TMI Blog2018 (6) TMI 1095X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Satyajeet Movies Pvt Ltd (2014 (2) TMI 1335 - ITAT MUMBAI) held that no penalty can be levied u/s 271(1)(c) for any addition made u/s 40(a)(ia) for failure to deduct TDS, once such payment has not been doubted. The default committed by the assessee can be termed it as technical or venial breach for which rigors of penalty provisions cannot be invoked - thus CIT(A), after considering relevant submissions, has rightly deleted penalty levied by the AO in respect of addition made u/s 40(a)(ia) - Decided in favor of assessee. - I.T.A No.09/Mum/2016 - - - Dated:- 13-6-2018 - Shri Joginder Singh(JUDICIAL MEMBER) AND Shri G Manjunatha (ACCOUNTANT MEMBER) For The Appellant : Shri M.V. Rajguru For The Respondent : Shri Mitesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently, the AO initiated penalty proceedings u/s 271(1)(c) and issued show cause notice u/s 274 r.w.s. 271(1)(c) and called upon the assessee to explain as to penalty shall not be levied for furnishing inaccurate particulars of income in respect of disallowance u/s 40(a)(ia) towards management fees paid for failure to deduct tax at source u/s 194J as the same has been reported by the tax auditor in his tax audit report column 17 of form 3CD and also the assessee has filed necessary particulars about the payment in the return of income filed u/s 139(1). The assessee further submitted that mere disallowance of certain expenses would not lead to an inference that the assessee has furnished inaccurate particulars of income which comes within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee further submitted that non filing of any explanation or non filing of appeal against addition made by the AO does not mean that the assessee is guilty of either furnishing inaccurate particulars of income or concealed particular of income with an intention to evade payment of taxes. The assessee further submitted that the AO has failed to appreciate the fact that the tax audit report was filed along with the return and tht it unequivocally stated that the management fees and provision for payment of gratuity was not allowable u/s 40(a)(ia) and 40A(7) of the Act respectively indicate that the assessee has made a computation error in its return of income. Therefore, no adverse inference can be drawn against the assessee merely for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia) of the Act, the same is not leviable in view of (he judgement of Hon'ble ITAT 'R* Bench, Mumbai in the case of Satyajeet Movies Pvt. Ltd. vs. ACIT, ITA No.6306/Mum/2011, AY.2005-06 dated 21/02/2014 and also enclosed a copy of the judgement. I have gone through the same. It is noted that the Hon'ble ITAT, Mumbai, against the additions made u/s.40(a)(ia) of the Act, observed that the genuineness of these expenses and quantum of payment have not been doubted and disallowance has been made only on the technical default on non-deduction of TDS for which there is separate provisions for levy of interest and penalty, under the Act. Penalty u/s.271(l)(c) can be levied only, if the assessee has concealed particulars of income or furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eviable against the additions made u/s.40(a)(7) of the Act. also and it is hereby confirmed. 5. The Ld.DR submitted that the Ld.CIT(A) was erred in deleting penalty levied u/s 271(1)(c) r.w.s. Explanation (1A) of the Act without properly appreciating the fact brought out by the AO that the assessee has failed to offer any explanation for not adding disallowance of management fees quantified by the auditor in his tax audit report u/s 40(a)(ia) of the Act even though such payment is not actually deductible. The Ld.DR further submitted that the act on the part of the assessee not to take cognizance of the auditors comments deserves to be penalised for the reason that if scrutiny proceedings are not taken place, the same would have remai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty u/s 271(1)(c) on the ground that the assessee has not offered any valid explanation for the default committed in compliance of TDS provisions. The AO further observed that as per explanation (1A) of section 271(1)(c) any person, who fails to offer valid explanation in respect of any addition, the amount added directly or indirectly to the total income of an assessee is deemed to represent the income of which particulars of income is concealed by the assessee. It is the contention of the assessee that it has neither concealed particulars of income nor furnished inaccurate particulars of income which is evident from the facts gathered by the AO in his order that the tax auditor has reported non deduction of TDS on management fees and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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