2013 (6) TMI 816 - AT - Income Tax

Summary

Issues involved:
The judgment involves the issue of penalty imposition u/s 271(1)(c) for wrong deductions, interest on late TDS payment, and non-allowable expenses. The main contention is whether the assessee concealed income or furnished inaccurate particulars of income.

Details of the Judgment:
1. The appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2006-07, challenging the deletion of penalty u/s 271(1)(c) amounting to Rs. 4,19,358.
2. The assessment was completed u/s 143(3) after disallowance of expenses u/s 40(a)(ia) for late TDS deposit and other additions for charity/donations, software expenses, and cash expenses.
3. The Assessing Officer made additions for late TDS deposit and interest, charity and donation disallowance, and u/s 40A(3) disallowance, leading to the penalty imposition.
4. The CIT (A) deleted the penalty after considering that the TDS was paid with interest in the subsequent year, and the expenses were allowed in the next year, hence no concealment of income.
5. The Revenue contended that the assessee claimed wrong deductions, leading to furnishing wrong particulars of income, while the assessee argued that there was no concealment as all income particulars were disclosed.
6. The ITAT held that there was no concealment as the assessee disclosed all income particulars, and the delay in TDS deposit did not warrant penalty imposition.
7. The judgment emphasized that disallowance of expenditure does not automatically imply concealment of income, and penalty cannot be imposed solely based on disallowances.
8. Relying on judicial precedents, the ITAT dismissed the Revenue's appeal, upholding the CIT (A)'s decision to delete the penalty.

This judgment clarifies that penalty u/s 271(1)(c) cannot be imposed solely based on disallowances, and concealment of income or furnishing inaccurate particulars must be established for penalty imposition.