Tax Tribunal Removes Penalties for 2011-12 & 2014-15; Disallowance of Depreciation Not Concealment or Inaccuracy.

The ITAT set aside the CIT(A)'s decision and deleted the penalties imposed under section 271(1)(c) of the Income Tax Act, 1961, for the assessment years 2011-12 and 2014-15. The tribunal concluded that the disallowance of the depreciation claim did not constitute concealment or furnishing of inaccurate particulars, thus allowing the assessee's appeals.

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Issues Involved:
1. Confirmation of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

Issue 1: Confirmation of Penalty under Section 271(1)(c) of the Income Tax Act, 1961

The assessee filed appeals against the orders passed by the Commissioner of Income Tax (Appeals)-16, Mumbai, confirming the penalties levied by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act, 1961, for the assessment years 2011-12 and 2014-15.

Facts of the Case:
The assessee filed its return of income declaring a loss. During scrutiny, the AO found that the assessee claimed depreciation at 60% on control room equipment and digital set-top boxes, which was restricted to 15% by the AO. Consequently, the AO added the excess depreciation claimed to the income of the assessee and initiated penalty proceedings under section 271(1)(c) of the Act, resulting in a penalty of Rs. 34,19,860/-.

Arguments by the Assessee:
The assessee argued that the claim of depreciation at 60% was not a case of "concealment of particulars of income" or "furnishing inaccurate particulars of income," thus, penalty under section 271(1)(c) was not justified. The assessee relied on several judicial precedents, including:
- Kanbay Software Enterprise Ltd. Vs. DCIT (122 TTJ 271 ITAT Pune Bench)
- DCIT Vs. Apollo Hospitals Enterprises Ltd. (23 ITR Tribunal 49 Chennai)
- CIT Vs. Reliance Petro Products (322 ITR 158 SC)
- Fastway Transmission (P) Ltd. Vs. ACIT (ITA No. 547/Chd/2017)

Judicial Precedents:
1. Kanbay Software Enterprise Ltd. Vs. DCIT:
The ITAT Pune Bench emphasized that penalty under section 271(1)(c) should not be imposed for mere disallowance of a claim unless it constitutes concealment or furnishing of inaccurate particulars.

2. DCIT Vs. Apollo Hospitals Enterprises Ltd.:
The ITAT Chennai Bench held that disallowance of a claim by the AO during scrutiny does not automatically result in concealment or furnishing of inaccurate particulars. The assessee had furnished all details, and the claim was a plausible view.

3. CIT Vs. Reliance Petro Products:
The Supreme Court held that merely making an incorrect claim does not amount to furnishing inaccurate particulars. The claim must be shown to be false or inaccurate to attract penalty.

4. Fastway Transmission (P) Ltd. Vs. ACIT:
The ITAT Chandigarh Bench allowed the claim of depreciation at 60% on set-top boxes, indicating that such a claim is not false.

Tribunal's Findings:
The tribunal observed that the factual and legal positions were clear. The disallowance of the depreciation claim did not amount to concealment or furnishing of inaccurate particulars. The tribunal found that the penalty under section 271(1)(c) was not justified, relying on the judicial precedents cited by the assessee.

Conclusion:
The tribunal set aside the findings of the CIT(A) and deleted the penalty for both assessment years. The appeals filed by the assessee were allowed.

Order Pronounced:
The order was pronounced in the open court on 11/11/2020.

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