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2016 (4) TMI 560 - GUJARAT HIGH COURT

2016 (4) TMI 560 - GUJARAT HIGH COURT - [2016] 386 ITR 304 - Penalty u/s 271(1)(c) - non deduction of tds - Held that:- The assessee has made a claim of expenditure in relation to the payments made, which he may not have been entitled to claim in view of the provisions of section 40(a)(ia) of the Act, as tax on part of such amount had not been deducted at source and deposited in the Government account before the due date for filing return income. However,merely submitting an incorrect claim in l .....

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e Income Tax Act, 1961 (hereinafter referred to as "the Act") is directed against the order dated 07.03.2012 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench "C", Ahmedabad (hereinafter referred to as the "Tribunal") in ITA No.2822/Ahd/2011, whereby the appeal preferred by the revenue has been dismissed. 2. This court, by an order dated 18.03.2014, admitted the appeal on the following substantial question of law: "Whether on the facts and in the cir .....

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ted at source from certain parties to whom labour payments were made, were not deposited into Government account as per the provisions of section 200(1) of the Act. He, therefore, held that the assessee had clearly violated provisions of section 40(a)(ia) of the Act and accordingly, made a total addition of ₹ 13,20,588/- to the total income of the assessee. The Assessing Officer, thereafter, initiated penalty proceedings by issuance of notice under section 274 read with section 271 of the .....

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ated 16.09.2011, allowed the appeal by holding that out of an amount of ₹ 13,20,588/-, tax was deducted at source in respect of ₹ 6,18,300/- and was deposited in the Government account on 24.04.2006, that is, before the due date of filing of return and thus, was covered by the decision of the Tribunal in Kanubhai Ramjibhai v. ITO, 49 DTR 70 (Ahd)(Trib.). As regards the balance amount of TDS,the Commissioner (Appeals) took note of the fact that the same was deposited in the Government .....

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the penalty order passed by the Assessing Officer. Being aggrieved, the appellant †assessee has preferred the present appeal. 4. Mr. K. T. Dave, learned advocate for the appellant submitted that the Tribunal has failed to appreciate that the default, if any, was technical and venial in nature inasmuch as, the disallowance to the extent of ₹ 6,18,300/- was allowed in assessment year 2007-08 vide order under section 154 dated 03.02.2009, whereas in respect of the balance amount .....

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nce, no penalty under section 271(1)(c) of the Act was attracted. It was, accordingly, urged that the breach being technical and venial in nature, the Commissioner (Appeals) was wholly justified in deleting the penalty and that the Tribunal was not justified in restoring the penalty imposed by the Assessing Officer. 4.1 In support of his submissions, the learned advocate placed reliance upon an unreported decision of this court in the case of Commissioner of Income Tax IV v. L. G. Chaudhary rend .....

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IT (Appeals) and the Tribunal have rightly deleted the penalty. 5. Opposing the appeal, Mr. Varun Patel, learned standing counsel for the respondent, reiterated the findings recorded by the Assessing Officer and the Tribunal. It was submitted that in the present case, while the appellant †assessee had deposited ₹ 6,18,300/- on 24.04.2006, that is, before the due date of filing of return of income for the assessment year under consideration, the balance amount out of ₹ 13 .....

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f the tax deducted at source into the Government account within the stipulated time as per the provisions of section 40(a)(ia) of the Act, are found out by the Assessing Officer only during the course of assessment proceedings. Under the circumstances, the Assessing Officer was justified in holding that the assessee had furnished inaccurate particulars of income as contemplated under section 271(1)(c) of the Act and that the Tribunal was wholly justified in affirming the findings recorded by the .....

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n order dated 24.10.2008 under section 143(3) of the Act the assessment was completed by assessing the total income at ₹ 24,84,970/-. While framing assessment under section 143(3) of the Act, the Assessing Officer invoked the provisions of section 40(a)(ia) of the Act and made disallowance of ₹ 14,29,890/-. The assessee pointed out that out of the total amount of ₹ 14,29,890/-, tax was deducted at source in respect of ₹ 6,18,300/- and was deposited on 24.4.2006, that is, .....

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t proceedings, formed the opinion that the assessee had furnished inaccurate particulars of income and levied penalty under section 271(1)(c) of the Act. The Tribunal, while upholding the finding recorded by the Assessing Officer, has found that this was not a case wherein the claim made by the assessee was allowable under the provisions of the Act and that the assessee was required to deduct tax in accordance with the statutory provisions and deposit the same within the stipulated time limit as .....

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rnment account. According to the Commissioner (Appeals) for a technical breach, levy of penalty was not warranted. Thus, the assessee while filing the return of income, did not make disallowance under section 40(a)(ia) of the Act in relation to the amounts paid on which it had not deducted the tax at source. It is the case of the assessee before the Assessing Officer as well as the authorities concerned that each and every particular of income was accurately furnished and there was a true disclo .....

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he Act, has held that a glance at the said provision would suggest that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. In the facts of that case, the court found that it was not a case of concealment of the particulars of the income, nor was it the case of the revenue either. However, the counsel for the revenue suggested that by making an incorrect claim .....

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ld embrace the meaning of the details of the claim made. The court further observed that in Webster’s Dictionary, the word "inaccurate" has been defined as: "not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript." The court observed that reading the words "inaccurate" and "particulars" in conjunction, they must mean the details supplied in the return, which are not accurate, .....

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ncorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income". The court held that in order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. Therefore, it is obvious that it must be shown that the conditions under section 271(1)(c) must .....

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t account within the stipulated time as per the provisions of section 40(a)(ia) of the Act, are totally found out by the Assessing Officer only during the course of assessment proceedings and had not been disclosed by the assessee. He, accordingly, has formed the opinion that the assessee has furnished inaccurate particulars of income. However, he has not stated as to what are the inaccurate particulars of income in the return filed by the appellant. 10. From the facts as emerging from the recor .....

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shing inaccurate particulars of income. The impugned order passed by the Tribunal, therefore. cannot be sustained. 11. Another notable aspect of the matter is that while the Assessing Officer has imposed penalty on the ground that the assessee has furnished inaccurate particulars of income, the Tribunal has set aside the order of the Commissioner (Appeals) by holding that the assessee has suppressed the actual particulars of income by not making disallowance under section 40(a)(ia) of the Act. T .....

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