Tribunal upholds CIT(A)'s decision to delete penalties for disallowances, including depreciation & transfer pricing.

The Tribunal upheld the CIT(A)'s decision to delete penalties under Section 271(1)(c) for various disallowances, including depreciation on steel purchases, professional fees paid, transfer pricing adjustments, and furnishing inaccurate particulars of income for A.Ys 2007-08, 2008-09, and 2009-10. The Tribunal found the issues debatable and supported the CIT(A)'s reasoning, dismissing the Revenue's appeals and the assessee's cross objections as penalties had already been deleted.

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Issues Involved:
1. Application of CBDT Circular 25/2015.
2. Deletion of penalty under Section 271(1)(c) for disallowance of depreciation on steel purchases.
3. Deletion of penalty under Section 271(1)(c) for disallowance of professional fees paid.
4. Deletion of penalty under Section 271(1)(c) for transfer pricing adjustments.
5. Justification for penalty levied under Section 271(1)(c) for furnishing inaccurate particulars of income.

Issue-wise Detailed Analysis:

1. Application of CBDT Circular 25/2015:
The Revenue questioned whether the CIT(A) erred in applying CBDT Circular 25/2015, dated 31.12.2015, while the assessee was assessed under normal provisions of the Act. The Tribunal found that the CIT(A) correctly applied the circular, which clarifies that when tax payable under normal provisions is less than tax payable under MAT provisions, the penalty under Section 271(1)(c) is not attracted for additions made under normal provisions.

2. Deletion of Penalty for Disallowance of Depreciation on Steel Purchases:
The Tribunal upheld the CIT(A)'s decision to delete the penalty levied under Section 271(1)(c) for disallowance of depreciation on steel purchases. The CIT(A) relied on an earlier ITAT decision in the assessee's own case for A.Y 2003-04 to 2006-07, where under similar facts, the penalty was deleted. The Tribunal found no error in the CIT(A)'s findings.

3. Deletion of Penalty for Disallowance of Professional Fees Paid:
The Tribunal noted that the ITAT had deleted the quantum disallowance of professional fees paid to S.K. Gupta Group of Companies in the assessee's case for A.Y 2008-09. Since the quantum addition was deleted, the penalty on such addition could not survive. The Tribunal upheld the CIT(A)'s decision to delete the penalty.

4. Deletion of Penalty for Transfer Pricing Adjustments:
The Tribunal considered the issue of penalty on transfer pricing adjustments for interest on loans to subsidiaries. It was noted that the assessee had disclosed necessary facts in the return of income, and the issue of whether transfer pricing adjustments were required was debatable. The Tribunal referred to various judicial precedents, including decisions of the Hon'ble Bombay High Court and ITAT Delhi, which held that when a question of law is arguable, no penalty can be levied. The Tribunal upheld the CIT(A)'s decision to delete the penalty, emphasizing that the issue was debatable and there were divergent views on the matter.

5. Justification for Penalty Levied for Furnishing Inaccurate Particulars of Income:
The Tribunal found that the CIT(A) correctly deleted the penalty levied under Section 271(1)(c) for furnishing inaccurate particulars of income. The CIT(A) noted that the assessee had acted in good faith and with due diligence, and the issues involved were debatable. The Tribunal upheld the CIT(A)'s findings and rejected the Revenue's grounds.

Conclusion:
The Tribunal dismissed the Revenue's appeals and upheld the CIT(A)'s orders deleting the penalties for A.Ys 2007-08, 2008-09, and 2009-10. The Tribunal also dismissed the assessee's cross objections as infructuous since the penalties had already been deleted.

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