ITSELF P A G E | 4 ITA NO.640/MUM/2018 AY. 2012 - 13 DCIT - 12(3)(2) VS. M/S MOVIDA INDIA PRIVATE LIMITED SUBSTANTIATED THE BONAFIDE S OF THE ASSESSEE; (V) THAT THE ASSESSEE AFTER REALISING ITS AFORESAID MISTAKE HAD IN THE COURSE OF THE ASSESSMENT PROCEEDINGS FILED A REVISED COMPUTATION WHEREIN THE AFORESAID CLAIM FOR DEPRECIATION WAS WITHDRAWN ; (VI) THAT AS THE ASSESSEE HAD DISALLOWED ALL THE OTHER EXPENSES THEREFORE IT COULD SAFELY BE CONCLUDED THAT THE FAILURE ON ITS PART TO DISALLOW ITS CLAIM FOR DEPRECIATION WAS CLEARLY AN ERROR AND NOT A WILFUL DEFAULT; (VII) THAT THE AFORESAID CLAIM FOR DEPRECIATION HAD NO BEARING ON THE TAX LIABILITY OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION; (VIII) THAT THE ASSESSEE HAD NO INTEN TION OF CARRYING FORWARD THE SAID DEPRECIATION CLAIM WHICH FACT COULD SAFELY BE GATHERED FROM A PERUSAL OF THE ORIGINAL COMPUTATION OF INCOME; (IX) THAT LOSS ARISING FROM THE CLAIM OF DEPRECIATION WAS AUTOMATIC ALLY CARRIED FORWARD IN THE ELECTRONICALLY FILED RETURN OF INCOME OVER WHICH THE ASSESSEE HAD NO CONTROL; (X) THAT THE AFORESAID LOSS WAS NOT CARRIED FORWARD IN THE ASSESSES SUBSEQUENT RETURN OF INCOME WHICH IN ITSELF PROVE D THAT THE ASSESSEE HAD NO INTENTION OF EITHER CLAIMING T HE SAID LOSS OR CARR YING FORWARD THE SAME TO THE SUBSEQUENT YEARS; AND (XI) THAT A MERE DISALLOWANCE OF DEPRECIATION IN ITS ELF COULD NOT BE CONSTRUED AS A JUSTIFIABLE BASIS FOR LEVYING PENALTY UNDER SEC.271(1)(C). HOWEVER THE AFORESAID EXPLANATION OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O. OBSERVING THAT THE ASSESSEE HAD INTENTIONALLY RAISED A WRONG CLAIM OF DEPRECIATION IN ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION THE A.O IMPOSED A PENALTY OF RS.2 27 91 648/ - UNDER SEC.271(1)(C) OF T HE ACT. 5. AGGRIEVED THE ASSESSEE ASSAILED THE ORDER OF THE A.O IMPOSING PENALTY UNDER SEC. 271(1)(C) BEFORE THE CIT(A). AFTER DELIBERATI NG ON THE CONTENTIONS ADVANCED BY THE ASSESSEE AND PERUSING THE ORDERS OF THE LOWER AUTHORITIES THE CIT(A) HELD A CO NVICTION THAT THERE WAS NEITHER ANY ACTUAL CONCEALMENT NOR FURNISHING OF ANY INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. ON A PERUSAL OF THE FACTS THE CIT(A) HELD A CONVICTION THAT THE A.O HAD AS A MATTER OF FACT IMPOSED PENALTY BY INVOKING THE PROVISIONS OF EXPLANATION 1 TO SEC.271(1)(C) OF THE ACT. THE CIT(A) WAS OF THE VIEW THAT EXPLANATION 1 TO SEC.271(1)(C) WAS IN THE NATURE OF A DEEMING PROVISION WHICH HAD EXP A NDED THE SCOPE OF THE CASES WHERE PENALTY COULD BE IMPOSED. ON THE BASIS OF HIS AFORESAID OBSERVATIONS THE CIT(A) HELD A CONVICTION THAT AS NEITHER ANY ACTUAL CONCEALMENT NOR ANY FURNISHING AN INACCURATE PARTICULARS OF INCOME HAD OCCASIONED IN THE PR ESENT CASE THEREFORE THE A.O WAS IN ERROR IN IMPOSING PENALTY UNDER SEC.271(1)(C) WITHOUT INVOKING THE DEEMING PROVISION OF EXPLANATION 1. ACCORDINGLY ON THE P A G E | 5 ITA NO.640/MUM/2018 AY. 2012 - 13 DCIT - 12(3)(2) VS. M/S MOVIDA INDIA PRIVATE LIMITED BASIS OF HIS AFORESAID DELIBERATIONS THE CIT(A) VACATED THE PENALTY IMPOSED BY THE A.O UNDE R SEC. 271(1)(C). INSOFAR THE CONTENTIONS ADVANCED BY THE ASSESSEE AS REGARDS THE VALIDITY OF THE JURISDICTION ASSUMED BY THE A.O FOR IMPOSING PENALTY UNDER SEC. 271(1)(C) DE HORS ANY MENTION OF THE SPECIFIC DEFAULT IN THE SHOW CAUSE NOTICE ISSUED UNDER SEC.274 R.W.S 271(1)(C) WAS CONCERNED THE SAME DID NOT FIND FAVOUR WITH THE CIT(A). 6. THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE OR DER OF THE A.O. LD. D.R TAKING US THROUGH THE FACTS OF THE CASE SUBMITTED THAT AS THE ASSESSEE DESPITE THE FACT THAT ITS BUSINESS OPERATIONS HAD YET NOT COMMENCED DURING THE YEAR HAD INTENTIONALLY RAISED A WRONG CLAIM FOR DEPRECIATION THEREFORE THE A.O HAD RIGHTLY IMPOSED PENALTY UNDER SEC. 271(1)(C). AS REGARDS THE CLAIM OF THE ASSESSEE THAT IT BEING IN ITS N A SCENT STAGE IN INDIA WAS NOT HAVING THE SERVICES OF A PROFESSIONAL AT ITS DISPOSAL IT WAS AVERRED BY THE LD. D.R THAT THE SAID CLAIM OF THE ASSE SSEE HAD NO BASIS AND WAS JUST AN ATTEMPT TO WRIGGLE OUT FROM THE REPERCUSSIONS OF RAISING A WRONG CLAIM IN ITS RETURN OF INCOME. IT WAS SUBMITTED BY THE LD. D.R THAT NOW WHEN SEC. 32 CLEARLY ENVISAGES A PRE - CONDITION THAT THE ASSET INTER ALIA MUST HAVE B EEN USED BY THE ASSESSEE FOR THE PURPOSE OF ITS BUSINESS OR PROFESSION DURING THE YEAR THEREFORE THE ASSESSEE DESPITE BEING WELL CONVERSANT OF THE SAID STATUTORY REQUIREMENT HAD PURPOSIVELY RAISED A WRONG CLAIM DURING THE YEAR UNDER CONSIDERATION. IN THE BACKDROP OF HER AFORESAID CONTENTION S IT WAS AVERRED BY THE LD. D.R THAT THE ASSESSEE CANNOT BE ALLOWED TO CANVASS THAT IT WAS UNAWARE ABOUT THE MANDATE OF LAW. IN FACT IT WAS SUBMITTED BY THE LD. D.R THAT AS THE ASSESSEE HAD CAPITALISED THE OTHE R EXPENSES WHICH WERE DIRECTLY RELATED TO THE DEVELOPMENT OF TECHNOLOGY AND HAD ALSO TREATED OTHER COSTS AS SUNK COSTS AND DISALLOWED THE SAME IN ITS COMPUTATION OF INCOME THEREFORE IT WAS BEYOND COMPREHENSION THAT IT WAS IGNORANT ABOUT ITS STATUTORY OB LIGATION OF DISALLOW ING ITS CLAIM OF DEPRECIATION ON A SIMILAR FOOTING DURING THE YEAR UNDER CONSIDERATION. IN SUM AND SUBSTANCE IT WAS AVERRED BY THE LD. D.R THAT THE RAISING OF THE CLAIM FOR DEPRECIATION BY THE ASSESSEE COULD NOT BE TREATED TO BE A BONA FIDE CLAIM AS THE SAME AS PER HER WAS CLEARLY IN THE NATURE OF A WRONG CLAIM. INSOFAR THE REVISED COMPUTATION OF INCOME THAT WAS FILED BY THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS WAS CONCERNED IT WAS SUBMITTED BY THE LD. D.R THAT THE A .O HAD RIGHTLY OBSERVED THAT THE ONLY REMEDY THAT WAS AVAILABLE WITH THE ASSESSEE TO CORRECT ITS MISTAKE WAS BY WAY OF P A G E | 6 ITA NO.640/MUM/2018 AY. 2012 - 13 DCIT - 12(3)(2) VS. M/S MOVIDA INDIA PRIVATE LIMITED FILING A REVISED RETURN OF INCOME AND NO COGNIZANCE OF THE AFORESAID REVISED COMPUTATION WHICH WAS NON EST IN THE EYES OF LAW COULD BE DRAWN. APART THEREFROM IT WAS SUBMITTED BY THE LD. D.R THAT THE VERY FACT THAT THE ASSESSEE DESPITE REALISING ITS SO CALLED MISTAKE HAD TAKEN SUBSTANTIAL TIME FOR ADMITTING THE SAME BEFORE THE A.O IN ITSELF DISLODGED ITS CLAIM THAT IT HAD INADVERTENTL Y ON ACCOUNT OF A BONAFIDE MISTAKE RAISED THE AFORESAID CLAIM FOR DEPRECIATION. LD. D.R VEHEMENTLY SUBMITTED THAT THE ASSESSEE AS A MATTER OF FACT HAD ADOPTED A CALCULATED APPROACH WHICH BY NO MEANS COULD BE CHARACTERISED AS A BONAFIDE MISTAKE ON ITS PART . ON THE BASIS OF HER AFORESAID CONTENTIONS IT WAS CLAIMED BY THE LD. D.R THAT IT COULD SAFELY BE CONCLUDED THAT THE ASSESSEE IN THE PRESENT CASE HAD RAISED A WRONG CLAIM OF DEPRECIATION WHICH HAD THEREAFTER BEEN RIGHTLY SUBJECTED TO LEVY OF PENALTY UN DER SEC.271(1)(C) BY THE A.O . ADVERTING TO THE OBSERVATIONS OF THE CIT(A) THAT THE PENALTY IMPOSED BY THE A.O UNDER SEC.271(1)(C) COULD NOT BE SUSTAINED AS THE EXPLANATION 1 TO SEC.271(1)(C) HAD NOT BEEN INVOKED BY THE A.O I T WAS AVERRED BY THE LD. D.R THAT AS PER THE MANDATE OF LAW NO STATUTORY OBLIGATION WAS CAST UPON THE A.O FOR INVOKING EXPLANATION 1 FOR IMPOSING PENALTY UNDER SEC.271(1)(C ) . ON THE BASIS OF HER AFORESAID CONTENTION S IT WAS SUBMITTED BY THE LD. D.R THAT THE CIT(A) HAD ERRED IN DIS LODGING THE WELL REASONED ORDER PASSED BY THE A.O WHEREIN THE LATTER AFTER APPRECIATING THE FACTS HAD JUSTIFIABLY IMPOSED PENALTY UNDER SEC.271(1)(C) OF THE ACT . 