TMI Blog2013 (8) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... d the assessee realized his mistake in having not deposited the tax on the impugned sum. The matter stands duly reported by the tax auditor in his report u/s.44AB, and which accompanies and forms part of the assessee's return of income. How could, therefore, it be said that the assessee has not disclosed the correct particulars of its income. Further, following the advice of its tax advisor, tax has also been deposited to the account of the Government on 20.11.2003, prior to the filing of the return for the relevant year on 27.11.2003. No doubt, it does not explain the basis of the claim for the current year; the provision itself providing for the contingency and consequence of delayed payment, deferring the claim to the year of actual p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its counsel, that penalty u/s.271(1)(c) stood levied by the Assessing Officer (A.O.) on three counts, i.e., depreciation on motor car (Rs. 0.01 lakhs); royalty payment (Rs.6.20 lakhs); and fees for technical services (Rs. 4.53 lakhs). It is only the last amount which concerns the present appeal inasmuch as the assessee stands allowed relief by the first appellate authority qua the first two amounts, and which has not been appealed against by the Revenue. With regard to the facts in relation to the fees for technical services (FTS), the disallowance has been effected u/s.40(a)(ia) on account of non-payment of TDS. The said section has, in fact, suffered amendments, as by Finance Act, 2010 w.e.f. 01.04.2010, so that the disallowance no longe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim relief on its basis. The assessee's case is de hors any explanation, with its bona fides in doubt, also for the reason that it makes no mention of the payment in the return. It was only on being pointed out by the A.O. during the assessment proceedings, and it is not that every return is subject to scrutiny, that the assessee accepted its mistake and agreed for the disallowance. The default of concealment or furnishing inaccurate particulars of income has to be considered with reference to the return of income as filed. Accordingly, the penalty has been rightly confirmed by the ld. CIT(A). 3. We have heard the parties, and perused the material on record. 3.1 At the outset, we express our displeasure and discountenance the argument ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is the explanation that the assessee has furnished for the default under reference leading to the disallowance in its case. 3.2 In our view, the facts as stated by the ld. CIT(A), rather than being adverse to the assessee, as far as the levy of the penalty u/s.271(1)(c) is concerned, favour it. This is as it is clear that the assessee was of the clear view that tax was not deductible on the said payment. Accordingly, neither any tax stood deducted, nor paid to the credit of the Central Government. It is only subsequently, on being so pointed out by the tax auditor, that the said default came to light, and the assessee realized his mistake in having not deposited the tax on the impugned sum. The matter stands duly reported by the tax aud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the return for the relevant year becomes relevant. The deposit of the tax establishes the assessee's bona fides in the matter, so that the disallowance becomes at best a technical default, leading to a disallowance for one year and a corresponding allowance for the immediately succeeding year. Though a proper note, explaining its stand, in our view, would have been the proper course for the assessee to follow, so as to avoid any adverse inference, in our view, the bona fides of the assessee's conduct are exhibited by the payment of TDS soon after the default stood brought to its notice by its tax auditor, per the auditor's report which forms part of its return. The same would weigh in favour of the assessee, so as to constitute a reasona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71(1)(c) of the Act, and would apply even in respect of legal claims and, further, even after the decision in the case of CIT v. Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR 158 (SC), which decision was considered in these cases. So, however, in the instant case, the deposit of TDS subsequently would operate as a mitigating factor. Though admittedly of little consequence in-so-far as the claim for deduction (as made per the return of income) for the relevant year is concerned in view of the clear language of the provision, it serves as a substantial compliance thereof. No doubt, it does not explain the basis of the claim for the current year; the provision itself providing for the contingency and consequence of delayed payment, deferri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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