2011 (5) TMI 977 - AT - Income Tax

Summary

Issues Involved: Validity of penalty imposed u/s 271(1)(c) of the Income Tax Act for assessment year 2005-06.

Summary:
The appeal by the Revenue challenged the order of the Commissioner of Income-tax(Appeals) regarding the validity of the penalty imposed under section 271(1)(c) of the Act. The Revenue contended that the assessee furnished inaccurate particulars by not considering disallowances u/s 40(a)(ia) for non-deduction of tax, warranting the levy of penalty. The Departmental Representative argued that the expenses claimed violated TDS provisions, leading to inaccurate particulars of income. On the other hand, the assessee's counsel maintained that no concealment occurred, and disallowances were made under section 40(a)(ia) without evidence of income concealment.

Upon review, the Tribunal found that the disallowance was based on section 40(a)(ia) and that the assessee provided all relevant facts and a bona fide explanation. The Tribunal noted an honest difference of opinion between the assessee and the revenue on the disallowance and the Act's provisions. It was concluded that the assessee did not conceal income or furnish inaccurate particulars, as the explanation had a valid basis. Therefore, the Tribunal held that no penalty under section 271(1)(c) was warranted, affirming the Commissioner's decision to reject the penalty imposition. Consequently, the appeal by the Revenue was dismissed.