7. PER CONTRA THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) RELIED ON THE ORDER OF TH E CIT(A). APART THEREFROM IT WAS SUBMITTED BY THE LD. A.R THAT AS THE CLAIM OF DEPRECIATION WAS INADVERTENTLY ON ACCOUNT OF A BONAFIDE MISTAKE RAISED BY THE ASSESSEE THEREFORE BYPASSING THE SAID MATERIAL FACT NO PENALTY UNDER SEC. 271(1)(C) COULD HAVE B EEN VALIDLY IMPOSED ON THE ASSESSEE . IT WAS SUBMITTED BY THE LD. A.R THAT THE VERY FACT THAT THE ASSESSEE HAD NEITHER CLAIMED THE SET OFF OF THE LOSS EMERGING FROM ITS AFORESAID CLAIM OF DEPRECIATION EITHER IN THE YEAR UNDER CONSIDERATION OR IN THE IMMEDIATELY SUCCEEDING YEAR I.E A.Y. 2013 - 14 NOR HAD CARRIED FORWARD THE SAME TO THE SUBSEQUENT YEARS THEREIN IN ITSELF EVIDENCE D THE FACT THAT ITS AFORESAID CLAIM FOR DEPRECIATION DURING THE YEAR UNDER CONSIDERATION WAS PROMPTED BY A BONAFIDE MISTAK E . ALSO IT WAS CLAIMED BY THE LD. A.R THAT THE ASSESSEE COULD NOT HAVE BENEFIT TED BY ANY MEANS BY RAISING THE AFORESAID CLAIM FOR DEPRECIATION SPECIFICALLY WHEN IT HAD NEITHER ANY INCOME DURING THE YEAR UNDER CONSIDERATION NOR HAD CARRIED FORWARD THE SAID LOSS TO THE SUCCEEDING YEARS . IN SUPPORT OF HER CONTENTION THAT NO PENALTY UNDER SEC.271(1)(C) COULD P A G E | 7 ITA NO.640/MUM/2018 AY. 2012 - 13 DCIT - 12(3)(2) VS. M/S MOVIDA INDIA PRIVATE LIMITED BE VALIDLY IMPOSED IN A CASE WHERE THE LOSS ARISING FROM AN INADVERTENT CLAIM OF DEPRECIATION DURING THE YEAR WAS NOT CARRIED FORWARD AND SET OFF I N THE SUBSEQUENT YEARS THE LD. A.R HAD DRAWN SUPPORT FROM THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT - 10 VS. FIRST DATA (INDIA) PVT. LTD. (2016) 384 ITR 260 (BOM) . ON THE BASIS OF HER AFORESAID SUBMISSION IT WAS AVERRED BY THE LD . A.R THAT NO PENALTY UNDER SEC. 271(1)(C) COULD HAVE BEEN VALIDLY IMPOSED BY THE A.O. 8. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD AS WELL AS THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THEM. ADMITTEDLY THE ASSESSEE COMPANY HAD NOT YET CO MMENCED ITS BUSINESS OPERATIONS DURING THE YEAR UNDER CONSIDERATION. AS OBSERVED BY US HEREINABOVE IT WAS THE CLAIM OF THE ASSESSEE THAT THOUGH IT HAD NOT COMMENCED ITS OPERATION S DURING THE YEAR UNDER CONSIDERATION THE ASSETS WERE PUT TO USE AND THE DEP RECIATION ON THE SAME WAS CALCULATED AS PER THE I.T A CT. ON BEING CALLED UPON TO JUSTIFY ITS CLAIM FOR DEPRECIATION IT WAS ADMITTED BY THE ASSESSEE THAT IT HAD INADVERTENTLY OMITTED IN NOT DISALLOWING THE DEPRECIATION IN THE COMPUTATION OF INCOME AND CONS EQUENTLY IN THE RETURN OF INCOME. AS IS DISCERNIBLE FROM THE ORDERS OF THE LOWER AUTHORITIES IT HAD THROUGHOUT BEEN CANVASSED BY THE ASSESSEE THAT THE FACT THAT IT HAD NOT SOUGHT ANY SET OFF OF THE DEPRECIATION LOSS IN ANY SUBSEQUENT YEAR CLEARLY EVIDE NCED THE FACT THAT THE RAISING OF CLAIM OF DEPRECIATION WAS MERELY BACKED BY A BON AFIDE MISTAKE ON ITS PART. HOWEVER WE FIND THAT THE AFORESAID EXPLANATION OF THE ASSESSEE WHO HAD TRIED TO JUSTIFY HIS BONAFIDES IN RESPECT OF THE AFORESAID INADVERTENT CLAI M OF DEPRECIATION HAD NOT FOUND FAVOUR WITH THE A.O. AS A MATTER OF FACT THE A.O WAS OF THE VIEW THAT NOW WHEN THE ASSESSEE DURING THE YEAR HAD CAPITALISED THE DIRECT COSTS RELATED TO DEVELOPMENT OF TECHNOLOGY AND HAD ALSO DISALLOWED ALL OTHER EXPENSE S IN THE COMPUTATION OF INCOME FOR THE REASON THAT ITS BUSINESS OPERATIONS HAD YET NOT COMMENCED THEREFORE IT COULD SAFELY BE GATHERED THAT THE AFORESAID CLAIM OF DEPRECIATION WAS NOT BACKED BY A BONAFIDE MISTAKE ON ITS PART. ALSO WE FIND THAT THE R EVISED COMPUTATION OF INCOME WHICH WAS FILED BY THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS WAS DECLINED TO BE ADMITTED BY THE A.O AS HE WAS OF THE VIEW THAT THE ONLY WAY FOR THE ASSESSEE TO CORRECT/UNDO THE MISTAKE WAS BY WAY OF FILING A R EVISED RETURN OF INCOME WHICH HOWEVER COULD NOT BE DONE AS THE PRESCRIBED TIME LIMIT FOR FILING THE SAME HAD EXPIRED WAY BACK AS ON 31.03.2014 . ON THE BASIS OF HIS P A G E | 8 ITA NO.640/MUM/2018 AY. 2012 - 13 DCIT - 12(3)(2) VS. M/S MOVIDA INDIA PRIVATE LIMITED AFORESAID OBSERVATIONS THE A.O WAS OF THE VIEW THAT THE SAID REVISED COMPUTATION OF INCOME FILED