InTax Appeal No. 169 of 2023 -GUJ HC- Gujarat High Court grants relief to Axis Bank; Rules no penalty under Section 271(1)(c) of the Income Tax Act for voluntary surrender ofexcess depreciation claim
Justice Vipul M. Pancholi & Justice Devan M. Desai [11-07-2023]

Read Order: The Principal Commissioner of Income Tax 1, Ahmedabad V. Axis Bank Ltd.

Chahat Varma

New Delhi, July 26, 2023: In a significant ruling, the Gujarat High Court has upheld the order of the Income Tax Appellate Tribunal (ITAT) and provided relief to Axis Bank Ltd. (respondent assessee). The Court held that the addition made on account of excess depreciation claimed, which was voluntarily surrendered by the respondent assessee, without prior detection by the Revenue, and demonstrated to be made for bonafide reasons, did not warrant the imposition of a penalty under Section 271(1)(c) of the Income Tax Act.

Briefly stated, the Principal Commissioner of Income Tax, Ahmedabad (appellant), raised a substantial question of law regarding the deletion of a penalty of Rs. 2,30,45,220 levied under Section 271(1)(c) of the Act by the ITAT. The appellant argued that the CIT (A) had already observed that the respondent assessee had filed inaccurate particulars of income, making them liable for the penalty under Section 271(1)(c) of the Act. The appellant contended that the ITAT allowed the appeal of the respondent assessee without acknowledging the alleged inaccurate particulars of income filed in the return of income.

The division bench of Justice Vipul M. Pancholi and Justice Devan M. Desai referred to the Supreme Court's ruling in C.I.T., Ahmedabad v. Reliance Petroproducts Pvt. Ltd. [LQ/SC/2010/287], where it was clarified that for Section 271(1)(c) to be applicable, specific conditions must be met, including concealment of particulars of income or furnishing inaccurate particulars of income. In this case, the bench found that the appellant failed to establish either of these conditions.

The bench further observed that the ITAT's decision highlighted that the addition made on account of excess depreciation claimed was voluntarily surrendered by the respondent assessee itself, without prior detection by the Revenue. Additionally, the respondent assessee had disclosed all particulars related to the excess claim in alignment with MCA notification.

Based on these considerations, the bench concluded that no question of law, particularly any substantial question of law, arose for the court's consideration. As a result, the appeal was dismissed.