2010 (5) TMI 653

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....(c) on the disallowance of Rs. 7,15,276. 3. During the course of assessment, the Assessing Officer, in this case, has held that employees share of provident fund amounting to Rs. 3,30,012 was not deposited into the Government account by the 20th of the following month. Therefore, the same was disallowed under section 36(1)(va) of the Income-tax Act and on this disallowance penalty proceedings under section 271(1)(c) were also initiated. The Assessing Officer has further found that the assessee had made payment of royalty, advertisement and publicity, audit fee and recruitment expenses amounting to Rs. 7,15,276 on which tax at source has not been deducted. The auditors of the assessee had itself quantified these payments as inadmissible u....

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....he learned Commissioner of Income-tax (Appeals) deleted the levy of penalty with regard to disallowance on account of late deposit of provident fund of Rs. 3,30,012. Regarding the penalty on the disallowance of expenditure amounting to Rs. 7,15,276, the learned Commissioner of Income-tax (Appeals) confirmed the levy of penalty by, inter alia, placing the reliance upon the decision of the hon'ble apex court in the case of Union of India v. Dharamendra Textile Processors [2008] 306 ITR 277/174 Taxman 571. 7. Against this order the assessee is in appeal before us. 8. We have heard both counsels and perused the records. We find that in this case the assessee had made payment amounting to Rs. 7,15,276 which were subject to the deduction of....

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....arked that the same will be allowable in the next assessment year. In our considered opinion. In this background the assessee cannot be held to be guilty of concealment or furnishing of inaccurate particulars of income. In this regard we place reliance from the apex court decision rendered by a larger Bench comprising of three of their Lordships in the case of Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 (SC) wherein it was held that (headnote) : "An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceedings, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, ....