TaxTMI 
TaxTMI 
2016 (10) TMI 536
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....ade any deliberate attempt to conceal income. ii. On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred in deleting the above said penalty ignoring the fact that the quantum addition on disallowance u/s 40(a)(ia) of the Act was confirmed by the first appellate authority and the assessee did not contest on the issue of LTCG. iii. The appellant craves to be allowed to add any fresh grounds of appeal and/or delete or amend any of the grounds of appeal. 2. The facts in brief of the case are that in the case of the assessee the assessment under section 143(3) of the Income Tax Act, 1961 (in short "the Act") was passed on 18/09/2009 assessing the total income at Rs. 3,83,03,325/- as against the returned income of Rs. 3,55,15,180/-. The assessing officer also initiated penalty proceedings under section 271(1)(c) of the Act .The additions/disallowances made by the Assessing Officer was confirmed by the learned Commissioner of Income Tax (Appeals) vide his order dated 26/07/2010. The Assessing Officer issued a show cause for levy of penalty on the additions disallowances confirmed by the learned Commissioner of Income Tax (Ap....
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....he is a foreign national. Thus, assessee by its act also caused loss of revenue which was otherwise realizable from the recipient of the income." 2.3 Before the learned Commissioner of Income-tax (Appeals), the assessee filed the submission, which are reproduced by the learned Commissioner of Income-tax (Appeals) as under: "The AR of the appellant submitted as under: "Submission:- A.Penalty in respect of disallowance u/s 40(a)(i) of Rs. 8,88,053/- (Rs.4,43,363 + Rs. 4,44,690) 1. The assessee made payment of Rs. 4,43,363/- to M/s. Coperion Werner & Pfleiderer in respect of process training conducted by it at the assessee's premises between 07.08.2006 to 11.08.2006. From this non-resident, assessee has purchased plant and machinery from time to time. The machines purchased by the assessee were not working at the optimum level and therefore on complaint by the assessee, the supplier of machine sent its engineer to provide the process training. The assessee has not deducted tax on this payment as according to it, it is a payment of business profit under Article 7 of DTAA with Germany and since the nonresident has no PE in India, no income has ....
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..../independent scientific activities or fees for technical services. The Hon'ble ITAT has upheld the disallowance only for the reason that assessee has failed to demonstrate the applicability of Article 7/14 of DTAA with Germany. Hence, on such interpretational difference and particularly when the disallowance is made u/s 40(a)(1), penalty u/s 271(l)(c) is not leviable as per the various case laws referred below:- Tanushree Basu Vs. ACIT (2013) 36 CCH 089 (Mum.)(Trib.) It was a fact that assessee had claimed expenses & same were disallowed by the AO while completing the assessment u/s 143(3) of the Act on the ground that assessee failed to deduct TDS. It was observed that the genuineness of the claim of the assessee had not been disputed by the department Therefore, it could not be said that assessee had claimed expenses which were false or not genuine. Assessee had furnished all the relevant facts concerning the claim made by it in the return filed. It was held that the AO had levied penalty in respect of said amount merely because said claim of the assessee was disallowed u/s 40(a)(ia) of the Act as assessee failed to deduct TDS thereon. In the case of CIT vs. Reliance Petro pr....
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....alment of any facts with regard to the claim of the deductions. Complete details were filed during the course of assessment proceedings as asked for by the A.O. In fact it is on the basis of the details filed by the appellant that the A.O. worked out the disallowable amounts both u/s 40(a)(ia) and 14A of the Act. The expenses claimed by the appellant were genuine expenses incurred for business purposes and there are no contrary observations by the Assessing Officer. The disallowance made by the A.O. u/s 40(a)(ia) of the Act was on account of legal provision and u/s 14A of the Act by attributing expenses to the tax free income claimed by the appellant." ". ..... The A.O. has in the last page of his order u/s 271(l)(c) levied the penalty on the assessee on the ground that "assessee has willfully furnished inaccurate particulars of income." The Ld. Commissioner of Income Tax (Appeals) held that the assessee has furnished all the required details and that hence no penalty can be levied on technical/legal disallowances u/s 14A or u/s 40(a)(ia). We on the facts of this case agree with these findings of the Ld. Commissioner of Income Tax (Appeals). We find no infirmity in the con....
