2019 (9) TMI 1072 - AT - Income Tax

Tribunal allows one appeal, dismisses another, directing deletion of penalty under Income Tax Act

M/s Paytronic Network Pvt. Ltd. Versus D.C.I.T., Circle- 7 (1) Aayakar Bhawan, Mumbai.

M/s Paytronic Network Pvt. Ltd. Versus D.C.I.T., Circle- 7 (1) Aayakar Bhawan, Mumbai. - TMI Issues:- Quantum additions made in the assessment- Penalty imposed under section 271(1)(c) of the Income Tax Act- Delay in filing appeals and condonation of the sameQuantum Additions:The assessee, engaged in electronic distribution and travel booking services, filed its return declaring a loss. The assessment resulted in various additions including TDS reconciliation, loss on fixed assets, interest on TDS, and disallowances under different sections. The CIT(A) confirmed these additions. The assessee, due to the insignificant tax impact of the additions compared to the overall loss, accepted the additions to avoid higher litigation costs. The Tribunal noted the inadvertent nature of the TDS omission and ruled that no tax evasion was intended. Citing precedents, the Tribunal held that no penalty under section 271(1)(c) was warranted.Penalty Imposed:The Tribunal analyzed each addition separately. Regarding the TDS reconciliation, the Tribunal found the omission to be an inadvertent mistake with no intention to evade tax. Precedents were cited to support the decision that no penalty was justified. Similarly, for the disallowance of interest expenses under section 36(1)(iii), the Tribunal ruled in favor of the assessee, citing commercial expediency and legitimate claims. The disallowance of interest expense capitalized to work in progress was also deemed unjustified as it was based on assumptions. The Tribunal, following legal principles, directed the deletion of the penalty imposed under section 271(1)(c).Delay in Filing Appeals:The assessee faced delays in filing appeals due to various circumstances, including consulting a Chartered Accountant after receiving a show-cause notice for prosecution. The Tribunal, after reviewing the reasons for the delay, condoned the delay in the interest of justice. The appeals were heard on merit, considering the substantial cause for the delay.In conclusion, the Tribunal dismissed one appeal while allowing another. The penalty under section 271(1)(c) was directed to be deleted, considering the factual and legal aspects of the case. The Tribunal's decision was based on the inadvertent nature of the mistakes and the absence of any intention to evade tax, as supported by legal precedents and the specific circumstances of the case.