2016 (8) TMI 804 - AT - Income Tax

Penalty imposed u/s.271(1)(c) - non payment of TDS and advance tax - Held that - The corresponding income with respect to the tax deducted at source and also the amount of advance tax paid by the assessee not only before the last date of financial year but also before search is equal to the amount of income returned by the assessee. It means entire income of the assessee was subject to TDS or the assessee himself has advance tax paid before the end of the financial year. Under these circumstances contention of ld. AR that the AO was not justified in holding that assessee has concealed its income have some merits. We also found that TDS as well as advance tax has been paid by the assessee not only before the due date of filing of return of income but also before search. Under these circumstances, we have to see the intention of assessee as to whether he wants to conceal the income or not. In the interest of justice and keeping in view the proposition of law advanced with respect to extended date of filing of return u/s.153A, which is supported by judicial pronouncements as cited by ld. AR, we restore the matter back to the file of AO for deciding afresh after giving due opportunity to the assessee. Non payment of admitted tax as required under section 249(4)(a) - Held that - Considering the fact that there is tax deducted at source out of assessee s income which has to be taken into account while computing the tax paid by the assessee and also considering the challans placed on record with regard to actual payments of tax, in the interest of justice, we restore this appeal to the file of CIT(A) for deciding afresh on merits as per provisions of Section 250 sub section 6 of the I.T.Act.

Summary

Issues:
- Imposition of penalty u/s.271(1)(c) of the I.T. Act for assessment years 2007-2008 & 2009-2010.
- Applicability of Explanation 5A to Section 271(1)(c) of the I.T. Act.
- Treatment of tax deducted at source (TDS) and advance tax paid by the assessee.
- Admittance of appeal based on tax payments under section 249(4)(a).

Analysis:

1. Imposition of Penalty under Section 271(1)(c):
- The appeals were filed by the assessee against the order of CIT(A) for the assessment years 2007-2008 & 2009-2010 regarding the imposition of penalty under Section 271(1)(c) of the I.T. Act.
- The AO had levied the penalty under Explanation 5A to Section 271(1)(c) of the I.T. Act, which the CIT(A) confirmed. The assessee contended that the penalty was not justified as the income was disclosed within the extended due date under section 139(4) r.w.s. 153A of the Act.
- The Tribunal found merit in the argument that the assessee filed the return within the stipulated time and that the intention to conceal income was not evident. The matter was restored to the AO for fresh consideration.

2. Applicability of Explanation 5A to Section 271(1)(c):
- The assessee argued that Explanation 5A to Section 271(1)(c) was not applicable as the return was filed in response to a notice u/s. 153A and should be treated as filed u/s. 139(1). Various judicial pronouncements were cited to support this argument.
- The Tribunal acknowledged the argument and found that the AO was not justified in holding that the assessee had concealed income. The matter was remanded back to the AO for a fresh decision.

3. Treatment of Tax Deducted at Source and Advance Tax:
- The assessee emphasized that TDS and advance tax were paid before the due date of filing the return of income and before the search action. The contention was that the entire income was disclosed, and there was no concealment.
- The Tribunal observed that the taxes were paid before the search and the due date of filing the return, indicating the absence of an intention to conceal income. The matter was sent back to the AO for reevaluation.

4. Admittance of Appeal based on Tax Payments:
- In another appeal, the CIT(A) dismissed the assessee's appeal citing non-payment of admitted tax under section 249(4)(a). The assessee contended that tax deducted at source should be considered while computing tax paid.
- The Tribunal agreed with the assessee's argument and directed the CIT(A) to reconsider the appeal on its merits, taking into account the tax deducted at source and actual payments made by the assessee.

In conclusion, the Tribunal allowed the appeals for statistical purposes in both cases, directing a fresh consideration by the respective authorities based on the arguments presented by the assessee regarding the disclosure of income, applicability of penalties, and tax payments.