2013 (12) TMI 894 - AT - Income Tax

Levy of penalty under section 271(1)(c) - Prior period expenses - Held that - The assessee has furnished all the particulars along with the voucher numbers of these expenses in the Audit Report which pertain to the financial year 2003-04 i.e., the assessment year 2004-05 - The bills were received after 1st April 2004 - No material has been brought on record to prove these details incorrect or the expenses do not pertain to the relevant financial year - The assessee has not concealed particulars of income - Decided against Revenue. Genuineness of expenses - Held that - Only part of the stitching charges remained unverified u/s 133(6) - In order to establish its claim of payment, the assessee has furnished copies of bills, details of account payee cheque, copy of bank statement reflecting such payments, Form-16A showing TDS deducted on such payments and also the details of Permanent Account Number of such parties - The assessee cannot be said to be guilty of furnishing inaccurate particulars of income - Decided against Revenue.

Summary

Issues involved:
Levy of penalty under section 271(1)(c) for prior period expenses and disallowance of stitching charges for the assessment year 2004-05.

Analysis:
1. Prior Period Expenses:
The appellant challenged the penalty imposed for prior period expenses, which were disclosed under various heads in the tax audit report. The Assessing Officer and the learned Commissioner (Appeals) confirmed the addition of these expenses, leading to the penalty imposition. The appellant contended that all details were furnished in Form 3CD, explaining that bills were received after the closing of the accounting year, justifying the treatment as prior period expenses. The penalty was deleted by the learned Commissioner (Appeals) based on the detailed submission and evidence provided by the assessee.

2. Disallowance of Stitching Charges:
Regarding the disallowance of stitching charges, the Assessing Officer noted discrepancies in the confirmation of payments made to various parties. Out of 85 persons, 12 did not respond adequately to the notices issued, leading to the disallowance and subsequent penalty imposition. The appellant argued that the payments were genuine, supported by bills, bank account details, TDS deductions, and PAN of the parties. The Tribunal upheld the deletion of penalty by the learned Commissioner (Appeals) based on the evidence provided, concluding that the assessee did not furnish inaccurate particulars of income.

3. Final Decision:
After considering the contentions of both parties, the Tribunal upheld the decision of the learned Commissioner (Appeals) to delete the penalties imposed on the prior period expenses and disallowance of stitching charges. The Revenue's appeal was dismissed, and consequently, the assessee's cross objection was also treated as dismissed. The Tribunal concluded that there was no concealment of income or furnishing of inaccurate particulars, based on the evidence and details provided by the assessee.

In summary, the Tribunal ruled in favor of the assessee, dismissing the Revenue's appeal and cross objection, thereby upholding the deletion of penalties related to the prior period expenses and stitching charges for the assessment year 2004-05.