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2013 (3) TMI 704 - HC - Income TaxPenalty under section 271(1)(c) - Tribunal deleted the penalty on the ground that in quantum appeal, the disallowance made by the Assessing Officer has been deleted - revenue has filed appeal before this Court, wherein the revenue has sought to justify the disallowances by placing reliance on Explanation 5 introduced to section 9 of the Act by the Finance Act, 2012 with retrospective effect from 1st June, 1976 - Held that - The very fact that the law has been amended with retrospective effect clearly shows that the issue was debatable and in the absence of any failure to disclose material facts necessary for the purpose of assessment, the deletion of penalty levied under section 271(1)(c) of the Act cannot be faulted. - Decided in favour of assessee.
Issues:
Penalty under section 271(1)(c) of the Income-tax Act, 1961 for assessment year 2004-05. Analysis: The case involved a dispute over the imposition of a penalty under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 2004-05. The penalty was levied on the assessee for not deducting tax at source on the amount paid to Yahoo Holdings (Hong Kong) Ltd., which was disallowed under section 40(a) of the Act in the regular assessment. The Commissioner of Income Tax (Appeals) upheld the penalty imposed by the assessing officer. The Tribunal, however, deleted the penalty by considering that in the quantum appeal, the disallowance made by the Assessing Officer had been overturned. The revenue challenged this decision before the High Court, arguing that the disallowance should be upheld based on Explanation 5 introduced to section 9 of the Act by the Finance Act, 2012 with retrospective effect from 1st June, 1976. The Court noted that the retrospective amendment indicated a debatable issue, and in the absence of any failure to disclose material facts for assessment, the deletion of the penalty could not be faulted. Consequently, the High Court found no merit in the revenue's appeal and dismissed it, ruling in favor of the assessee. The Court did not award any costs in this matter.
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