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2011 (2) TMI 1430 - AT - Income Tax
Penalty levied u/s 271(1)(c) - disallowance u/s 040(a)(ia) for non payments of TDS - The brief facts leading to the issue are that assessee-firm is engaged in construction activities and it has filed it’s return income. The AO issued notice u/s.143(2) and during assessment proceedings he found that assessee had made TDS from gross contract payment to carting contractor. However, TDS amount was not deposited into govt. exchequer before expiry of time prescribed u/s 200(1).
HELD THAT:- this is not allowable as deduction while computing the income chargeable under the head ‘profit & gains of business or profession’ for the year. We find from the orders of the lower authorities that there is no allegation that the payment of catering expenses on which TDS is deducted but not paid to Govt. exchequer is non-genuine or bogus. It is also a fact that the lower authorities have not brought anything or not disputed that the payment is excessive or unreasonable. The disallowance is simply made either for non-deduction of TDS in view of provisions of Section 040(a)(ia) or non-payment of TDS deducted to the govt. exchequer. In view of the above discussion, that the legal fiction created by Section 040(a)(ia) will not apply to the provisions of Section 271(1)(C), the disallowance made simply by invoking the provisions of Section 040(a)(ia) will not attract penalty for furnishing of inaccurate particulars of income because there is no inaccurate particulars of income in the return. Accordingly, we confirm the order of CIT(A) deleting the penalty and this issue of the Revenue’s appeal is dismissed.
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