When is penalty not levied u/s 27l(l)(c) of the Income Tax Act?

This judgement concerns an appeal by the Department against the deletion of a penalty imposed under Section 271(1)(c) of the Income Tax Act. The penalty was related to the classification of expenditure on Bus Queue Shelters (BQS) as revenue expenditure by the assessee, while the Assessing Officer treated it as capital expenditure. Despite previous confirmations of similar additions, the Commissioner of Income-Tax (Appeals) deleted the penalty.

IN THE INCOME TAX APPELLATE TRIBUNAL
 DELHI BENCH ‘C’: NEW DELHI
 (Through Video Conferencing)

 BEFORE,
 SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER
 AND
 SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER

 ITA No.5522/Del/2017
 (ASSESSMENT YEAR 2012-13)

Add. CIT,
Special Range-5,
New Delhi 
PAN –AABCJ 6312Q
(Appellant) 

Vs.

M/s J C Decaux Advertising
India (P) Ltd.
231, Okhla Industrial
Estate,
Phase-III,
New Delhi-110 020
(Respondent)

Appellant By Ms. Anima, Sr. DR
Respondent by Sh. K.M. Gupta, Adv.

Date of Hearing 12.07.2021
Date of Pronouncement  12.07.2021

ORDER

 PER SUDHANSHU SRIVASTAVA, JM:

 This appeal is preferred by the Department against order dated 20.06.2017 passed by the Learned Commissioner of IncomeTax (Appeals)-36, New Delhi {CIT(A)} for Assessment Year 2012-13.The sole issue under challenge is deletion of penalty of Rs.87,94,892/- imposed u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter called ‘the Act’).

2.0 The brief facts of the case are that the assessee is engaged in the business of ‘out-of-home’ advertisement consisting of street furniture (such as advertising on bus shelters, public utilities, lots, cycle stands, auto stands etc.) billboards and transportation (such as advertising in airports, railway stations, metros, bus stands, vehicles etc.). The assessee company had capitalized expenditure incurred on Bus Queue Shelters (BQS) in its books of accounts and had claimed depreciation thereon. However, for Income Tax purposes such expenditure was claimed as Revenue expenditure u/s 37 of the Income Tax Act, 1961 in the return of income. The Assessing Officer completed the assessment after making disallowance on account of expenditure on construction of BQS as capital expenditure. In Assessment Years 2007-08 and 2008-09 also the Assessing officer had made similar additions on account of such expenditure of construction of BQS which was confirmed by the Ld. CIT(A). Although the assessee company had filed appeals against such additions before this Tribunal (ITAT), the company chose not to press the grounds before the ITAT. Subsequently, the Assessing Officer imposed penalty u/s 271(1)(c)of the Act on such quantum addition. The assessee challenged the imposition of penalty before the Ld. CIT(A) in Assessment Years 2007-08 and 2008-09 and the Ld. CIT(A) deleted the penalties imposed.

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