TMI Blog2017 (11) TMI 629X X X X Extracts X X X X X X X X Extracts X X X X ..... ank has been credited with ₹ 2,52,000 and the narration which has been provided is that “Being online TDS paid vide challan no. 92388 dated 14.03.2012 paid for FY 2008-09 as per assessment order dated 28.12.2011.” In light of the same, we are unable to accede to the explanation so offered by the assessee and found the same devoid of any bonafide. In the case of Pricewaterhouse Coopers Pvt Ltd (2012 (9) TMI 775 - SUPREME COURT) held that the facts of the case are rather peculiar and somewhat unique. It was further held that the assessee made a bonafide and inadvertent computational error while filing its return of income and the fact that the disallowance was reflected in the tax audit report which was filed along with the return of income shows that it was not a case of furnishing inaccurate particulars of income or concealment of income. The said decision therefore was rendered in the context of its peculiar facts and the bonafide of the assessee was established which apparently is not satisfied in the instant case. - Decided against assessee. - ITA No. 820/JP/2016 - - - Dated:- 29-9-2017 - SHRI KUL BHARAT, JM AND SHRI VIKRAM SINGH YADAV, AM For The Assessee : Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 dated 28.12.2011 was issued to the assessee stating that it appears to me that you have concealed the particulars of your income or furnished inaccurate particulars of such income and you are hereby required to show-cause why an order imposing penalty on you under section 271(1)(c) should not be passed. 4. The assessee did not appeal against the said disallowance made by the Assessing Officer and the said disallowance has thus attained finality for year under consideration. 5. In the penalty proceedings, the assessee was again given a show-cause on 18.6.2012 as to why penalty u/s 271(1)(c) should not be imposed for concealment of income and furnishing inaccurate particulars of such income. However, there was no response from the assessee to the said show-cause and the Assessing Officer thereafter proceeded to complete the penalty proceedings. In its penalty order, the AO levied penalty of ₹ 6,05,295 being 100% of tax sought to be evaded and has held as under: As per the provisions of section 194I, the assessee was liable to deduct TDS on the above payments to its sister concern. Inspite of knowing the fact that the assessee has not paid the TDS on the above p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid act and conduct of the appellant clearly amounts to furnishing of inaccurate particulars of income within the meaning of section 271(1)(c). Accordingly, the appellant is held to be liable for penalty u/s 271(1)(c) corresponding to the amount of ₹ 25,20,000/-. 7. During the course of hearing, ld. AR submitted that firstly, as permitted by the first proviso to section 40(a)(ia), the assessee has already deposited the TDS of ₹ 25,20,000/- in AY 2012-13 as evident from the copy of computation and return of income filed for AY 2012-13. In this regard, the ld. AR submitted that the 1st provision to section 40(a)(ia), though amended by Finance Act, 2010 w.e.f. 01.04.2010 is merely declaratory and curative in the nature and removed the hardship hitherto being faced and hence has been held to be having a retrospective applicability in the sense that the past assessments have also been treated as covered by such amendment. Recently the Hon ble Rajasthan High Court has also taken a similar view in the case of CIT vs. Harish Chand Ahuja (2015) 125 DTR 184 (Raj.) and the disallowance made on this score was deleted. Thus, the assessee having the option of making the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of payment(s) made to landlord/payee and there was no inaccurate particulars of income furnished in its return with regard to such payment. In the case of CIT v/s Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158 (SC), the Supreme Court had to deal with the matter as to what amounts to furnishing of inaccurate particulars of income, in the context of section 271(1)(c). Reviewing the earlier judgments of the Supreme Court in case of Dilip No. Shroff vs. Jt. CIT (2007) 291 ITR 519 (SC) and UOI vs. Dharmendra Textile Processors Ors. (2008) 306 ITR 277 (SC), the Apex Court held that, where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false, there is no question of inviting the penalty u/s 271 (1)(c). A mere making of claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. This was followed in the case of Ramkrishna Shetty vs. ACIT (supra). 11. It was further submitted that a perusal of the show cause notice issued u/s 274 r/w 271(1)(c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent assessment year and whether the assessee has furnished inaccurate particulars of income or concealed his particulars of income has to be seen qua each assessment year independently. Further, the ld DR submitted that there is no bonafide explanation furnished by the assessee either during the assessment proceedings or even during the penalty proceedings for non-deduction of TDS on the rent payment. In light of that, he submitted that the AO was right in levying the penalty u/s 271(1)(c) and which has rightly been upheld by the ld CIT(A). 