BY THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS HAD NO EXISTENCE IN THE EYES OF LAW. APART THEREFROM THE A.O WAS ALSO OF THE VIEW THAT THE CLAIM OF THE ASSESSEE THAT IT HAD NOT SOUGHT SET OFF OF THE DEPRECIATION LOSS FOR TH E YEAR UNDER CONSIDERATION IN ANY OF THE SUBSEQUENT YEARS WOULD NOT ABSOLVE IT FROM THE REPERCUSSIONS OF RAISING A WRONG CLAIM IN ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. AS HAD BEEN OBSERVED BY US AT LENGTH HEREINABOVE IN THE BACKDROP OF TH E AFORESAID DELIBERATIONS THE A.O AFTER INTER ALIA DISALLOWING THE ASSESSES CLAIM FOR DEPRECIATIONS OF RS. 7 02 47 029/ - HAD THEREAFTER SADDL ED IT WITH THE DEFAULT OF HAVING INTENTIONALLY RAISED A WRONG CLAIM OF DEPRECIATION IN ITS RETURN OF INCOME AND C ONSEQUENTLY SUBJECTED IT TO A PENALTY OF RS. 2 27 91 648/ - UNDER SEC. 271(1)(C) . AS CAN BE GATHERED FROM A PERUSAL OF THE ORDER OF THE CIT(A) WE FIND THAT THE PENALTY IMPOSED UNDER SEC. 271(1)(C) WAS VACATED BY HIM FOR THE REASON THAT HE WAS OF THE VI EW THAT A S NEITHER ANY ACTUAL CONCEALMENT NOR ANY FURNISHING OF INACCURATE PARTICULARS OF INCOME HAD OCCASIONED IN THE PRESENT CASE THEREFORE THE A.O WAS IN ERROR IN IMPOSING PENALTY UNDER SEC.271(1)(C) WITHOUT INVOKING THE DEEMING PROVISIONS OF E XPLANATION 1 TO SEC. 271(1)(C) OF THE ACT. IN SUM AND SUBSTANCE THE CIT(A) HELD A CONVICTION THAT AS EXPLANATION 1 TO SEC. 271(1)(C) WAS IN THE NATURE OF DEEMING PROVISION WHICH HAD EXP A NDED THE SCOPE OF THE CASES WHERE A PENALTY UNDER THE AFORESAID STATUTORY PROVISION COULD BE IMPOSED THEREFORE AS IN THE CASE BEFORE HIM THERE WAS NEITHER ANY ACTUAL CONCEALMENT NOR ANY ACTUAL FURNISHING OF INACCURATE PARTICULARS OF INCOME THUS THE A.O WITHOUT INVOKING THE PROVISIONS OF EXPLANATION 1 COULD NO T HAVE IMPOSED PENALTY UNDER THE SAID STATUTORY PROVISION ON THE ASSESSEE. 9. WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UNDER CONSIDERATION BEFORE US IN THE BACKDROP OF THE CONTENTIONS ADVANCED BY THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES. AS IS DISCERNIBLE FROM THE NOTES TO THE FINANCIAL STATEMENTS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WE FIND THAT THE ASSESSEE HAD THEREIN CATEGORICALLY DISCLOSED TWO PRIMARY ASPECT S VIZ. (I) THAT THE COMPANY HAD NOT YET COMMENCED ITS BUSINESS O PERATIONS DURING THE YEAR ; AND (II) THAT DEPRECIATION WAS PROVIDED ON A STRAIGHT LINE METHOD OVER THE ESTIMATED USEFUL LIFE OF THE FIXED ASSETS . ALSO IN THE BACKDROP OF THE FACT THAT THE ASSESSEE HAD NOT YET COMMENCED ITS BUSINESS OPERATIONS DURING THE Y EAR IT HAD THEREFORE WHILE FILING ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION I.E A.Y. 2012 - 13 DISALLOWED ALL THE EXPENSES. ON THE P A G E | 9 ITA NO.640/MUM/2018 AY. 2012 - 13 DCIT - 12(3)(2) VS. M/S MOVIDA INDIA PRIVATE LIMITED BASIS OF THE AFORESAID FACTS WE ARE OF THE CONSIDERED VIEW THAT THE AFORESAID CLAIM OF DEPRECIATION RAISED BY TH E ASSESSEE HAS TO BE READ IN CONJUNCTION WITH THE FACT THAT THE ASSESSEE IN ITS RETURN OF INCOME/FINANCIAL STATEMENTS HAD MADE A COMPLETE DISCLOSURE OF THE FACT THAT ITS BUSINESS OPERATIONS HAD NOT YET COMMENCED DURING THE YEAR UNDER CONSIDERATION . IN SUM AND SUBSTANCE THE CLAIM OF DEPRECATION RAISED BY THE ASSESSEE WAS NOT BASED ON INCORRECT FACTS BUT IN FACT WAS BACKED BY A TRUE DISCLOSURE OF THE FACT THAT ITS BUSINESS OPERATIONS HAD NOT YET COMMENCED DURING THE YEAR UNDER CONSIDERATION. ON THE BASIS OF THE AFORESAID FACTS IT CAN SAFELY BE GATHERED THAT THOUGH THE ASSESSEE HAD NOT BEG U N ITS BUSINESS OPERATION S DURING THE YEAR UNDER CONSIDERATION HOWEVER FOR THE REASON THAT AS THE ASSETS WERE PUT TO USE THEREFORE IT HAD CALCULATED THE DEPRECIATION ON THE SAME UNDER THE I.T ACT WHICH THEREAFTER HAD INADVERTENTLY REMAINED OMITTED TO BE DISALLOWED IN THE TAX COMPUTATION AND CONSEQUENTLY