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2016 (4) TMI 1046 - ITAT DELHI

2016 (4) TMI 1046 - ITAT DELHI - TMI - Penalty u/s 271(1) (c) - claim of TDS was found wrong - Held that:- Withdrawal of the credit of TDS in respect of which the income is not offered/assessed in the relevant AY in view of provisions of section 199(3) and Rule 37BA(3) or otherwise being wrong claim as in this case would not be termed as 'the amount of tax sought to be evaded' as defined in Explanation-4 to section 271(1)(c). Therefore, after considering the conspectus of the material on record .....

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computation of total income have been duly disclosed by it. Penalty deleted - Decided in favour of assessee - ITA No. 198/Del/2014 - Dated:- 30-3-2016 - Shri J. S. Reddy, Accountant Member And Shri Sudhanshu Srivastava, Judicial Member For the Appellant : Shri P. Damkanunja, Sr. DR For the Respondent : Shri Sanjay Kumar Garg, Adv ORDER Per Sudhanshu Srivastava, Judicial Member The present appeal, filed by the department, has been preferred against the order dated 24.10.2013 passed by the Ld. CIT .....

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its Return of Income (ROI). However, the AO found that credit for TDS of ₹ 17,30,832/- was wrongly claimed as the income corresponding to this TDS was accounted for by one of the sister concerns of the appellant, namely; M/s Modern Stage Services (P) Ltd. Accordingly, the AO did not allow the claim for credit of TDS observing as under: "It was admitted by assessee that the payment had been made to Modern Stage Services Pvt. Ltd. and the TDS certificate had been incorrectly issued in t .....

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is withdrawal." 3. The AO initiated penalty u/s 271(l)(c) for concealment of income and furnishing inaccurate particulars of income within the meaning of explanation 1 to sub-section (1) of the section 271(l)(c). Later on, the AO, placing reliance on the cases Zoom Communications (P) Ltd. 327 ITR 51 (Del), Thakur V. Hari Prasad (1987) 167 ITR 603 (AP), Dharmendra Textile Processors (2008) 166 Taxman 65 (SC), K.P. Madhusudan 251 ITR 99 (SC) and Drapco Electric Corporation 122 ITR 341 (Guj), .....

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rected by asking such deductor to furnish a simple correction statement. The assessee instead of getting the matter sorted out and correcting the form 16A deliberately & knowingly claimed credit of other person's TDS in its name which was patently wrong and not permissible under the law. If the income had been booked by the M/s Modern Stage Services Pvt. Ltd. , then the credit of TDS could only be allowed to them and not to assessee. In view of this, the credit of TDS of ₹ 17,30,83 .....

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ppreciating the fact that the assessee has furnished inaccurate particulars of income by claiming the credit of same TDS at two places i.e in its return of income and in the return of income filed for its sister concern M/s Modern stage services Private Ltd. ii) The CIT(A)has erred in deleting the penalty imposed u/s 27(1)(c) of ₹ 17,30,832/- on account of wrong claim of TDS without appreciating the fact that the assessee has knowingly, willfully & deliberately tried to evade the tax b .....

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he Ld. DR submitted that the assessee's explanation furnished during the course of assessment proceedings were considered at that time and reasons for satisfaction for initiation of penalty proceedings were mentioned in the body of order itself. It was submitted that the liability of the assessee is to offer all credits/receipts as its income and claiming tax credit of other person is legally unacceptable. The Ld. DR further submitted that even if any mistake had occurred at the level of ded .....

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ssee. In view of this, the credit of TDS of ₹ 17,30,832/- was withdrawn and the assessee was liable to pay tax on account of this withdrawal. The assessee did so advertently to avoid incidence of tax due. It was further submitted that although no addition to the returned income was made but the fact remains that in order to avoid payment of tax, the assesse had deliberately made a wrong claim of TDS to the tune of ₹ 17,30,832/- and had also furnished inaccurate particulars to this ex .....

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he issue at length and has rightly deleted the penalty imposed. 8. We have heard the rival submissions and perused the relevant records. It has been held by Hon'ble Supreme Court in the case of K. P. Madhusudhanan Vs. CIT; 251 ITR 99 that notice u/s 271(l)(c) puts the assessee on notice regarding applicability of Explanation 1 of 271(l)(c). Explanation 1 of 271(l)(c) automatically comes into operation when there is failure to offer an explanation or the explanation offered is found to be fal .....

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tention is that it has wrongly claimed credit of TDS of M/s Modern Stage Services (P) Ltd. on the fact that the deductors have issued TDS certificates in its name because of the similarity in the names of the two along with some common shareholders and partners. In our considered view, wrong claim towards credit of tax cannot be termed as 'the amount of tax sought to be evaded' in view of the specific definition provided in Explanation- 4 to section 271(1)(c). Further, explanation 1 to s .....

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