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M/s. Bhayana Builders Pvt. Ltd. Versus The DCIT, Circle-2 (1) , New Delhi

Levy of penalty under section 271(1)(c) - wrongly deducted tax on service tax - higher TDS is shown in 26AS - whether gross receipts as per 26AS which refers to TDS claim, can be made the basis for an addition - Held that:- The assessee filed reply before A.O. at the penalty stage explaining that his contractee M/s. Pioneer Urban Land & Infrastructure Ltd., had erroneously deducted TDS on the gross billing amount including service tax on the total amount of ₹ 9,65,75,290. The reconciliatio .....

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has been able to explained that his contractee M/s. Pioneer Urban Land & Infrastructure Ltd., had erroneously deducted TDS on the gross billing amount including service tax. This was the reason, when higher TDS is shown in 26AS and the A.O. had taken item of service tax to the higher receipts. - Thus, the assessee has explained the above difference in the receipts as per the details submitted before A.O./CIT(A) and the details noted in 26AS. The assessee also explained that since service ta .....

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facts clearly indicate that the explanation of assessee at the penalty stage was factually correct based on the material on record and assessee successfully explained the addition so made which is the basis for levy of the penalty. Since the difference is reconciled at the penalty stage and claim of assessee have not been doubted or rejected, therefore, Ld. CIT(A) was not justified in confirming the levy of penalty merely because assessee conceded for addition of the amount in question. - Decid .....

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I.T. Act, 1961. 2. Briefly the facts of the case are that original return of income was filed declaring income of ₹ 17.27 crores, later on, assessee-company revised its return of income declaring loss of ₹ 17.66 crores. The assessee-company is engaged in the business of construction of wide range of structural building and selling and installation of tiles/grids. During the course of assessment proceedings, the assessee-company was provided the AIR information generated from system. .....

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replied before A.O. that his contractee M/s. Pioneer Urban Land & Infrastructure Ltd., had erroneously deducted TDS on the gross billing amount including service tax which they should not have done. It shows the billing amount of ₹ 9,27,53,832 and by adding service tax of ₹ 38,21,458 total would comes to ₹ 9,65,75,290. This is the reason for the difference of ₹ 38,21,458. The assessee, therefore, requested that penalty may not be imposed. The A.O. however, was not sat .....

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Land & Infrastructure Ltd., who have deducted TDS on the gross billing amount including the service tax. The observations of the A.O. that assessee had not filed any documentary evidence is not factually correct, as the assessee, as per copy of the reply, had furnished a statement giving complete details in respect of reconciliation of billing amounts, work done, service tax, TDS etc., in the statement in respect of M/s. Pioneer Urban Land & Infrastructure Ltd. The statement gave the br .....

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y correct and verifiable as such. It was submitted that penalty and quantum proceedings are different and independent proceedings. Merely because an addition has been made in the assessment order by itself would not lead to conclusion/inference of concealment of the particulars of income or furnishing inaccurate particulars of income. On mere difference in gross receipts as per TDS details as contained in 26AS would not lead to levy of penalty. The details have already been part of the receipts .....

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ack in the return. In the statement of taxable income, a sum of ₹ 1,35,91,766 has been disallowed and added back in the computation of income as per copy of the computation and income tax return which is separately enclosed. The Tax Auditor had not stated that the service tax was not passed through P & L A/c. Therefore, in the first instance, service tax of ₹ 38,21,458 pertaining to M/s. Pioneer Urban Land & Infrastructure Ltd., should not form part of total income, as it was .....

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nt is indicated separately, the tax shall be deducted at source under Chapter-XVIIB of the I.T. Act, on the amount paid/payable without including such service tax component. It was, therefore, submitted that as per the Circular, TDS was not required to be deducted on the service tax component and M/s. Pioneer Urban Land & Infrastructure Ltd., had wrongly deducted tax on service tax of ₹ 38,21,458, resulting the same forming part of the gross amount for TDS purposes as shown in 26AS. Th .....

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fore, penalty was correctly levied and dismissed the appeal of assessee. 5. We have heard the Learned Representatives of both the parties and perused the material on record. Learned Counsel for the Assessee reiterated the submissions made before the authorities below. Paper book, page-1 is reply before A.O. at the penalty stage supported by reconciliation of M/s. Pioneer Urban Land & Infrastructure Ltd., copy of which is filed at page-2 of the paper book. Paper Book-42 is particulars of sum .....

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ee has not been found incorrect. The A.O. has not noted in the penalty order as to under which limb of Section 271(1)(c) of the Act, he has levied the penalty. He has relied upon the order of ITAT, Delhi Bench in the case of Bengali Sweets Centre vs. ACIT ITA.No.2068 & 2069/ Del./2014 dated 20th April, 2017, in which, on the same issue, penalty have been cancelled. He has also submitted that earlier Board Circular have been clarified on enactment of GST Act and the same principle have been r .....

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91 taxman. 179. 7. We have considered the rival contentions of learned Representatives of both the parties and perused the material on record. The assessee filed revised return at loss of ₹ 17.66 crores. The A.O. while making addition of ₹ 38,39,628 in dispute, computed the income of the assessee, has started the figure from profit as per P & L A/c (before taxes of Rs.(-)20,43,59,939 and thereafter added several items which includes disallowance under section 43B of ₹ 1,35, .....

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total of the amount unpaid on the date of tax audit has been mentioned at ₹ 1,35,91,866 which is mentioned by the A.O. in the assessment order. However, it includes the service tax of ₹ 82,04,104 which was the amount unpaid. The assessee filed reply before A.O. at the penalty stage explaining that his contractee M/s. Pioneer Urban Land & Infrastructure Ltd., had erroneously deducted TDS on the gross billing amount including service tax on the total amount of ₹ 9,65,75,290. .....

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conciliation certificate. The assessee, thus, has been able to explained that his contractee M/s. Pioneer Urban Land & Infrastructure Ltd., had erroneously deducted TDS on the gross billing amount including service tax. This was the reason, when higher TDS is shown in 26AS and the A.O. had taken item of service tax to the higher receipts. The assessee has referred to Board Circular No. 1 of 2014 dated 13th January, 2014, in which, in para-3, it is clarified as under: 3. The matter has been e .....

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h July, 2017 on enactment of GST Act in which it is again reiterated in para-4 that in the light of fact that even under New GST Regime, the rational of excluding the tax component from the purview of TDS remains valid. 7.2. Thus, the assessee has explained the above difference in the receipts as per the details submitted before A.O./CIT(A) and the details noted in 26AS. The assessee also explained that since service tax is not income of the assessee, which is also not disputed by the Ld. D.R, t .....

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28, it would certainly amount to double addition. It is well settled law that quantum and penalty proceedings are independent and distinct proceedings. Even if the addition is agreed by the assessee, if the assessee is able to explain the addition, then, penalty may not be leviable in the facts and circumstances of the case. The above facts clearly indicate that the explanation of assessee at the penalty stage was factually correct based on the material on record and assessee successfully explai .....

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