2016 (4) TMI 1046 - AT - Income Tax

Penalty u/s 271(1) (c) - claim of TDS was found wrong - Held that - Withdrawal of the credit of TDS in respect of which the income is not offered/assessed in the relevant AY in view of provisions of section 199(3) and Rule 37BA(3) or otherwise being wrong claim as in this case would not be termed as the amount of tax sought to be evaded as defined in Explanation-4 to section 271(1)(c). Therefore, after considering the conspectus of the material on record and the rival submissions, we are of the considered view that the presumption of concealment as contained in explanation (1) of section 271(l)(c) read with the explanation (4) of section 271(l)(c) has been rebutted by the assessee and that all the facts relating to this explanation and material to the computation of total income have been duly disclosed. Under the circumstances, it is held that explanation of the appellant was bona-fide and all the facts relating to the same and material to the computation of total income have been duly disclosed by it. Penalty deleted - Decided in favour of assessee

Summary

Issues involved: Appeal against deletion of penalty under section 271(1)(c) for wrong claim of TDS.

Detailed Analysis:

1. Background: The department appealed against the deletion of penalty amounting to ?17,30,832 imposed under section 271(1)(c) for Assessment Year 2009-10 by the Ld. CIT(A)-XXVI, New Delhi.

2. Factual Scenario: The appellant firm, engaged in the sale of stage lighting equipment, claimed credit for TDS of ?24,81,348 in its Return of Income. However, the AO found that credit for TDS of ?17,30,832 was wrongly claimed as the income corresponding to this TDS was accounted for by another concern, M/s Modern Stage Services (P) Ltd.

3. Penalty Initiation: The AO initiated penalty under section 271(l)(c) for concealment of income and furnishing inaccurate particulars of income. Citing relevant case laws, the penalty was levied as the appellant claimed credit of TDS in its name, which was not permissible under the law.

4. Appeal: The appellant appealed before the Ld. First Appellate Authority, who deleted the penalty.

5. Grounds of Appeal: The Department raised grounds stating that the penalty was wrongly deleted as the appellant furnished inaccurate particulars of income by claiming the same TDS for itself and its sister concern.

6. Arguments: The Department argued that the appellant knowingly claimed credit of another person's TDS, which was legally unacceptable, to evade tax. The conduct of the appellant raised doubts about their intention to submit true and correct particulars.

7. Counter-arguments: The appellant argued that the penalty deletion was justified as all facts were disclosed, and the claim was made based on a genuine belief.

8. Judgment: The Tribunal referred to legal precedents and held that the appellant's explanation was bona fide, and all material facts were disclosed. The claim of TDS, even if wrong, did not amount to concealment of income as per Explanation-4 to section 271(1)(c). Therefore, the penalty was not imposable, and the appeal of the Department was dismissed.

In conclusion, the Tribunal upheld the deletion of the penalty, emphasizing the importance of disclosing all material facts and the bona fide nature of the appellant's explanation in determining the applicability of penalties under section 271(1)(c).