2016 (2) TMI 1066

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....ecords are: The assessee is a company, engaged in the business of manufacturing of switchgears and parts and components used in the switchgears. The assessee filed its return of income for the assessment year 2005-06 on 31-10-2005 declaring total income of Rs. 6,35,68,480/-. The Assessing Officer during the scrutiny assessment proceedings made disallowance of Rs. 7,30,65,239/- u/s. 40(a)(ia) r.w.s. 194C of the Act. The assessee preferred an appeal before the Commissioner of Income Tax (Appeals) assailing the disallowance. The First Appellate Authority vide order dated 18-03-2009 confirmed the findings of the Assessing Officer. Penalty proceedings were initiated against the assessee for filing inaccurate particulars of income. Accordingly, t....

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....yan Builders & Developers (P.) Ltd. reported as 368 ITR 722 (Bom) has held that no penalty is leviable where the issue is debatable and the High Court has admitted the appeal as it involves substantial question of law. 4. On the other hand Shri I.P. Nago representing the Department submitted that the Commissioner of Income Tax (Appeals) has erred in deleting the penalty on merits. The Tribunal vide order dated 23-02- 2010 has confirmed the addition to the tune of Rs. 1.87 crores. The ld. DR prayed for setting aside the impugned order and confirming the levy of penalty. 5. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The ld. AR has brought to our notice that ....

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....n of clause (iv) (e) to the Explanation to Section 194C was retrospective in its operation and if even so whether the same would be attracted only in the event where the goods were manufactured by vendors by wholly or substantially using material supplied to them by the Appellant? (iv) Whether the amounts paid before the end of the financial year relevant to the assessment year 2005-06, paid by the Appellant to vendors on which tax had not been deducted under Section 194C could be disallowed under Section 409(a) (ia) of the Act ?" 6. The ld. AR has also placed reliance on the decision rendered in the case of CIT Vs. Nayan Builders & Developers (P.) Ltd. (supra). In the said case, the Hon'ble High Court deleted the penalty on the grou....