TMI Blog2009 (7) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, was selected for scrutiny with the issue of notice u/s 143(2) of the Act on 19-10- 2006. During the course of assessment proceedings,the Assessing Officer[ AO in short]noticed that the assessee did not deduct tax at source in respect of the following payments on account of job charges: 1. Plastotech Polymers ₹ 95,210/- 2. Asiad Industries ₹ 51,120/- 3. Supreme Plast ₹ 5,000/- Rs.1,51,330/- To a query by the AO, the assessee explained that their firm was a small entity and did not employ full time Accountant to write the books of accounts. The assessee was under a bonafide belief that the job charges do not attract TDS provisions nor the assessee had any TDS number . It was further submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evy of penalty u/s 271(1)( c) of the Act the assessee replied vide letter dated 10-2- 2008 received by the AO on 12-6-2008 that the provisions of section 40(a) (ia) of the Act were very harsh in nature, the real expenditure incurredby the assessee having been disallowed. Relying upon the decisions in the case of Banaras Textorium v. CIT 169ITR (All), National Textiles v. CIT (2001) 249 ITR 125 (Guj.), Sarabhai Chemical Pvt. Ltd. V. CIT (2002) 257 ITR 355 (Guj.) and K. C. Builders and Anr. Vs. ACIT (2004) 265 ITR 562 (SC), the assessee contended that presence of means rea must be proved before levy of penalty and mere addition in the assessment does not tantamount to levy of penalty. However, the AO rejected these contentions of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deduction of TDS u/s. 194C from the job work charges paid to the various parties and thus not being entitled to deduction of related amount of job work charges. Further the appellant has not furnished a satisfactory explanation for the above mentioned defaults. He simply stated that the additions are made for technical breach of non-compliance of provisions of section 40(a) (ia). In this case it was the liability of the appellant to deduct tax on the job work charges paid to the various parties. It is now well settled law that wilful concealment is not essential for attracting civil liability of penalty u/s. 271 (1) ( c ) of the I. T. Act, 1961. The judicial pronouncement in the case of UNION OF INDIA AND OTHERS Vs DHARMENDRA TEXTI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of job charges without deducting tax at source, this amounts to furnishing inaccurate particulars of income. We find that the assessee had given all the particulars of income, including details like name of the party, address, PAN, etc. along with copies of bills during the assessment proceedings and thus, had disclosed all facts to the AO. It is not the case of the AO or the assessee that in reply to a query of the AO, some new facts were discovered or the AO had dug out some information which was not furnished by the assessee. In such circumstances, Hon ble Delhi High Court held in the case of Commissioner Of Income-Tax.vs Bacardi Martini India Limited.,288 ITR 585(Del) that no penalty was leviable. It is well settled that assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration, the deduction of job charges of ₹ 1,46,330/- was denied u/s 40a(ia) of the Act only due to non-deduction of tax at source and has subsequently been allowed in the AY 2008-09. It is well settled that the criterion and yardsticks for the purpose of imposing penalty u/s 271(l)(c) are different than those applied for making or confirming the additions. When the assessee has made a particular claim in the return of income and has also furnished all the material facts relevant thereto, the disallowance of such claim cannot automatically lead to the conclusion that there was concealment of particulars of his income by the assessee or furnishing of inaccurate particulars thereof. What is to be seen is whether the said claim mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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