Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (9) TMI 437 - ITAT JAIPUR

2016 (9) TMI 437 - ITAT JAIPUR - TMI - Penalty U/s 271(1)(c) - Held that:- It is a fact that the ld Assessing Officer in assessment proceedings had not mentioned any particular limb of penalty whether it is for concealment of income or for furnishing inaccurate particulars of income. He also had not given any finding in the penalty order that this penalty was on account of a particular limb. The ld DCIT at the time of imposing penalty, has also not taken approval from the ld JCIT U/s 274(2)(b) o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e. Non-deduction of TDS is a technical violation U/s 40(a)(ia) of the Act. - The disallowance under this Section are made on the basis of deeming provision held that legal fiction created U/s 40(a)(ia) cannot be extended for levy of penalty U/s 271(1)(c) of the Act as the deeming provision inserted for specific purposes. The case laws relied upon by the assessee are squarely applicable, therefore, we uphold the order of the ld CIT(A). - Decided against revenue. - ITA No. 148/JP/2013 - Dated .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l of ₹ 70,48,481 & ₹ 1,00,370/- made by the A.O. by invoking Section 40(a)(ia) and ₹ 44,02,000/- on account of contingent liability, which were confirmed by the CIT(A) also, though by claiming such deduction the assessee has under stated its total income and therefore, furnished inaccurate particulars of its income attracting penalty provisions U/s 271(1)(c). 2. The sole ground of the appeal is against deleting the penalty U/s 271(1)(c) of the Income Tax Act, 1961 (in short .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ic fault of the assessee whether it is for concealment of income or furnishing inaccurate particulars of income. The quantum addition was challenged by the assessee before the ld CIT(A). The ld Assessing Officer considered following addition for imposing penalty U/s 271(1)(c) of the Act. Sl. No. Description Amount 1. Disallowance U/s 40(a)(ia) ₹ 70,48,481/- 2. Disallowance out of car hire charges ₹ 1,00,370/- 3. Disallowance of contingent liability ₹ 11,77,500/- Total ₹ 8 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r considering the assessee s reply, the ld Assessing Officer considered the provisions of Section 271(1)(c) on page Nos. 2 and 3 and held that it is clear cut case made by the revenue against the assessee for concealment of income and/or furnishing of inaccurate particulars of income, inasmuch as assessee s default of provisions of Section 40(a)(ia) of the Act. The assessee s reply on bonafideness has not found convincing to the Assessing Officer as claimed by the assessee that the return was fi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f its contention nor had the assessee put forth any argument whereby the onus cast upon it in respect of its innocence and righteous conduct is established. The case laws cited by the assessee are also not squarely applicable. He further relied on the decision in the case of Union of India Vs. Dharmendra Textiles Processors 295 ITR 244 (SC) wherein it has been held that penalty U/s 271(1)(c) of the Act is a civil liability and the willful concealment is not an essential ingredient for attracting .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r disallowance/ addition which is basis for imposition of penalty is amounting to ₹ 4402000/- on account contingent liability. As regards this addition the appellant has furnished an explanation that commission is claimed in P&L account and shown payable on regular basis as and when a new member is introduced however the amount is paid to such member only when the new member further introduced two members. The AO rejected the claim of the appellant on the reasoning that the liability o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed on page 12 and 13 of this order which as per appellant supported his claim. The essential issue to be noted that this is an issue where definitely there can be more than one opinion/ option regarding allowability of such claim. The appellant opted for an option relying upon certain case laws which is rejected by the AO. However rejection of such legal claim cannot be said to be a case of concealment of income. Reference is made to the decision of Hon ble Supreme Court in the case of Reliance .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the legislature. Keeping in view the proposition of law laid down by Hon ble Supreme Court, the penalty u/s 271(1)(c) of IT Act cannot be imposed on such disallowance of ₹ 44044000/-. iii. As regards another disallowance/ addition of ₹ 118370/- and 30400/- total for ₹ 148770/-. It is noted that such expenses were not at all allowable to the appellant. As regards the claim of donation of ₹ 118370/ this is not an allowable expenses. Similarly regarding disallowance of S .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

