TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 1072
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....ount of not deducting tax at source as per the provisions of section 194C of the Act in respect of payments of Rs.97,47,913/- made to sub-contractors and which was disallowed u/s 40(a)(ia) of the Act. 3. Thus, in both the appeals, the issue involved is as to whether levy of penalty by AO u/s 271(1)( c ) of the Act is justified on account of the additions made u/s 40(a)(ia) of the Act for non deduction of TDS as per the provisions of section 194C for the payments made to sub-contractors and u/s 194I on account of payments made for machinery rent (only in Assessment year 2007-08) 4. It is relevant to state that the AO for the assessment year 2007-08 levied penalty at the rate of 100% of the tax sought to be evaded on Rs.40,76,447/- which was disallowed u/s 40(a)(ia) of the Act which comes to Rs.13,72,132/- on the ground that the assessee furnished inaccurate particulars of income by making the claim in the return filed on account of payments made to sub-contractors/machinery rent without deducting TDS on the said payments covered under the provisions of sections 194C and 194I of the Act. The ld. CIT(A) also confirmed the action of the AO to levy penalty by observing that the assess....
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.... to levy penalty u/s 271(1)( c) of the Act. Hence, the department is in appeal before the Tribunal disputing the aforesaid order of ld. CIT(A). 6. At the time of hearing, ld. AR supported the order of ld. CIT(A) for assessment year 2006-07 and submitted that the facts in the assessment year 2007-08 and the issue involved is identical and therefore the levy of penalty u/s 271(1)( c ) of the Act merely on account of disallowance made because of technical reasons u/s 40(a)(ia) of the Act are not justified. He further submitted that assessee in subsequent assessment years paid TDS i.e. assessment year 2010-2011 relating to disallowance made for assessment year 2007-08 and paid in assessment year 2009-10 relating to disallowance made for assessment year 2006-07 and the same was allowed by the department. Ld. AR submitted that similar issue have also been considered by the Delhi Bench of the Tribunal in the case of New Horizon India Ltd. V/s DCIT (2011) 12 ITR (Trib) 332(Delhi). He further submitted that penalty levied u/s 271(1)( c ) of the Act on account of disallowance made u/s 40(a)(ia) of the Act was cancelled by the Tribunal on the ground that the assessee could not be held guilty....
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....ssessee. Similarly, for the assessment year 2007-08, the AO made assessment u/s 143(3) of the Act on 24.12.2009 by making addition of Rs.40,76,447/- u/s 40(a)(ia) of the Act as the assessee failed to deduct TDS as per the provisions of section 194C and 194I of the Act. Pursuant thereto, the AO initiated penalty proceedings u/s 271(1)( c ) of the Act. For the assessment year 2006-07, the AO levied penalty at the rate of 100% of the tax sought to be evaded which comes to Rs.32,81,147/- on the ground that the addition of Rs.97,47,913/- has been made by considering it as concealment of income on account of furnishing incorrect particulars of income by the assessee. Similarly, in respect of assessment year 2007-08, the AO levied penalty u/s 271(1)( c ) of the Act at the rate of 100% of the tax sought to be evaded on Rs.40,76,447/- as he considered that the said addition is made as the assessee has concealed its income on account of furnishing inaccurate particulars of income. Therefore, it is evident that for both assessment years under consideration, the penalty was levied by AO u/s 271(1)( c ) of the Act on account of making disallowance in view of provisions of section 40(a)(ia) of t....
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.... Clause ( c ) of sub-clause (iii) of section 271(1) of the Act "has concealed particulars of income" or "furnished inaccurate particulars of such income". Therefore, in both cases of concealment "inaccurate , phrase " particulars of income' is used. The Expression "has concealed particulars of income" and " has furnished inaccurate particulars of income" are not defined either in section 271(1) ( c ) or elsewhere in the Act. But the word "Concealed" is derived from the Latin word "concelare" which implies "to hide". The Webster's New International Dictionary, explains the word "conceal" as " to hide" or withdraw from observation; to cover or keep from sight; to prove discovery of; to withhold knowledge of". Thus, the offence of concealment is direct attempt to hide an item of income or derive thereof from the department to avoid payment of tax liability as per the provisions of Act. Thus, there should be an attempt on the part of the assessee to conceal the facts relating to its income or furnishing inaccurate particulars of income to avoid payment of tax. In the case before us nothing has been stated or brought on record by the department that the assessee had hidden the facts fro....
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....) of the Act. The Hon'ble Jurisdictional High Court held that it was not a case of department that the assessee withheld any information or furnished any false information. That the facts necessary for carrying out the assessment proceedings were admittedly disclosed in the return filed by assessee. It was held that the assessee had wrongly claimed deduction and it was not entitled to same as it is a pure question of law. In that context, the Hon'ble Jurisdictional High Court has held that by making incorrect claim in law cannot tantamount to furnishing inaccurate particulars of income since the assessee has furnished all the requisite details in the return save and except wrongly applied charging rate of tax on short term capital gains disclosed by assessee. Their Lordships held that applying the wrong rate of tax on which short term capital gains disclosed by assessee does not amount to furnishing inaccurate particulars of income. We are of the considered view that the above case squarely apply to the facts of the case before us. 11. The Delhi Bench of the Tribunal in the case of New Horizon India Ltd (supra) also considered similar facts and penalty levied on account of disallo....