AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (9) TMI 475
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....in the gross receipts as per reconciliation submitted by the assessee and 26AS. The assessee submitted that this difference should be added back to the total income. The A.O. accordingly, made addition of Rs. 38,39,628. The A.O. also noted that he is satisfied that the assessee-company has furnished inaccurate particulars of such income. The A.O. initiated penalty proceedings under section 271(1)(c) of the Act and assessee replied before A.O. that his contractee M/s. Pioneer Urban Land & Infrastructure Ltd., had erroneously deducted TDS on the gross billing amount including service tax which they should not have done. It shows the billing amount of Rs. 9,27,53,832 and by adding service tax of Rs. 38,21,458 total would comes to Rs. 9,65,75,290. This is the reason for the difference of Rs. 38,21,458. The assessee, therefore, requested that penalty may not be imposed. The A.O. however, was not satisfied with the explanation of the assessee and held that assessee has concealed the particulars of income and furnished inaccurate particulars of income and liable to penalty under section 271(1)(c) of the I.T. Act and accordingly, levied the penalty. 3. The assessee challenged the penalty ....
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....d. The Tax Auditor had not stated that the service tax was not passed through P & L A/c. Therefore, in the first instance, service tax of Rs. 38,21,458 pertaining to M/s. Pioneer Urban Land & Infrastructure Ltd., should not form part of total income, as it was not an item of P & L A/c but an item of balance sheet, which was duly taken into consideration separately for the purpose of disallowance under section 43B of the I.T. Act. The Board has clarified that no TDS is required to be made on service tax component. The CBDT issued a clarificatory Circular No.1 of 2014 dated 13th January, 2014 clarifying that wherever in terms of agreement/contract between the payer and the payee, the service tax component comprised in the amount payable to a resident is indicated separately, the tax shall be deducted at source under Chapter-XVIIB of the I.T. Act, on the amount paid/payable without including such service tax component. It was, therefore, submitted that as per the Circular, TDS was not required to be deducted on the service tax component and M/s. Pioneer Urban Land & Infrastructure Ltd., had wrongly deducted tax on service tax of Rs. 38,21,458, resulting the same forming part of the gr....
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.... been correctly levied in the matter. The Ld. D.R. relied upon the decision of Delhi High Court in the case of CIT vs. Zoom Communication 191 taxman. 179. 7. We have considered the rival contentions of learned Representatives of both the parties and perused the material on record. The assessee filed revised return at loss of Rs. 17.66 crores. The A.O. while making addition of Rs. 38,39,628 in dispute, computed the income of the assessee, has started the figure from profit as per P & L A/c (before taxes of Rs.(-)20,43,59,939 and thereafter added several items which includes disallowance under section 43B of Rs. 1,35,91,866. The same is the figure mentioned by the assessee in the statement of taxable income for the assessment year under appeal, copy of which is filed at page 83 of the paper book, as was filed with the return of income. The A.O. made further addition of Rs. 38,39,628 on account of difference in gross receipts and computed the total income of assessee at (-) Rs. 11,75,64,275. The assessee has filed details of liability under section 43B of the I.T. Act at page 42 of the paper book. The total of the amount unpaid on the date of tax audit has been mentioned at Rs. 1,35,....
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....not form part of total receipts of the assessee and has to be given treatment separately in the Balance Sheet. The assessee has declared in the return of income along with statement of taxable income, disallowance under section 43B in a sum of Rs. 1,35,91,866 which is also adopted by the A.O. in the assessment order, would clearly prove that the same includes the service tax. When A.O. had taken the figure of the taxable income and made separate addition of Rs. 38,39,628, it would certainly amount to double addition. It is well settled law that quantum and penalty proceedings are independent and distinct proceedings. Even if the addition is agreed by the assessee, if the assessee is able to explain the addition, then, penalty may not be leviable in the facts and circumstances of the case. The above facts clearly indicate that the explanation of assessee at the penalty stage was factually correct based on the material on record and assessee successfully explained the addition so made which is the basis for levy of the penalty. Since the difference is reconciled at the penalty stage and claim of assessee have not been doubted or rejected, therefore, Ld. CIT(A) was not justified in co....