come to the extent of ₹ 148770/-. Therefore penalty u/s 271(1)(c) of IT Act on such quantum addition of ₹ 148770/- deserves to be imposed/ sustained. The AO has rightly imposed penalty on such quantum addition. The penalty amounting to ₹ 36612/- which is 100% tax sought to be evaded on such quantum addition of ₹ 148770/- is accordingly confirmed. Therefore the appellant gets relief of ₹ 2843649/-. 6. The appeal is partly allowed. The addition/disallowances made at & .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

led the particulars of income and also furnished inaccurate particulars of income. Therefore, order of the ld CIT(A) deserves to be reversed. 5. At the outset, the ld AR of the assessee has reiterated the arguments made before the ld CIT(A). There was a TDS survey conducted on 08/3/2007. TDS was deducted out of total commission expenditure of ₹ 70,48,481/- on ₹ 20,48,500/-. Finally remaining amount of ₹ 49,99,981/- was found final for violation of provisions of Section 40(a)(ia .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of minimum two new members. The company provided in commission expenditure ₹ 44,02,000/- however, till 31st March, 2006, these members could not introduce two new members. On verification of commission expenditure, it is also found that the commission amounting to ₹ 32,24,500/- was covered under both the heads i.e. disallowance of ₹ 70,48,481/- and ₹ 44,02,000/-. The ld Assessing Officer reduced this double addition in computing itself. The genuineness of expenses under b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

clarificatory in nature by various courts and held that same is effective from 01/4/2005. The Auditor also had not pointed out that on this amount TDS is liable to be deducted in audit report. The assessee had explained the reasons for not considering this amount in the income, which was bonafide. That recipient were not under the tax net as their income was below taxable limit, therefore, the assessee was to get the form NO. 15G/15H but which could not be collected but subsequently the TDS was .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hat merely because an amount is not allowed or taxed to income, it cannot be said that the assessee had filed inaccurate particulars or concealed any income chargeable to tax. No penalty can be levied. 5.1 Further before adjudication of the appeal by the ld CIT(A) on 17/11/2009, a search was conducted on the appellant. Thereafter, the assessee approached to the settlement commission and ultimately case has been settled under the facts and circumstances, no adverse inference can be drawn in non-c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by itself, would not, in our opinion, attract the penalty U/s 271(1)(c) of the Act. Moreover, it is a fact that disallowances made in assessment proceedings are by invoking Section 40(a)(ia) which is a deeming provision and creates legal friction. The said legal friction cannot be extended from disallowing the expenditure and cannot be considered for provisions of Section 271(1)(c) of the Act. The various courts have held that legal friction cannot be extended and has to be limited to the purpo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d on the basis of genuineness by the revenue. Therefore, no penalty can be imposed. He further relied on the decision of Hon ble Ahmadabad ITAT in the case of Devpras Institute Vs. ITO ITA No. 1743/Ahd/2012 dated 23/11/2012 wherein it has been held that disallowance made under the provisions of Section 40(a)(ia) but genuineness of payments have not been doubted, therefore by relying on the Hon'ble Supreme Court decision in the case of Reliance Petroproducts Pvt. Ltd. (supra), appeal was deci .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

7, 2011. (v) ACIT Vs Bhoruka Logistics Pvt. Ltd. (2010) 34 (II) ITCL 552. (vi) ACIT Vs M/s Saraswati Construction Company ITA No. 2865/Ahd/2010. (vii) M.P. Tolls Road Limited, Mumbai Vs. ACIT ITA No. 36/Ind/2012 Indore. (viii) ITAT, Ahmadabad in the case of L.G Choudhary Vs. DCIT, ITA No. 228/Ahd./2010 (ix) ITAT, Ahmadabad in the case of Anupama Rasayan India Limited Vs DCIT ITA No. 504 & 505/Ahd/2010 (x) ITAT, Ahmadabad in the case of ACIT Vs Mazda Ltd. ITA No. 1552/Ahd/2011 dated 07/06/20 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version