IN THE RETURN OF INCOME. IN OUR CONSIDERED VIEW THE FACT THAT THE ASSESSEE HAD NOT SET OFF THE AFORE SAID DEPRECIATION LOSS IN ANY SUBSEQUENT YEAR LENDS SUBSTANTIAL CREDENCE TO THE EXPLANATION OF THE ASSESSEE THAT IT HAD ON ACCOUNT OF A BONAFIDE OMISSION FAILED TO DISALLOW DEPRECATION IN THE TAX COMPUTATION AND CONSEQUENTLY IN THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION . IN FACT WE FIND THAT IT HAS BEEN THE CLAIM OF THE ASSESSEE BEFORE THE LOWER AUTHORITIES THAT AS IT HAD NOT CARRIED FORWARD THE AFORESAID DEPRECIATION LOSS AND THEREIN SET OFF THE SAME IN THE SUBSEQUENT YEARS THEREFORE THE FACT THAT IT HAD NO INTENTION OF RAISING A FALSE CLAIM OF DEPRECIATION WHILE FILING OF THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS PROVED BEYOND DOUBT. 10. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION AND FIND SUBSTANTIAL FORCE IN THE CLAIM THE LD. A.R THAT THE AFORESAID CLAIM FOR DEPRECATION WAS INADVERTENTLY RAISED BY THE ASSESSEE IN ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. AS IS DISCERNIBLE FROM THE ORDERS OF THE LOWER AUTHORITIES IT IS AN ADMITTED FACT THAT THE ASSESSEE COMPA NY WAS A START UP COMPANY WHICH DURING THE YEAR UNDER CONSIDERATION WAS IN ITS NASCENT STAGE IN INDIA. INSOFAR THE VARIOUS COSTS WHICH WERE INCURRED DURING THE YEAR UNDER CONSIDERATION WERE CONCERNED WE FIND THAT THE ASSESSEE HAD CAPITALISED THE DIRECT COSTS RELATED TO DEVELOPMENT OF TECHNOLOGY. ON THE OTHER HAND ALL OTHER COSTS WERE TREATED AS SUNK COSTS AND WERE DISALLOWED IN THE COMPUTATION OF INCOME. AS IS DISCERNIBLE FROM THE ORDERS OF THE LOWER AUTHORITIES IT IS THE CLAIM OF THE LD. A.R THAT A S THE ASSESSEE DURING THE YEAR WAS IN ITS NASCENT STAGE IN INDIA THEREFORE IN THE ABSENCE P A G E | 10 ITA NO.640/MUM/2018 AY. 2012 - 13 DCIT - 12(3)(2) VS. M/S MOVIDA INDIA PRIVATE LIMITED OF ANY DEDICATED FINANCE AND TAX TEAM IT HAD OUTSOURCED ITS TAX RELATED WORK TO A THIRD PARTY CONSULTANT. ACCORDINGLY IT HAS BEEN THE CLAIM OF THE ASSESSEE THAT W HILE FILING THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION THOUGH THE TAX CONSULTANT TO WHOM THE TAX RELATED WORK WAS OUTSOURCED HAD DISALLOWED THE EXPENSES INCURRED BY THE ASSESSEE DURING THE YEAR FOR THE REASON THAT ITS BUSINESS HAD NOT YET COMM ENCED HOWEVER INADVERTENTLY THE DEPRECIATION THAT WAS CALCULATED AS PER THE I.T ACT AT RS.7 02 47 029/ - HAD REMAINED OMITTED TO BE DISALLOWED BY HIM IN THE TAX COMPUTATION AND CONSEQUENTLY IN THE RETURN OF INCOME . RESULTANTLY IN THE RETURN OF INCOME TH E CONSEQUENTIAL LOSS WAS REFLECTED AT RS.7 02 47 028/ - AND THE SAME AS PER ITS SOFTWARE WAS AUTOMATICALLY SHOWN IN THE CARRIED FORWARD SCHEDULE OF THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. I T IS THE CLAIM OF THE ASSESSEE THAT THE FACT THE D EPRECIATION HAD WRONGLY BEEN CLAIMED DURING THE YEAR UNDER CONSIDERATION WAS BROUGHT TO ITS NOTICE BY ITS NEW TAX CONSULTANT ON 30.11.2013 I.E AT THE TIME OF FILING OF THE RETURN OF INCOME FOR THE IMMEDIATELY SUCCEEDING YEAR VIZ. A.Y. 2013 - 14 . ACCORDINGLY IT IS THE CLAIM OF THE ASSESSEE THAT ON LEARNING ABOUT ITS AFORESAID INADVERTENT MISTAKE THAT HAD CREPT IN ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION I.E A.Y 2012 - 13 IT TOOK THE NECESSARY STEPS AND HAD NOT CLAIM ED ANY BENEFIT OF THE BROUGHT FORWARD UNABSORBED DEPRECIATION LOSS OF RS.7 02 47 029/ - IN ITS RETURN OF INCOME FOR A.Y 2013 - 14. IN SUM AND SUBSTANCE IT IS THE CLAIM OF THE ASSESSEE THAT ITS BONAFIDE S AS REGARDS THE INADVERTENT CLAIM OF DEPRECIATION CAN SAFELY BE GATHERED FROM THE FA CT THAT NO BENEFIT OF THE CONSEQUENTIAL BROUGHT FORWARD DEPRECIATION LOSS WAS CLAIMED IN THE RETURN OF INCOME FOR THE IMMEDIATELY SUCCEEDING YEAR I.E A.Y. 2013 - 14. WE FIND SUBSTANTIAL FORCE IN THE AFORESAID CONTENTION OF THE LD. A.R AND ARE OF THE CONSI