Vodafone Idea Limited vs The Dy Commissioner of Income Tax, Circle-5(2)(1), Mumbai

PER MANISH AGARWAL, AM :

The present appeal is filed by assessee against the order dated 27.09.2025 passed by Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), New Delhi [“Ld. CIT(A)”] in Appeal No. CIT(A), Delhi-9/10086/2019-20 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of penalty order dated 29.03.2019 passed u/s 271(1)(c) r.w.s. 274 of the Act pertaining to Assessment Year 2007-08.

Brief facts of the case are that the assessee company is engaged in the business of providing cellular mobile telephony network in the telecom circle of Rajasthan, Haryana and Uttar Pradesh (East). The return of income was originally filed on 31.10.2007 declaring Nil income under normal provisions of the Act and book profit was declared at Rs. 344,61,73,636/- under section 115 JB of the Act. The said return was revised 31.03.2009 at Nil income under normal provisions of the Act and book profit was revised at Rs. 425,48,47,160/- u/s 115 JB of the Act. The case was taken up for scrutiny and various additions / disallowances were made and the total income under normal provisions of the Act was computed at Rs. 141,92,62,886/- however, the book Profit remained the same at Rs. 425,48,47,160. The assessee preferred an appeal against the said wherein the ld. CIT(A) vide order dated 12.04.2017 has allowed substantial relief to the assessee and uphold the disallowance on account of ARC depreciation and further disallowances under section 40(a)(ia) of the Act. Aggrieved by the said order, assessee preferred an appeal before the Tribunal wherein the coordinate “J” bench of ITAT Mumbai in ITA No. 4189//Del/2017 vide order 22/05/2025 has deleted the disallowance made u/s 40(a)(ia) of the Act and remand the matter back to the file of AO on the issue of disallowance made of ARC depreciation. In the meantime, the AO proceeded with pending penalty proceedings initiated u/s 271(1)(c) of the Act and in terms of the order dt. 29.03.2019 has levied the penalty of Rs. 7,93,07,861/- by holding that assassin has concealed the income or furnished inaccurate particulars of income to the extent of Rs. 23,56,14,561/-.

Against the said order, assessee preferred an appeal before the ld. CIT(A) who vide order dated 27.09.2025 uphold the order of penalty so levied u/s 271(1)(c) of the Act and dismissed the appeal of the assessee.

Aggrieved by the order of Ld. CIT(A), the assessee is in appeal before the Tribunal by taking various grounds of appeal as per the appeal memo.

Since all the grounds of appeal raised by the assessee are with respect to the confirmation of the levy of penalty u/s 271(1)(c) of the act of Rs. 7,93,07,861/-, levied on the additions confirmed by the ld. CIT(A) though the tax was levied under section 115JB of the Act on the book profit, thus all the grounds of appeal are taken together for consideration.

Before us, the ld. AR for the assessee submits that the Co-ordinate ‘J’ Bench of Mumbai ITAT, vide its order dt. 22.05.2025 in ITA No. 4189/Del/2025 has already deleted the disallowance made u/s 40(a)(ia) of the Act and remand back the issue of disallowance of ARC depreciation claimed by the assessee to the file of AO. He further submits that the ld. CIT(A) has not taken into consideration the order of the Tribunal and confirmed the penalty levied by the AO in summary manner. He, therefore, requested that the matter may be sent back to the file of the AO with the necessary directions to consider the issue of levy the penalty in terms of the order in set aside proceedings regarding disallowance of ARC depreciation. He prayed accordingly.

On the other hand, ld. CIT DR fairly admitted that the ld. CIT(A) has not considered the order of the Co-ordinate bench of Tribunal in quantum proceedings and raised no objections to the request of ld. AR of remanding the matter to the file of the AO for fresh consideration.

Having considered the arguments of both the parties at length and perused the material available on record. In the instant case, the penalty u/s 271(1)(c) of the Act was levied on two issues, first disallowance of ARC depreciation and Second disallowance made u/s 40(a)(ia) of the Act. It is observed that the Co-ordinate ‘J’ bench of Mumbai Tribunal vide its order in ITA No. 4189/Del/2017 has already dealt with both these issues and deleted the disallowance made u/s 40(a)(ia) of the Act. With respect to the issue of disallowance of ARC depreciation, though the Co-ordinate bench was of the view that the same is allowable following the order of Hon’ble Delhi High Court however, for the purpose of verification of the quantum of claim made by the assessee, remand back the matter to the file of AO.

Since the issue of disallowance made u/s 40(a)(ia) has already been settled in favour of the assessee, therefore, no penalty could be levied on the same however, the issue of disallowance of ARC depreciation has already remanded back to the file of the AO for verification of the quantum of claim therefore, we set aside the order of ld. CIT(A) in confirming the levy of penalty u/s 271(1)(c) of the Act and remand back to the file of the AO to decide afresh in terms of the order passed in set aside proceedings pending as a result of aforesaid order of the Tribunal in ITA No. 4189/Del/2025. Accordingly, all the grounds of appeal raised by the Assessee are allowed for statistical purposes.

In the result, the appeal of the assessee is allowed for statistical purposes.