Facts of the case

The assessee had claimed excess depreciation on land component of the properties. The Assessing Officer did not ascertain the same. However, before the Ld. CIT (Appeals), the assessee had suo motu made submission regarding this. In order to align its books of accounts with MCA notification, the assessee had itself disclosed all the particulars relating to the excess claim to the Ld. CIT (Appeals).
The Ld. CIT (Appeals) had charged the assessee with penalty under section 271(1)(c) of the Income-tax Act, 1961 on the ground that the assessee had furnished inaccurate particulars of income.

Observations of the Court

The Hon’ble High Court of Gujarat observed that the assessee had itself surrendered excess claim of depreciation without any prior detection of the Revenue. The assessee had also demonstrated that the excess claim was been made for bona fide reasons. The court also observed that in order to align its books of accounts with MCA notification, the assessee had itself disclosed all particulars relating to the excess claim.

Reliance on the decision of the Supreme Court

The High Court of Gujarat relied upon the decision of Hon’ble Supreme Court in the case of Dilip N. Shroff vs. JCIT [2007 (6) SCC 329] wherein the court explained the terms “concealment of income” and “furnishing inaccurate particulars” appearing in section 271(1)(c). The Supreme Court had held that in order to attract the penalty under section 271(1)(c), mens rea was necessary as the word “inaccurate” signified a deliberate act or omission on behalf of the assessee.

Decision

Applying the ratio decidendi laid down by the Apex Court, the Hon’ble High Court of Gujarat held that since the assessee had surrendered the excess claim of depreciation prior to the detection of Revenue of the said claim, there was no deliberate act on the part of the assessee to furnish inaccurate particulars of income. Accordingly, no penalty is leviable upon the assessee under section 271(1)(c).