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Issues involved: Appeal against the order of Ld. CIT(A)-XIX, New Delhi confirming levy of penalty u/s. 271(1)(c) of the Act for Assessment Year 1997-98.
1st Issue - Deduction of TDS in foreign countries: The appellant contested the penalty levied on two counts, one being the rejection of the claim of deduction of TDS in foreign countries. The appellant argued that no satisfaction was recorded by the A.O. for the penalty u/s 271(1)(c) as required by law. Referring to past litigation and decisions, the appellant asserted that the disallowance of the claim did not amount to concealment of income or furnishing inaccurate particulars. The Tribunal agreed, noting that the issue had been a subject of substantial litigation since 1974-75 and that the disallowance did not indicate deliberate concealment. The penalty was deleted on this issue, citing lack of satisfaction and absence of intention to conceal income. 2nd Issue - Excess provision of interest tax: The second issue pertained to the disallowance of excess provision of interest tax in the assessment order. The appellant argued that the penalty was time-barred u/s 275(c) of the Act, as it was passed beyond the 6-month limitation period. Relying on a Supreme Court decision, the appellant contended that the penalty order was beyond the statutory time limit. The Tribunal agreed, holding that the penalty was indeed barred by limitation and subsequently deleted the penalty on this issue. Conclusion: The Tribunal allowed the appeal, deleting the penalties imposed on both issues. The decision was based on the lack of recorded satisfaction for the first issue and the time-barred nature of the penalty for the second issue. The appeal was pronounced in favor of the assessee on 30.10.2009.
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