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2010 (5) TMI 891 - AT - Income Tax

Issues involved: Appeal against order of CIT(Appeals)-VI, Mumbai for assessment year 2005-09 regarding cancellation of penalty u/s 271(1)(c) based on conflicting decisions of the Hon'ble Apex Court.

Facts:
The assessee, a company engaged in transportation, faced a disallowance u/s 40(a)(ia) for delay in TDS payment to the Govt. Treasury. The AO disallowed an amount and levied a penalty u/s 271(1)(c) for furnishing inaccurate particulars of income. The assessee appealed, claiming full disclosure and no concealment of income.

Judgment:
The first appellate authority agreed with the assessee, stating that disallowance of expenditure does not equate to concealment of income. Citing the judgment in CIT vs. Ajain Singh & Co., it was held that a mere disallowance does not prove inaccurate particulars of income. The authority emphasized the need for a non-bonafide explanation to justify a penalty. The ITAT upheld this decision, dismissing the Revenue's appeal.

Conclusion:
The ITAT Mumbai, comprising Vice President Shri D. Manmohan and Accountant Member Shri J. Sudhakar Reddy, dismissed the Revenue's appeal against the cancellation of penalty u/s 271(1)(c) based on the principle that a disallowance of expenditure does not automatically imply furnishing inaccurate particulars of income. The judgment highlighted the importance of a bonafide explanation and full disclosure in determining the applicability of penalties in tax matters.

 

 

 

 

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