TaxTMI 
TaxTMI 
2016 (4) TMI 114
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. 271(1)(c) of the IT Act, whereas the cross objection of assessee supports the impugned order. 2. The brief facts, leading to the present case, are that the assessee had paid interest to ONGC amounting to Rs. 55,47,123/- without deducting tax on interest payments (TDS) as required under section 194A of the Act. Therefore, disallowance of impugned interest was made u/s. 40(a)(ia) of the Act and was added to the total income of the assessee. This addition stood sustained upto the stage of ITAT in the case of assessee. Consequent upon this, the Assessing Officer initiated penalty proceedings for furnishing inaccurate particulars of income and after applying Explanation 1 to section 271(1)(c) against the assessee, imposed penalty of Rs. 18,6....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d. Counsel for the assessee contended that the respondent has never concealed the particulars of income nor furnished inaccurate particulars of income. Satisfactory explanations were offered by the respondent both at the assessment stage as well as penalty stage before the AO for non-deduction of tax on the interest paid to ONGC. It was submitted that bona fide of assessee's explanations cannot be questioned in the penalty proceedings simply because disallowance of interest was made for non-deduction of tax at source u/s. 40(a)(a) of the Act. It was submitted that the Revenue Department has not raised any finger on the genuineness of the interest expenditure, but disallowed the claim only for the reason that TDS was not deducted on such int....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... tax at source u/s. 194 owing to assurance of the payee company that they will pay the tax on the part of this income, as was communicated to respondent vide their letter dated 06.08.2007 whereby they have certified that the amount of Rs. 55,47,123/- being interest on the NPCC loan has been recognized as interest income of ONGC in F.Y. 2006-07 and tax as applicable has been paid to the Government. The ld. AR of the assessee submitted that this fact led the respondent not to deduct tax on interest payment to the ONGC, a Govt. Company. Besides, the factum of non-deduction of tax on the interest payment made to ONGC was declared to the Department at the very time of filing of return itself by way of disclosure as appendix "D"(I) in Tax Audit R....