TaxTMI 
TaxTMI 
2012 (3) TMI 493
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.... 2. Briefly, the facts of the case as emerged from the order of the learned CIT(A) are that penalty of Rs. 1,97,55,306/ has been imposed by the AO with respect to the additions of (i) Rs. 5,85,87,521/- made on account of disallowance u/s. 40(a) (ia) of the IT Act and Rs. 1,03,222/- made on account of disallowance out of telephone/office/site & staff welfare expenses. The matter reached before the learned CIT(A). The learned CIT(A), after considering the rival submissions directed the AO to delete the penalty with respect to addition made u/s 40(a) (ia) of the IT Act holding that there was no concealment of income or furnishing of inaccurate particulars of income. Further, it was held by the learned CIT(A) that TDS was duly deducted and depo....
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....ee had deducted TDS from gross contact payment to catering contractor but the same was not deposited into govt. exchequer before expiry of time prescribed under sub-section 1 of section 2000 of the Act in view of section 40(a) (ia) of the Act. We find that this is not allowable as deduction while computing the income chargeable under the head "profit & gains of business or profession" for the year. We find from the orders of the lower authorities that there is no allegation that the payment of catering expenses on which TDS is deducted but not paid to Govt. exchequer is non-genuine or bogus. It is also a fact that the lower authorities have not brought anything or not disputed that the payment is excessive or unreasonable. The disallowance ....
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....rd to controvert the findings of the learned CIT(A). 4.2 The same issue has also been decided in favour of the assessee by the ITAT Ahmedabad "B" Bench vide order dated 13-03-2012 in ITA No.1041/Ahd/2010 for AY 2006-07 in the case of M/s. Lucky Star International by dismissing the departmental. The findings of the Tribunal in Para 6 to 8 are reproduced as under: "6. We have heard the learned both the parties, perused the orders of the authorities below and considered the materials on record. During the course of hearing of the appeal the learned DR relied upon the order of the authorities below. On the other hand, the learned AR referring to Para 3 and 4 of the penalty order, submitted that all the additions in respect of commis....
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....e bonafide of assessee vis-àvis disallowance of 40(a) (ia). Assessee Company filed its return of income on 22nd December 2003 declaring an income of Rs. 6.32 Crores. An assessment was passed u/s 143(3) on 30th March 2006 whereby total income of the assessee has been determined at Rs. 11.53Crores. During the course of assessment proceeding Ld. AO found that the assessee had made the provisions in respect of certain foreign payments and claimed these provisions without deducting corresponding TDS. AO disallowed this claim of assessee and levied penalty under section 271(1)(C )relying upon the decision of Reliance (2010-TIOL-21-SCII) CIT(A) deleted the penalty - Matter reached to the ITAT." After hearing the parties th....
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....none appeared on behalf of the assessee. We heard the Departmental Representative. In this case, penalty is levied for disallowance of expenditure u/s 40(a) (ia) of the Income Tax Act. Non deduction of TDS by the assessee was resulted in disallowance of expenditure u/s 40(a) (ia), that itself cannot be construed as furnishing inaccurate particulars of income or concealment of income. The assessee has failed to deduct TDS which resulted in disallowance of expenditure. In our opinion, the mistake committed by the assessee was compensated by disallowing the expenditure. Further, the Revenue cannot penalise the assessee by levying penalty u/s 271 (1) (c) of the Act. In order to levy penalty u/s 271 (1) (c) of the Act, there has to be concealmen....