2011 (5) TMI 496 - AT - Income Tax

Tribunal upholds penalty for inaccurate income particulars & concealed income.

BR. TV Versus Assistant Commissioner of Income tax, Circle 11(1)

BR. TV Versus Assistant Commissioner of Income tax, Circle 11(1) - TMI Issues Involved:1. Penalty under Section 271(1)(c) of the Income Tax Act.2. Addition of Rs. 5,50,000 as unexplained cash credit.3. Disallowance of depreciation claim of Rs. 11,00,000 on studio equipment.Issue-wise Detailed Analysis:1. Penalty under Section 271(1)(c) of the Income Tax Act:The case revolves around the penalty of Rs. 6,67,750 levied by the Assessing Officer (AO) under Section 271(1)(c) of the Income Tax Act, which was affirmed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The penalty was imposed due to the addition of Rs. 5,50,000 as unexplained cash credit and the disallowance of depreciation claim of Rs. 11,00,000 on studio equipment. The Tribunal had to determine if the penalty was justified based on the facts and circumstances of the case.2. Addition of Rs. 5,50,000 as Unexplained Cash Credit:The AO noticed an amount of Rs. 5,50,000 shown as received from Nayamma R. Mulla, which the assessee claimed was payable towards the purchase of a car. However, the assessee failed to provide any documentary evidence to substantiate this claim. The AO rejected the claim due to the lack of proof and treated the amount as unexplained cash credit. The assessee contended that the amount was a liability for the car purchase and not a borrowing, but failed to furnish any corroborative evidence, such as a confirmation letter from Nayamma R. Mulla or documents from ICICI Bank. The Tribunal upheld the AO's decision, stating that the explanation was not substantiated with evidence, making it a fit case for penalty under Section 271(1)(c).3. Disallowance of Depreciation Claim of Rs. 11,00,000 on Studio Equipment:The assessee initially claimed depreciation on studio equipment worth Rs. 11,00,000, but later withdrew the claim during the assessment proceedings, stating that the equipment was not used during the year. The AO disallowed the depreciation claim, noting that the withdrawal was not voluntary but prompted by the scrutiny process. The Tribunal observed that the assessee did not revise its return within the stipulated period under Section 139(5) and only withdrew the claim when asked to provide bills for the fixed assets. The Tribunal concluded that the withdrawal was not a voluntary disclosure, but a response to the AO's inquiry, and thus, the penalty under Section 271(1)(c) was justified.Conclusion:The Tribunal affirmed the orders of the tax authorities, holding that the assessee failed to provide satisfactory evidence for the addition of Rs. 5,50,000 and the disallowance of depreciation on studio equipment. The penalty under Section 271(1)(c) was upheld, as the assessee was found to have furnished inaccurate particulars of income and concealed income. The appeal filed by the assessee was dismissed.