DERED VIEW THAT THE FACT THAT THE ASSESSEE IN ITS RETURN OF INCOME FOR A.Y. 2013 - 14 HAD NOT SOUGHT ANY BENEFIT OF THE BROUGHT FORWARD LOSS EMANATING FROM ITS CLAIM FOR DEPRECIATION RAISED DURING THE YEAR UNDER CONSIDERATION I.E A.Y. 2012 - 13 IN ITSELF FOR TIFIES THE VERACITY OF THE EXPLANATION OF THE ASSESSEE THAT THE AFORESAID CLAIM OF DEPRECIATION WAS MERELY BACKED BY A BONAFIDE MISTAKE. IN FACT WE FIND THAT THE ASSESSEE BY WAY OF A DISCLOSURE IN THE NOTES FORMING PART OF ITS FINANCIAL STATEMENTS FO R THE YEAR UNDER CONSIDERATION HAD CATEGORICALLY STATED THAT IT HAD NOT COMMENCED ITS BUSINESS OPERATIONS DURING THE YEAR UNDER CONSIDERATION. APART THEREFROM AS OBSERVED BY US HEREINABOVE THE ASSESSEE HAD DISALLOWED ALL OTHER EXPENSES DURING THE YEAR UN DER CONSIDERATION FOR THE REASON THAT ITS BUSINESS OPERATIONS HAD NOT YET COMMENCED. IN OUR CONSIDERED VIEW THE AFORESAID STATE OF AFFAIRS SUBSTANTIALLY LENDS CREDENCE TO THE EXPLANATION OF P A G E | 11 ITA NO.640/MUM/2018 AY. 2012 - 13 DCIT - 12(3)(2) VS. M/S MOVIDA INDIA PRIVATE LIMITED THE ASSESSEE THAT IT HAD BY WAY OF A BONAFIDE MISTAKE RAISED A CLAIM OF DEPRECIATION AT THE TIME OF FILING OF THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION . ALSO THE CLAIM OF THE ASSESSEE THAT THE MISTAKE IN RAISING THE AFORESAID CLAIM OF DEPRECIATION HAD OCCASIONED ON THE PART OF THE THIRD PARTY TAX CONSULTA NT TO WHOM THE TAX RELATED MATTERS WERE OUTSOURCED DURING THE YEAR THOUGH HAD NOT BEEN CONCLUSIVELY PROVED TO THE HILT BY THE ASSESSEE HOWEVER THE SAME ALSO CANNOT BE DISCARDED IN THE ABSENCE OF ANY MATERIAL PLACED ON RECORD BY THE REVENUE WHICH WOULD PROV E TO THE CONTRARY. IN FACT N EITHER IS THERE ANY MATERIAL BORNE FROM THE RECORDS WHICH WOULD DISPROVE THE AFORESAID CLAIM OF THE ASSESSEE NOR ANY EFFORT HA S BEEN PUT IN BY THE LD. D.R TO DISLODGE THE SAID CLAIM OF THE ASSE S SEE. 11. APART THEREFROM WE FIND THAT THE SEQUENCE OF EVENTS CULMINATING INTO THE IMPOSITION OF PENALTY UNDER SEC. 271(1)(C) WOULD ALSO HAVE A STRONG BEARING ON THE ADJUDICATION AS REGARDS THE MAINTAINABILITY OF THE SAME. ON A PERUSAL O F THE RECORDS WE FIND THAT SCRUTINY PROCEEDINGS WERE INITIATED BY WAY OF A NOTICE ISSUED UNDER SEC. 143(2) DATED 08.08.2013. NOTICE UNDER SEC. 142(1) DATED 02.04.2014 WAS THEREAFTER ISSUED TO THE ASSESSEE HOWEVER A PERUSALOF THE SAME REVEALS THAT NO S PECIFIC QUERY REGARDING THE CLAIM OF DEPRECIATION WAS THEREIN RAISED BY THE A.O . IN REPLY THE ASSESSEE VIDE ITS LETTER DATED 30.06.2014 HAD FILE D VARIOUS DETAILS . AT POINT NO. 9 OF ITS REPLY THE ASSESSEE HAD VOLUNTARILY CAME FORTH WITH CERTAIN FACTS VIZ. (I) THAT AS SPECIFICALLY MENTIONED IN THE AUDITED FINANCIALS THE COMPANY HAD NOT COMMENCED ITS BUSINESS OPERATION S DURING THE YEAR UNDER CONSIDERATION; (II) THAT THOUGH THE COMMERCIAL OPERATIONS HAD NOT COMMENCED DURING THE YEAR UNDER CONSIDERATION HOW EVER DEPRECIATION WAS CALCULATED ON THE ASSETS WHICH HOWEVER HAD INADVERTENTLY REMAINED OMITTED TO BE DISALLOWED IN THE RETURN OF INCOME; (III) THAT THE ASSESSEE COMPANY HAD NO INTENTION OF RAISING THE AFORESAID CLAIM OF DEPRECIATION AND HAD NOT USED THE LOSSES EMERGING THEREFROM FOR ANY SET OF F PURPOSES; AND (IV) THAT THE DEPRECIATION THAT WAS INADVERTENTLY CLAIMED DURING THE YEAR UNDER CONSIDERATION WAS NOT CARRIED FORWARD FOR SET OFF IN THE RETURN OF INCOME FOR THE IMMEDIATEL Y SUCCEEDING YEAR I.E A.Y. 2013 - 14. APART THEREFROM WE FIND THAT THE A.O HAD THEREAFTER RAISED CERTAIN QUERIES IN THE COURSE OF THE ASSESSMENT PROCEEDINGS WHICH WERE REPLIED BY THE ASSESSEE VIDE ITS LETTER S DATED 25.08.2014 27.08.2014 23.01.2015 AND 02 .02.2015. HOWEVER WE FIND THAT IN NEITHER OF THE AFORESAID LETTERS ISSUED BY THE A.O ANY QUERY WAS RAISED AS REGARDS THE ASSESSES CLAIM FOR DEPRECIATION. ON 13.02.2015 THE ASSESSEE REITERATING