2016 (5) TMI 1424 - AT - Income Tax

Penalty u/s 271(1)(c) - disallowances made on account of non deduction of TDS - Held that - We find that it is an undisputed fact that penalty was imposed by the Assessing Officer for disallowance made u/s 40(a)(ia) of the Act for non deduction of tax on various payments. This fact is verifiable from the penalty order itself. We further find that the Hon ble ITAT Hyderabad Bench in the case of ACIT Circle3(1) VS. Seaways Shipping Ltd. Secundrabad 2011 (6) TMI 816 - ITAT HYDERABAD has deleted the similar penalties imposed by the authorities below. - Decided in favour of assessee.

Summary

Issues:
Appeal against penalty imposed under section 271(1)(c) for non-deduction of TDS.

Analysis:
The appeal was filed against the penalty upheld by the CIT(A) for disallowances made on account of non-deduction of TDS. The AR argued that the CIT(A) increased the penalty unjustifiably, despite the relief granted by the Tribunal in quantum proceedings. Various case laws were cited to support the argument that penalties for non-deduction of TDS are not sustainable. The DR, on the other hand, relied on the orders of the Authorities Below.

The Tribunal found that the penalty was imposed for disallowances under section 40(a)(ia) for non-deduction of tax on payments. Citing a similar case where penalties were deleted, the Tribunal concluded that the non-deduction of TDS resulting in expenditure disallowance does not constitute concealment of income or furnishing inaccurate particulars of income. The Tribunal emphasized that the penalty under section 271(1)(c) requires concealment or inaccurate particulars, which was not the case here. Therefore, the penalty was unjustified, and the appeal was allowed.

In light of the above analysis, the Tribunal deleted the penalty confirmed and enhanced by the CIT(A), following the judicial precedents and principles laid down in relevant case laws. The appeal was allowed, and the order was pronounced in open court on 20th May 2016.