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2023 (2) TMI 265 - AT - Income Tax
Penalty u/s 271(1)(c) - disallowance u/s 40(a)(ia) - payment of interest to India Bulls/Kotak Mahindra on which TDS was omitted to be deducted by the assessee required in terms of provision of Section 194A - HELD THAT:- Tribunal has set aside the issue of disallowance under Section 40(a)(ia) to the file of the Assessing Officer for verification of such interest by the payees as their income and reversal of disallowance. The payment of interest to the payees is not in dispute. Thus, admittedly the interest expenses have been actually incurred. The disallowance of interest expenditure was attracted only due to non deduction of TDS and it cannot be said to be a case of concealment of income or furnishing of inaccurate particulars of income per se.
The levy of penalty under Section 271(1)(c) is thus not attracted. Coupled with this, notice issued under Section 274 r.w. Section 271(1)(c) has been stated to be issued in a mechanical manner without striking of the inappropriate portion from the notice. It is thus not known the exact nature of default committed by the assessee.
Hence when seen cumulative, assessee deserves to be exonerated from the clutches of penalty under Section 271(1)(c) of the Act. Appeal of the assessee is allowed.