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The Commissioner of Income-Tax, The Deputy Commissioner of Income-Tax Versus M/s. Filtrex Technologies P. Ltd.

2015 (7) TMI 409 - KARNATAKA HIGH COURT

Levy of penalty on addition made u/s 40(a)(ia) - Non deduction of TDS on payment for technical services received from singapore - Penalty for concealment of income and furnishing of inaccurate particulars of income u/s 271(1)(c) of the Act - Held that:- It is well settled principle that penalty proceedings are quite different from the assessment proceedings. It is by now well settled that levy of penalty is not automatic if the addition/disallowance is sustained by the appellate authorities. The .....

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e to a foreign party was liable for levying tax in India or not.

The Chartered Accountant has given a certificate to the effect that the assessee is not required to deduct tax at source while making the payment to M/s. Filtrex Holding Pte. Ltd., Singapore. Thus, the assessee acted on the basis of the certificate issued by the expert.The assessee has filed Form 3CD along with the return of income in which the Chartered Accountant has not reported any violation by the assessee under Cha .....

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x Appellate Tribunal, Bangalore in ITA.No.1628/Bang/2012, confirming the order of the Commissioner of Income Tax (Appeals), Bangalore. 2. The respondent-assessee is a company engaged in the manufacture of carbon blocks used in water purifying filters at residential buildings. It filed its return of income for the assessment year 2006-07 declaring the income at ₹ 40,22,030/-. However, the total income determined by the concerned Assessing Officer in the assessment order, dated 22.12.2008 wa .....

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ce of ₹ 79,98,870/- was sustained by the erstwhile Commissioner. The Assessing Officer treated the sum of ₹ 79,98,870/- both as concealment of income and furnishing of inaccurate particulars of income by the respondent-assessee and therefore initiated proceedings for levy of penalty under Section 271(1)(c) of the Act. After hearing, the Assessing Officer imposed penalty of ₹ 26,92,419/- being the penalty attributable to the concealment of income of ₹ 79,98,870/-. The Comm .....

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me has to be adjudicated. 3. By the impugned orders, the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal, Bangalore, have concluded that the assessee- respondent herein has not indulged in furnishing of inaccurate particulars of income; the assessee-respondent herein has made payments to three different foreign parties out of which two payments were held not liable for deduction of tax; it is only the payment in respect of M/s. Filtrex Holdings Pte. Ltd., Singaore was .....

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he question as to whether disallowance made by the Assessing Officer of ₹ 79,98,870/- would amount to concealment of income under Section 271(1)(c) of the Act? The very question was decided in the impugned orders passed by the Commissioner of Income Tax (Appeals) as well as the Income Tax Appellate Tribunal in favour of the assessee. 5. We do not find any ground to interfere with the impugned orders inasmuch as the Commissioner of Income Tax (Appeals) and the appellate Tribunal, on facts, .....

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clusion that conditions laid down in Section 271(1)(c) of the Act are satisfied for levying penalty. It is well settled principle that penalty proceedings are quite different from the assessment proceedings. It is by now well settled that levy of penalty is not automatic if the addition/disallowance is sustained by the appellate authorities. The ingredients of the provisions of Section 271(1)(c) are to be satisfied for levying the penalty. It is no doubt true that the payment made by the respond .....

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by the appellate authorities. However, the respondent-assessee has filed detailed statement, explaining as to why it is not liable to be imposed with penalty. After hearing the assessee and after considering the material on record, the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal have concurrently concluded that it is difficult to say that the respondent has either concealed the income or furnished inaccurate particulars of the income. As has been held by the Apex C .....

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