Jaipur Telecom Private Limited Vs DCIT (ITAT Jaipur)
Income Tax Appellate Tribunal (ITAT) Jaipur Bench has provided significant relief to Jaipur Telecom Private Limited by setting aside penalties levied under Section 270A of the Income Tax Act, 1961, for assessment years 2017-18 and 2018-19. The Tribunal ruled that the assessee’s claims for excess depreciation and interest on delayed TDS payments, though later disallowed, were based on a “bona fide belief” and did not constitute “misreporting” or “under-reporting” of income.
The appeals challenged orders from the National Faceless Appeal Centre (NFAC), Delhi, which had confirmed penalties imposed by the Assessing Officer (AO). The core of the dispute revolved around two primary disallowances made during the assessment proceedings: excess depreciation and interest on delayed TDS payments.
Background of the Case
For the Assessment Year 2017-18, Jaipur Telecom, a private limited company involved in lease rentals and real estate, filed its return declaring a total income of Rs. 2,17,59,670/-. The case was selected for compulsory scrutiny. The AO completed the assessment on November 26, 2019, determining a total income of Rs. 2,37,85,408/- after disallowing Rs. 19,59,272/- for excess depreciation and Rs. 66,466/- for interest on delayed TDS.
The AO initiated penalty proceedings under Section 270A for “under-reporting of income in consequence of misreporting,” eventually levying a 200% penalty amounting to Rs. 12,51,906/-. The AO’s reasoning was that the assessee had “incorrectly and erroneously debited” these amounts, leading to “under-reporting of income in consequence of misreporting.” A key factor in the AO’s decision was that the assessee did not appeal the assessment order, which the AO interpreted as an acceptance of the misreporting. Similar penalties were levied for AY 2018-19, totaling Rs. 12,20,518/-.