ITS AFORESAID CLAIM THAT IT HAD P A G E | 12 ITA NO.640/MUM/2018 AY. 2012 - 13 DCIT - 12(3)(2) VS. M/S MOVIDA INDIA PRIVATE LIMITED INADVERTENTLY OMITTED TO DISAL LOW DEPRECIATION IN THE TAX COMPUTATION HAD THUS FILE D ITS REVISED COMPUTATION OF INCOME AS ANNEXURE 1 TO ITS AFORESAID LETTER. IN THE REVISED COMPUTATION OF INCOME THE ASSESSEE HAD CATEGORICALLY STATED THAT THE DEPRECIATION CALCULATED WAS NOT BEING CLAIMED AS A DEDUCTION AS THE BUSINESS OPERATIONS HAD NOT COMMENCED DURING THE YEAR. FURTHER THE ASSESSEE VIDE ITS LETTER DATED 28.01.2016 HAD ONCE AGAIN SUBMITTED BEFORE THE A.O THAT IT HAD INADVERTENTLY CLAIMED DEPRECIATION AS DEDUCTION IN ITS TAX COMP UTATION AND CONSEQUENTLY IN THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. W E FIND THAT IT IS A MATTER OF FACT BORNE FROM THE RECORDS THAT THE ASSESSEE HAD VIDE ITS LETTER DATED 30.06.2014 HAD ON A SUO MOTTO BASIS SUBMITTED BEFORE THE A.O THAT DEP RECIATION ON ASSETS HAD WRONGLY BEEN CLAIMED DURING THE YEAR UNDER CONSIDERATION. ALSO IT WAS REQUESTED BY THE ASSESSEE THAT AS THE TIME LIMIT TO FILE THE REVISED RETURN OF INCOME HAD LAPSED THEREFORE THE AFORESAID DETAILS MAY BE PLACED ON RECORD. ON THE BASIS OF THE AFORESAID FACTS WE FIND THAT THERE IS SUBSTANTIAL FORCE IN THE CLAIM OF THE ASSESSEE THAT AS IT HAD IN THE COURSE OF THE ASSESSMENT PROCEEDINGS PRIOR TO ANY QUERY HAVING BEEN RAISED BY THE A.O AS REGARDS ITS CLAIM FOR DEPRECIATION CAME FORTH WITH CLEAN HANDS AND THEREIN ADMITTED ITS MISTAKE OF HAVING INADVERTENTLY RAISED THE AFORESAID CLAIM FOR DEPRECIATION ON ITS ASSETS THEREFORE IT COULD NOT HAVE BEEN VISITED WITH PENALTY U/S 271(1)(C) IN RESPECT OF SUCH DISALLOWANCE . APART THEREFROM WE FIND THAT THE FACT THAT THE ASSESSEE AFTER LEARNING ABOUT ITS AFORESAID MISTAKE HAD THEREAFTER NOT CLAIMED ANY BENEFIT OF THE BROUGHT FORWARD DEPRECIATION LOSS WHILE FILING ITS RETURN OF INCOME FOR A.Y. 2013 - 14 ON 30.11.2013 FURTHER LENDS CREDENCE TO ITS BONAFIDES . RATHER AN IN DEPTH CONSIDERATION OF THE AFORESAID FACTS REVEALS THAT WHILE FOR THE ASSESSEE HAD FILED ITS RE TURN OF INCOME FOR A.Y. 2013 - 14 ON 30.11.2013 THE FIRST NOTICE/QUESTION N A I RE WHICH WAS ISSUED BY THE A.O UNDER SEC.142(1) WAS DATED 02.04.2014 (DE HORS ANY SPECIFIC QUERY REGARDING ASSESSES CLAIM FOR DEPRECIATION). IN THE BACKDROP OF THE AFORESAID FACTS WE FIND THAT THE FACT THAT THE ASSESSEE HAD NOT CLAIMED ANY BENEFIT OF THE BROUGHT FORWARD DEPRECIATION LOSS WHILE FILING IT S RETURN OF INCOME FOR A.Y. 2013 - 14 IN ITSELF SUBSTANTIATE S THAT IT HAD RAISED THE AFORESAID CLAIM OF DEPRECIATION ON ACCOUNT OF AN INADVERTENT BONAFIDE MISTAKE AT THE TIME OF FILING OF THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION I.E A.Y 2012 - 13 . ACCORDINGLY IN THE TOTALITY OF THE FACTS OF THE CASE WE ARE OF THE CONSIDERED VIEW THAT AS THE BONAFIDES OF THE ASSESSEE AS REGARDS THE RAISING OF THE AFORESAID CLAIM OF DEPRECIATION STAND S CLEARLY ESTABLISHED THEREFORE THE A.O WAS NOT JUSTIFIED IN I MPOSING PENALTY UNDER SEC. 271(1)(C) OF THE ACT. P A G E | 13 ITA NO.640/MUM/2018 AY. 2012 - 13 DCIT - 12(3)(2) VS. M/S MOVIDA INDIA PRIVATE LIMITED 12. IN FACT WE ARE OF A STRONG CONVICTION THAT A SIMPLICITER ADDITION/DISALLOWANCE IN THE HANDS OF ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS CANNOT ON A STANDALONE BASIS AUTOMATICALLY LEAD TO LEVY OF PENALTY UNDER SEC.271(1)(C). OUR AFORESAID VIEW IS FORTIFIED BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF SHRI T. ASHOK PAI VS. CIT BANGLORE (2007) 7 SCC 162 (SC) . IN THE AFORESAID CASE IT WAS OBSERVED BY THE H ONBLE APEX COURT THAT UNLESS AND UNTIL THERE IS SOME EVIDENCE TO SHOW OR SOME CIRCUMSTANCES FOUND FROM WHERE IT CAN BE GATHERED THAT THERE WAS AN INTENTION OR DESIRE ON THE PART OF THE ASSESSEE TO HIDE OR CONCEAL THE INCOME SO AS TO