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2014 (2) TMI 1335 - AT - Income TaxPenalty proceedings u/s 271(1)(c) - adhoc disallowance at the rate of 20% of the various expenses - Held that:- AO has made adhoc disallowance at the rate of 20% of the various expenses without pointing out any specific expenses being in the nature of non business purpose or for personal use. If the accounts have been audited, then the normal presumption is that the expenses are verifiable vis-a-vis the documents maintained by the assessee. Even though disallowances have been made in the quantum proceedings, due to non verifiability of expenses through corroborative evidences and the same has not been challenged, however this does not lead to any inference that assessee is liable for levy of penalty for either furnishing of any inaccurate particulars or for concealment of particulars of income. The disallowance is purely based on adhoc basis, dehors any adverse material on record, therefore, no penalty is warranted u/s 271(1)(c) on adhoc disallowance of the expenses claimed by the assessee in the profit & loss account. Disallowance u/s 40(a)(ia), on account of payment of technical and professional fees and publicity expenses, it is seen from the record that the AO has made the disallowance on the ground that TDS has not been deducted on such payment - The disallwoance has been made merely on account of technical default of non deduction of TDS. Under the Income Tax Act, failure to deduct TDS, entails levy of interest and penalty under different provisions of the Act and certainly not u/s 271(1)(c), which can be levied only if the assessee has concealed particulars of his income or has furnished inaccurate particulars of income. In this case assessee has neither furnished any inaccurate particulars of income nor has concealed any particulars of income because all the details of expenses, genuineness of the payment and quantum has been accepted. Once the payments made to professional and technical persons have not been doubted and on the basis of such payments the assessee has debited the said amount in the P&L account, it cannot be held that assessee is liable for penalty within the ambit of section 271(1)(c). Disallowance of claim of deduction u/s 35D, it is seen that assessee has furnished the necessary information with regard to claim of such expenses, in the audited statement of account duly disclosed in the return. Even if the entire claim of the assessee has not been found to be sustainable, then also it cannot be held that assessee has furnished inaccurate particulars of income. To attract the provisions of section 271(1)(c), the assessee must be held to have concealed the material particulars or to have furnished inaccurate particulars - it cannot be held that assessee is guilty of furnishing of inaccurate particulars so as to attract the penal provisions of section 271(1)(c). Hence on this disallwoance also no penalty is warranted. - Assessee appeal allowed.
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