The ITAT upheld a ₹2.05 crore penalty on a Zee Group entity for claiming depreciation and amortization on accommodation entries detected during a departmental survey.
Penalty for Artificial Entries Despite Coerced Surrender
The Income Tax Appellate Tribunal (ITAT) has upheld a penalty of ₹2.05 crore imposed on a Zee Group entity for claiming depreciation and amortisation on fictitious accommodation entries. The assessment arose from a departmental survey operation that uncovered unexplained additions in the company's books.
The assessee argued that the entries were surrendered under duress following the survey and that penalty could not be imposed on coerced admissions. However, the ITAT found that the nature of the entries — including inflated asset values and fabricated documentation — indicated deliberate tax evasion. The tribunal held that substantive inaccuracy in claims warranted penalty under Section 271(1)(c) of the Income Tax Act, regardless of the circumstances of disclosure.
This ruling clarifies that voluntary or coerced admission during surveys does not immunise taxpayers from penalty if fraudulent intent is established. Corporate tax practitioners must conduct rigorous due diligence on capitalisation and depreciation claims, particularly in post-survey assessments. The decision underscores the department’s increasing reliance on survey evidence to detect and penalise artificial book adjustments.