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....de payments of Rs. 4,43,363/- to an entity M/s Coperion Werner & Pfeerderer for sending an engineer to India for process training. The appellant stated that this payment was covered under article 7 and therefore no TDS was required to be made. 5.13. The AO stated that TDS was required to be deducted and made a disallowance u/s 40(a)(i). The addition made by the AO u/s 40(a)(i) was confirmed by the Ld. CIT(A) and the Hon'ble ITAT. The Hon'ble ITAT stated that Article 7 will not be applicable. 5.14. The appellant had further made a payment of Rs. 4,44,690/- to Dr. U. K. Thele. This was for scientific services. The AO however held that the payment was for technical services and subject to TDS and therefore disallowed the amount u/s 40(a)(i). The Ld. CIT(A) and Hon'ble ITAT up held the addition. The Hon'ble ITAT observed that the payment to Dr. U. Thele was for rendering technical services not falling under Article 14 of the DTAA. 5.15. I shall now discuss whether penalty will be imposable on these amounts. All the particulars had been furnished by the appellant. All facts relating to the computation of his total income had been disclosed by h....
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....tion 40(a)(i) of the Act. The learned Authorized Representative also relied on the decision of the Tribunal in ITA No. 2572 to 2574/Ahd/2011 in the case of Sh. Vishal Neeraj Aggarwal versus DCIT, Baroda. 2.7 We have heard the rival submissions and perused material on record. From the submission of the assessee before the lower authorities, we find that the assessee has filed all the particulars in respect of the expenses incurred, which has been held to be disallowable under section 40(a)(i) of the Act. The explanation furnished by the assessee in support of its claim of non-deduction of tax at source, though, has not been found correct, however, same was not malafide. According to the assessee, the payment of Rs. 4,43,363/- paid to an entity M/s. Coperion Werner & Pfleiderer was covered under Article-7 of the DTAA with Germany whereas the Tribunal has held that the Article-7 was not applicable in the case of the assessee. Similarly, in respect of payment of Rs. 4,44,690/- to Dr. UK Thiele, the assessee claimed that the payment was towards independent scientific activity which fall under Article 14 of DTAA with Germany, whereas the Tribunal held that the assessee failed to demon....
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....hat the disallowance was due to non-payment ofTDS, which was at the most a technical default. There being nothing to indicate any concealment of the income or furnishing of inaccurate particulars of income by the assessee, the Assessing Officer was rightly not justified in levying the penalty. 4. This being a correct approach adopted by both the authorities concurrently, this tax appeal poses no question of law and the same requires no interference and is consequently to be dismissed. " 13. Therefore, respectfully following the judgment of Hon'ble Jurisdictional High Court, we hereby direct the Assessing Officer to delete the penalty on this amount. Thus, this ground is allowed and the appeal of the assessee for AY 2006-07 is allowed." 2.8 Thus respectfully following the above decision no penalty is leviable in the case for disallowances towards non-deduction of tax at source. 3. Third disallowance of Rs. 26,138/- under section 40(a)(i) has already been deleted by the Tribunal and, therefore, no penalty was leviable corresponding to the disallowance of Rs. 26,138/-. In view of above discussion, we find that order of the learned Commissioner of Income-tax (Ap....
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.... on the finding of the Assessing Officer and submitted that the assessee has filed inaccurate particulars of income and hence the penalty was leviable in the case of the assessee. 4.2 On the other hand, learned Authorized Representative of the assessee relied on the findings of the learned Commissioner of Income Tax (Appeals). 4.3 We have heard the rival submission and perused the material on record. We find that all the particulars in respect of the sale of shares were duly filed before the Assessing Officer. The learned Authorized Representative submitted that the long-term capital gain (LTCG) was claimed as exempt by the assessee at the time of filing the return, inasmuch as, the assessee was of bonafide view that STT would be paid in the due course once the BSE would get the issue clarified from the CBDT. The correspondence of the BSE in this respect was also filed before the Assessing Officer. However, since the assessee failed to get the same clarified until the last date of revision of return of income i.e. 31/03/2008, the assessee during the course of assessment proceeding, without any show cause notice issued by the Assessing Officer, offered the long-term capital ga....