AVOID IMPOSITION OF TA X THEREON PENALTY UNDER SEC.271(1)(C) CANNOT BE IMPOSED. IN FACT IT WAS OBSERVED BY THE HONBLE APEX COURT THAT IN ORDER THAT A PENALTY UNDER SEC.271(1)(III) MAY BE IMPOSED IT HAS TO BE PROVED THAT THE ASSESSEE HAD CONSCIOUSLY MADE THE CONCEALMENT OR FU RNISHED INACCURATE PARTICULARS OF HIS INCOME. ALSO IT WAS OBSERVED BY THE HONBLE APEX COURT THAT BEFORE AN ASSESSEE IS SADDLED WITH PENALTY UNDER SEC. 271(1)(C) THE A.O MUST ARRIVE AT A FINDING THAT NOT ONLY THE ASSESSEE HAD FAILED TO PROVE THAT HIS EX PLANATION IS NOT ONLY NOT BONAFIDE BUT ALSO THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE INCOME WERE NOT DISCLOSED. WE ARE AFRAID THAT IN THE PRESENT CASE THERE IS NOTHING BORN E OUT FROM THE RECORDS WHICH COULD PERSUADE US TO CONCLUDE THAT THERE WAS AN Y INTENTION OR DESIRE ON THE PART OF THE ASSESSEE TO HIDE OR CONCEAL ITS INCOME SO AS TO AVOID ANY IMPOSITION OF TAX . RATHER ON THE CONTRARY THE ASSESSEE HAD BEEN ABLE TO SUCCESSFULLY DEMONSTRATE THAT THERE WAS NO INTENTION ON ITS PART TO EVA DE ANY TAX IN ANY MANNER. W E ARE OF THE CONSIDERED VIEW THAT MERELY MAKING OF THE AFORESAID CLAIM OF DEPRECIATION BY THE ASSESSEE WHICH THOUGH IS NOT SUSTAINABLE IN LAW COULD NOT HAVE JUSTIFIED IMPOSITION OF PENALTY UNDER SEC. 271(1)(C). OUR AFORESAID V IEW IS FORTIFIED BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCT (P) LTD. (2010) 322 ITR 158 (SC) . ADMITTEDLY THERE HAS BEEN A MISTAKE ON THE PART OF THE ASSESSEE IN RAISING A CLAIM FOR DEPRECIATION ON THE ASSETS DESPITE THE FACT THAT ITS BUSINESS OPERATIONS HAD NOT COMMENCED DURING THE YEAR UNDER CONSIDERATION. HOWEVER WE ARE OF THE CONSIDERED VIEW THAT IMPOSITION O F PENALTY WOULD BE UNWARRANTED IN A CASE WHERE THE ASSESSEE HAS COMMITTED AN INADVERTENT AND A BONAFIDE ERROR AND HAD NOT INTENDED TO OR ATTEMPT ED TO EITHER CONCEAL ITS INCOME OR FURNISH INACCURATE PARTICULARS THEREOF. OUR AFORESAID VIEW IS ALSO SUPPORTED BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF PRICE WATER HOUSE COOPERS PVT. LTD. VS. CIT (2012) 348 ITR 306 (SC) . IN THE BACKDROP OF OUR AFORESAID DELIBERATIONS AND THE SETTLED POSITION OF LAW WE ARE P A G E | 14 ITA NO.640/MUM/2018 AY. 2012 - 13 DCIT - 12(3)(2) VS. M/S MOVIDA INDIA PRIVATE LIMITED OF THE CONSIDERED VIEW THAT THE ASSESSEE IN THE TOTALITY OF THE FACTS OF THE CASE COULD NOT HAVE BEEN SADDLED WITH PENALTY UNDER SEC.271(1)(C) IN RESPECT OF ITS AFORESAID BONAFIDE MISTAKE OF HAVING CLAIMED DEPRECIATION ON THE ASSETS DURING THE YEAR UNDER CONSIDERATION. APART THEREFROM WE ARE AL SO OF THE CONSIDERED VIEW THAT AS THE ASSESSEE HAD NEITHER BENEFITTED FROM CLAIM OF THE DEPRECIATION LOSS DURING THE YEAR UNDER CONSIDERATION NOR CARRIED FORWARD THE SAME FOR SET OFF TO THE SUBSEQUENT YEAR THEREFORE ON THE SAID COUNT ALSO IT COULD N OT HAVE BEEN VISITED WITH PENALTY UNDER SEC. 271(1)(C). OUR AFORESAID VIEW IS FORTIFIED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT - 10 VS. FIRST DATA (INDIA) PVT. LTD. (2016) 348 ITR 260 (BOM) . AS SUCH HOLDING A STRONG CONVICT ION THAT THE A.O HAD ERRED IN IMPOSING PENALTY UNDER SEC. 271(1)(C) WE THUS IN TERMS OF OUR AFORESAID OBSERVATIONS UPHOLD THE QUASHING OF THE PENALTY UNDER SEC.271(1)(C) BY THE CIT(A) . ACCORDINGLY IN TERMS OF OUR AFORESAID OBSERVATIONS WE UPHOLD THE VIE W TAKEN BY THE CIT(A) THAT NO PENALTY UNDER SEC. 271(1)(C) COULD HAVE BEEN IMPOSED ON THE ASSESSEE. 1 3 . RESULTANTLY THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 2 2 . 11.2019 S D / - S D / - ( S.RIFAUR RAHMAN ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 22 .11 .2019 PS. ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. / DR ITAT MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI P A G E | 15 ITA NO.640/MUM/2018 AY. 2012 - 13 DCIT - 12(3)(2) VS. M/S MOVIDA INDIA PRIVATE LIMITED