14. We have heard the rival contentions and pursued the material available on record. Firstly, we note that the amendment to section 40(a)(ia) by the Finance Act 2010 was in relation to transactions where after deduction of tax during the previous year, the same was paid on or before the due date of filing of the return of income under section 139(1). Prior to the amendment, the extended period of deposit of taxes so deducted was limited to cases where the deduction of tax is made during the last month of the previous year and extended period was given for deposit on or before the due date of filing of the return of income under section 139( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nected and have effect on the transactions in the subsequent financial year for example, the closing stock of a year will become the opening stock for the next year. The question is whether there is dispute regarding either quantification or valuation of the closing stock, will that become a non-issue when it comes to levy of penalty just because whatever final value of closing stock is determined, it will become the opening stock of the next financial year. Similarly, there could be dispute regarding rate of depreciation on fixed assets and can it be said that whatever rate of depreciation is finally determined, the same will be a non-issue as far as penalty is concerned just because where the rate of depreciation is say, reduced for a particular year, to that extent, claim of depreciation is reduced but at the same time, closing written down value will be increased and the claim of depreciation is effectively deferred to the extent of differential in rate of depreciation. 17. In our view, as far as levy of penalty under section 271(1)(c) is concerned, what has to be seen is whether the conditions stipulated in Section 271(l)(c) are satisfied or not and it has to be examined qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded in the order, at least, he has to record facts as contemplated in Explanation 1. If these facts are discernible from the assessment order, the deeming clause in Explanation 1 is attracted and the income is deemed to have been concealed. That gives the jurisdiction to the Officer passing the order to initiate the penalty proceedings. If the Officer passing the assessment order is the Assessing Officer, in the said order, the aforesaid facts are not discernible, at least he must direct initiation of proceedings under Section 271(l)(c). Then Section (1)(B) is attracted and these conditions deemed to exist which confers jurisdiction on him to initiate penalty proceedings. Section (1)(B) has no application to an order passed by Commissioner of Appeals or Commissioner. 20. In the instant case, we find that the AO has stated in the assessment order that the penalty proceedings u/s 271(1)(c) of the Act are being initiated separately. Accordingly, as per section 271 (1)(B), condition precedent for initiation of penalty proceedings under Section 271(l)(c) deemed to exist and constitute satisfaction of the AO which confers jurisdiction on him to initiate penalty proceedings. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings, no penalty could be imposed on the assessee. 22. As the Hon ble High Court held in the above case that the person who is accused of the conditions mentioned in Section 271 should be made known about the grounds on which they intend imposing penalty on him as the Section 274 makes it clear that assessee has a right to contest such proceedings and should have full opportunity to meet the case of the Department and show that the conditions stipulated in Section 271(l)(c) do not exist as such he is not liable to pay penalty. The grounds for levy of penalty are thus linked to the adherence to the Principle of natural justice and it was held that such Principle of natural justice should not be offended. Now, let s examine how the same is applicable in the facts of the case. In the instant case, the assessee has been issued two show-cause notices. The first show-cause notice dated 28.12.2011 was issued along with the passing of the assessment order dated 28.12.2011 where the assessee was made aware of initiation of the penalty proceedings and thereafter, another show-cause notice was issued on 18.06.2012. Though the first show-cause notice talks about concealing the partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to nature and quantum of rental payments made to Aircen Copper Pvt Ltd is discernable from the rent account filed by the assessee during the course of assessment proceedings. In this regard, we refer to the findings of the AO in the assessment order which is reproduced as under: On perusal of the rent account filed by the assessee, it was noticed that the assessee has paid and credited the rent amounting to ₹ 21,60,000/- on account of office premises rent of Testing Lab amounting to ₹ 3,60,000/- in the account of M/s Airen Copper Pvt. Ltd. on 31.3.2009 and the TDS as per Section 194 I of the I.T. Act, 1961 has not been deducted. 24. Now coming to the explanation offered by the assessee for non-deduction of tax on the rental payment, we find that during the course of assessment proceedings, the assessee has submitted before the AO that the company has paid rent through account payee cheque and TDS has been done as per Income Tax Rules. However, the AO didn t accept the said explanation for the simple reason that the rent account statement doesn t show that the tax has been deducted while making the rent payment on 31.3.2009 and secondly, no evidence to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the taxes. The same is apparent from the TDS voucher placed at APB 4 where the TDS on rent has been debited and Union Bank has been credited with ₹ 2,52,000 and the narration which has been provided is that Being online TDS paid vide challan no. 92388 dated 14.03.2012 paid for FY 2008-09 as per assessment order dated 28.12.2011. In light of the same, we are unable to accede to the explanation so offered by the assessee and found the same devoid of any bonafide. In the case of Pricewaterhouse Coopers Pvt Ltd (Supra), the Hon ble Supreme Court held that the facts of the case are rather peculiar and somewhat unique. It was further held that the assessee made a bonafide and inadvertent computational error while filing its return of income and the fact that the disallowance was reflected in the tax audit report which was filed along with the return of income shows that it was not a case of furnishing inaccurate particulars of income or concealment of income. The said decision therefore was rendered in the context of its peculiar facts and the bonafide of the assessee was established which apparently is not satisfied in the instant case. 26. Before departing, we may add th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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