Income Tax Officer v. Vaidangi Techno Management Consultants Pvt. Ltd.
In the Income Tax Appellate Tribunal, Jaipur
ITA 1078/JP/2016
Before Mr Kul Bharat, Judicial Member, and Mr Vikram Singh Yadav, Administrative Member
Decided on July 11, 2017

Relevancy of the case: Whether UID kit is a computer?

Statutes & Provisions Involved

• The Information Technology Act, 2000 (Section 2(1)(i))

Relevant Facts of the Case

• While framing the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act). The Assessing Officer initiated penalty proceedings u/s 271(1)(c) of the Act for concealing the income.
• As per the Assessing Officer, the assessee had claimed excessive depreciation on UID Kits, claiming them to be a part of computer systems. Subsequently, the penalty u/s 271(1)(c) of the Act was imposed vide order dated 29/09/2015.
• Against this, the assessee preferred an appeal before the appellate tribunal

Prominent Arguments by the Advocates

• The assessee’s counsel stated that AO has levied penalty based on the findings recorded in the assessment order. It is a settled position of law that assessment and penalty proceedings are distinct and separate from each other.
• Devices in a UID kit such as IRIS scanner, fingerprint scanner, webcam, and printer provide input, process, store, and give output as expected. They are a crucial part of a computer system as an Aadhar card cannot be prepared by a laptop alone. These devices are mandatorily required, and hence, they must be considered as a “computer.”

Opinion of the Bench

• There is no dispute with regards to the settled position that penalty proceedings and assessment are separate and distinct. The assessee is under a bonafide belief that UID kit is a part of computer system and hence, the depreciation rate of 60% is claimed.

Final Decision

• There is no substantial reason to impose the penalty. The Revenue’s appeal is dismissed.