TMI Blog2016 (7) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... er: - 2.1 The assessee, a company engaged in management and maintenance of real estate, filed its return of income for A.Y. 2007-08 on 27.10.2007 declaring loss of ₹ 1,00,40,853/-. The return was processed under section 143(1) of the Act and the case was subsequently taken up for scrutiny. The assessment was completed under section 143(3) of the Act vide order dated 27.11.2009, wherein the assessee s loss was determined at ₹ 33,51,300/-, inter alia, in view of the following additions/disallowances were made: - i) Disallowance under section 40(a)(ia) ₹ 61,72,064/- ii) Addition on account of Rent receipts ₹ 4,34,123/- Penalty proceedings under section 271(1)(c) of the Act were simultaneously initiated in the order of assessment in respect of the above disallowances/additions. 2.2 As per the details before us from the impugned order of the CIT(A) it appears that on appeal in quantum proceedings, the addition in respect of rent receipts has been upheld only to the extent of ₹ 1,49,500/- out of ₹ 4,34,123/- added by the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) The learned CIT(A) failed to appreciate that Your Appellant had given a bonafide and genuine explanation vide letter dated 4th Jan, 10 stating, in addition to the other, that the alleged amount of TDS was paid alongwith interest vide paid challan dated 24th Dec., 09 which in purview of the proviso to the said section was allowable in the year of payment of the TDS. (3) The learned CIT(A) ought to have appreciated that the alleged amount of disallowance was a technical disallowance under the provisions of section 40(a)(ia) of the Act and that the bonafide explanation was already given. (4) On the facts and circumstances and in view of the bonafide and genuine explanation, Your Appellant prays that the penalty levied on the disallowance under the provisions of section 40(a)(ia) of the Act may be cancelled. (II) PENALTY ON ADDITION ON A/C. OF RENT RECEIPTS OF ₹ 1,49,500- (1) The learned CIT(A) erred in confirming penalty on the addition of ₹ 1,49,500/- on a/c. Of rent receipt disregarding the explanation that the alleged amount which was included on receiving the amount in the next A.Y. i.e. immediate to the current A.Y. was already i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out that the bonafides of the appellant are clear from the fact that appellant had themselves added back a sum of ₹ 11,05,793/- on account of TDS not deducted and paid. It was further clarified before the A.O. that the assessee had already calculated TDS amount of ₹ 11,39,300/- and interest of ₹ 4,23,203/- and the same was paid on 24.12.2009. Hence it was requested that penalty may not be imposed since assessee was facing genuine difficulties due to lack of competent staff and that there was no intention to hide anything. As regard addition of ₹ 4,34,1 23/- being Rent receipt, it is submitted that appellant has offered rental income in the subsequent A.Y. The addition made were of the following parties: (a) Midtech Pvt. Ltd. : ₹ 60,000/- (b) Rockwell automation (P) Ltd. : ₹ 50,000/- (c) Huntsman International : ₹ 41,323/- (d) Huntsman International : ₹ 39,200/- (e) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stipulated time, and for not offering rental receipt to tax. The explanation is that the same had occurred due to inadvertent error since staff were incompetent. The said explanation is not an acceptable explanation for the reason that if the staff knew that tax had to be deducted at source from certain payments, then it is difficult to believe that they were ignorant that the same had also to be remitted to government account within stipulated time. The fact that the appellant themselves had made certain disallowance under s. 40(a)(ia) cannot absolve the appellant of its conduct. In fact, the conduct of the appellant is contrary to the clear provisions of the Act. The assessee is a limited company and is guided and instructed by tax experts. In the computation of income, the assessee had made several adjustments to the net profit and hence it is difficult to believe that assessee company did not know the provisions of the Act. The assessee is not an ordinary layman but a company incorporated under the Companies Act and its accounts are also subject to Audit. This is not a case where claims made by the assessee company had been disallowed under the law by rejecting a probable view, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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