TMI Blog2015 (9) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... n law, would not invite penalty. - Decided in favour of assessee. Furnishing inaccurate particulars of income by making inadmissible claim on account of compensation paid - non deduction of TDS - Tribunal deleted the penalty - Held that:- Tribunal records the fact that due to the negotiation with the Shahs, the amount of compensation was reduced from ₹ 64.72 lakhs to ₹ 45 lakhs and the Respondent-Assessee had deducted the tax at the time of actual payment. The balance provision for compensation made in its account, was reversed. The impugned order to our mind correctly records the fact that disallowance in this case is not done on account of the expenditure being bogus but merely because the requirement of deducting tax at source had not been complied with by the Respondent-Assessee. The explanation offered by the Respondent-Assessee that no tax was deducted by it because no compensation was payable, as it was still under negotiation. It was only on the amount of compensation payable being determined and paid that tax was deducted. The decision of the Apex Court in Reliance Petro Products (supra) which Mr. Mohanty, sought to distinguish would continue to apply as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) The present proceedings emanate from the penalty proceedings under Section 271(1)(c) of the Act on the above account initiated by the Assessing Officer. The Respondent-Assessee resisted the penalty proceedings by pointing out that though provision for interest had been made, no payment was made as the permission of Reserve Bank of India (RBI) to make the payment, was still awaited. Thus, no sooner the permission of RBI was obtained for remitting the amount, the TDS was deducted. This was particularly so as the payment of interest was subject to approval of RBI. The Assessing Officer did not accept the explanation and imposed a penalty upon the Respondent-Assessee essentially on the ground that the appeal of the Respondent-Assessee in quantum proceedings had been rejected by the Commissioner of Income Tax (Appeals) [CIT(A)]; (c) On appeal, the CIT(A) in the penalty proceedings on examination of records found that the Respondent-Assessee had disclosed in the audited account the interest payable on the ECB loan. Besides, a note was also made in the audited account that the assessee was awaiting permission from the RBI, to make payment of the interest to the lender. Pending suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has concealed the particulars of his income or furnished inaccurate particulars of such income but if the explanation offered for the same is found to be satisfactory, then no penalty is imposed upon the party. In the present case, Respondent-Assessee has made a complete disclosure of particulars of income and expenditure by disclosing it in its account and also making a note in its Accounts viz. awaiting the permission of the RBI to make the payment; (g) Moreover, the explanation offered by the Respondent-Assessee was not found to be false. The decision of the Apex Court held in CIT v/s. Reliance Petro Products (P) Ltd. 322 ITR 158 has held that where details supplied in returns of Income are neither incorrect or false, penalty cannot be imposed. A mere making of an claim not sustainable in law, would not invite penalty. In this case, there is a concurrent finding of fact by the CIT(A) and the Tribunal that the claim made by the Respondent-Assessee was bona fide. This finding is not shown to be perverse and/or arbitrary. Therefore, Question (a) as proposed, does not give rise to any substantial question of law. Accordingly, we see no reason to entertain Question (a). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nishing of inaccurate particulars, warranting a penalty under Section 271(1)(c) of the Act. Thus, the expenditure claimed, not having been held to be false, the reason for not deducting the TDS, appears to be bona fide. Therefore, the impugned order of the Tribunal records that no penalty is imposable; (e) Mr. Mohanty, learned Counsel appearing for the Appellant point outs that the penalty in this case ought not to have been disturbed by the Tribunal. This is because, two authorities under the Act imposed penalty upon the Respondent-Assessee. It is submitted that the decision in Reliance Petro Products (supra) would have no application to the present case. In particular, he invites our attention to the fact that in Reliance Petro Products (supra), the question was interpretation of Section 14A of the Act and a claim had been made by the Assessee therein on the basis that the expenditure had been allowed in the earlier year and, therefore, there was a bona fide belief. In the present case, there are no such facts; (f) It is true that both the Assessing Officer and the CIT(A) have held the Respondent-Assessee is liable for penalty. However, the Assessing Officer imposed a penal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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