2013 (5) TMI 882 - AT - Income Tax

ITAT upholds deletion of penalty for TDS non-deduction under Income-tax Act

The ITAT affirmed the CIT(A)'s decision to delete the penalty imposed on the assessee for non-deduction of TDS on transportation hire charges under ... - Issues involved: Appeal against deletion of penalty under section 271(1)(c) for non-deduction of TDS on transportation hire charges invoking section 40(a)(ia) of the Income-tax Act, 1961.Summary:The appeal by revenue challenged the deletion of penalty by CIT(A) for non-deduction of TDS on transportation hire charges under section 271(1)(c) of the Act. The assessee contended that the TDS provision was introduced in 2004 and they believed payments below a certain limit were exempt. The AO imposed penalty for concealment of income, but CIT(A) deleted it considering the bonafide nature of non-deduction in the first year of obligation. The ITAT upheld the deletion, citing precedents where genuine claims disallowed for TDS non-deduction did not warrant penalty. The genuineness of the expenses claimed was not disputed, leading to the confirmation of the penalty deletion by the ITAT.The ITAT found that the assessee's claim of expenses was genuine, and the disallowance was solely due to non-deduction of TDS, not because the claim was false. Citing the Supreme Court's ruling in Reliance Petroproducts Ltd, the ITAT concluded that the mere disallowance of a claim due to TDS non-deduction does not justify a penalty under section 271(1)(c) of the Act. The ITAT also referenced a similar case from ITAT Ahmedabad where a penalty was canceled for the same reason. Therefore, the ITAT upheld the CIT(A)'s decision to delete the penalty, as the genuineness of the expenses was not in question.In conclusion, the ITAT dismissed the revenue's appeal, affirming the deletion of the penalty by the CIT(A) for non-deduction of TDS on transportation hire charges under section 271(1)(c) of the Income-tax Act, 1961.