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2019 (6) TMI 239 - AT - Income TaxPenalty u/s 271(1)(c) - disallowance u/s.40(a)(ia) as assessee failed to deduct TDS - addition of undisclosed sales as reflected in 26AS statement - HELD THAT:- In this case, the tax was paid in the year 2012-13 and was claimed as expenses in that year only. We observe that the genuineness of the claim of the assessee has not been disputed by the department. Therefore, it cannot be said that assessee has claimed expenses which are false or not genuine. The assessee has furnished all the relevant facts concerning the claim made by it in the return filed. The AO has levied penalty in respect of said amount merely because said claim of the assessee was disallowed u/s.40(a)(ia) as assessee failed to deduct TDS thereon. Undisclosed sales as reflected in Form 26AS - in the case of Berger Paints ltd., said income was accounted for in financial year 2003-04 and in the case of Hindustan Unilever Ltd., the amount was written off as discount and tax was deducted on such amount erroneously. Therefore, in our view, the assessee has explained the above difference in the receipts as per the details submitted before the authorities below and the details noted in 26AS. It is well settled law that quantum and penalty proceedings are independent and distinct proceedings. Even if the addition is agreed by the assessee and if the assessee is able to explain the addition, then, penalty may not be leviable in the facts and circumstances of the case. The explanation of assessee at the penalty stage was factually correct based on the material on record and assessee successfully explained the addition so made which is the basis for levy of the penalty. Since the difference is reconciled and claim of assessee have not been doubted or rejected, therefore, Ld. CIT(A) was not justified in confirming the levy of penalty. We are of the view that since the assessee explained the above addition, therefore, penalty need not be imposed in the facts and circumstances of the case. - Decided in favour of assessee.
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