Appellate Tribunal Deletes Rs. 8.24 Lakh Penalty: Income Tax Depreciation Penalty Found Unsustainable Due to Estimation.

The Appellate Tribunal allowed the assessee's appeal, deleting the penalty of Rs. 8,24,413 levied under section 271(1)(c) of the Income-tax Act, 1961. The Tribunal concluded that the penalty was unsustainable as the disallowance of depreciation was based on estimation, not on furnishing inaccurate particulars of income. The decision relied on precedents distinguishing similar cases.

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Issues:
- Penalty under section 271(1)(c) of the Income-tax Act, 1961
- Disallowance of depreciation claimed by the assessee
- Legal point regarding levying penalty on disallowance of expenses on an estimated basis

Detailed Analysis:
1. The appeal was filed against the order of the Commissioner of Income-tax (Appeals) confirming a penalty under section 271(1)(c) of the Income-tax Act, 1961. The assessment year in question was 2009-10, and the penalty amount was Rs. 8,24,413. The penalty was initiated based on information received regarding 'hawala' transactions and disallowance of depreciation claimed by the assessee.

2. The assessment was completed under section 143(3) read with section 147 of the Act, where the Assessing Officer disallowed a portion of the depreciation claimed by the assessee. The penalty proceedings were initiated under section 271(1)(c) of the Act, resulting in the levy of a penalty amounting to Rs. 8,24,413, which was challenged by the assessee before the Commissioner of Income-tax (Appeals) and subsequently before the Appellate Tribunal.

3. The Appellate Tribunal considered the facts of the case, where the Assessing Officer disallowed 25% of the depreciation claimed by the assessee on an estimated basis. The Tribunal referred to a previous ITAT order and Supreme Court judgments to determine that merely making an incorrect claim does not constitute furnishing inaccurate particulars of income. The Tribunal distinguished other judgments relied upon by the revenue and concluded that the penalty levied on an estimated addition was not sustainable.

4. The Tribunal noted that the impugned purchases of the assessee were not disputed, and only a portion of the depreciation was disallowed on an estimation basis. Relying on the precedent set by the co-ordinate bench in previous cases, the Tribunal held that there was no merit in upholding the penalty. Consequently, the penalty under section 271(1)(c) amounting to Rs. 8,24,413 was deleted, and the appeal of the assessee was allowed.

5. In the final pronouncement, the Appellate Tribunal allowed the appeal of the assessee and deleted the penalty levied under section 271(1)(c) of the Income-tax Act, 1961. The decision was based on the distinction made from previous judgments and the specific circumstances of the case where the disallowance was made on an estimated basis.

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