2017 (1) TMI 739 - AT - Income Tax

Penalty u/s. 271(1)(c) - Held that - CIT(A) by relying upon the Hon ble Supreme Court of India decision in the case of CIT vs. Reliance Petroproducts (P) Ltd. 2010 (3) TMI 80 - SUPREME COURT has observed that the assessee had given an explanation, which is bonafide. There is no furnishing of inaccurate particulars of income or deliberate attempt to conceal income, hence, he rightly deleted the penalty in dispute. Even otherwise, we note that the addition on which the penalty in dispute was levied, has already been deleted by the ITAT 2016 (3) TMI 647 - ITAT DELHI , hence, the penalty in dispute will not survive. - Decided in favour of assessee.

Issues Involved:
1. Deletion of penalty under Section 271(1)(c) of the Income Tax Act.
2. Genuineness of expenditure claimed by the assessee.
3. Applicability of Section 40(a)(ia) for non-deduction of tax under Section 194H/194C.

Issue-wise Detailed Analysis:

1. Deletion of Penalty under Section 271(1)(c) of the Income Tax Act:
The Revenue appealed against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], which deleted the penalty of ?32,12,599/- imposed by the Assessing Officer (AO) under Section 271(1)(c). The CIT(A) held that there was no furnishing of inaccurate particulars of income or deliberate attempt to conceal income by the assessee. The Tribunal upheld this view, noting that the CIT(A) had elaborately adjudicated the issue, emphasizing that the appellant had furnished all particulars in respect of income earned and expenditure incurred. The AO did not state that the particulars furnished were inaccurate or that there was an attempt to furnish inaccurate particulars. The Tribunal also cited the Supreme Court's decision in CIT vs. Reliance Petroproducts (P) Ltd., which observed that making an incorrect claim in law does not tantamount to furnishing inaccurate particulars.

2. Genuineness of Expenditure Claimed by the Assessee:
The CIT(A) and the Tribunal both found that the payments made by the assessee to M/s Vikram Electric Equipment (P) Ltd. were genuine. The CIT(A) noted that the appellant had actually purchased land and made payments to the consolidator, and the nature of the payment was not in doubt. The only issue was whether the disallowance under Section 40(a)(ia) could be made for not deducting tax under Section 194H/194C. The Tribunal reiterated that in related cases, the genuineness of transactions with M/s Vikram Electric Equipment (P) Ltd. was not doubted, and the entity was recognized as genuine.

3. Applicability of Section 40(a)(ia) for Non-deduction of Tax under Section 194H/194C:
The CIT(A) and the Tribunal both concluded that the provisions of Section 194H or 194C were not applicable to the payments made to M/s Vikram Electric Equipment (P) Ltd. The Tribunal noted that in the assessee’s own case for the same assessment year, the ITAT had already adjudicated the issue and deleted the quantum addition. The Tribunal found that the payment to the consolidator was not for rendering services but was a mutually agreed price for the transfer of certain rights in the land. The Tribunal emphasized that M/s Vikram Electric Equipment (P) Ltd. was acting on a principal-to-principal basis, and hence, the provisions of Section 194H were not applicable. Consequently, no disallowance under Section 40(a)(ia) was warranted.

Conclusion:
The Tribunal upheld the CIT(A)'s decision to delete the penalty under Section 271(1)(c), finding no deliberate attempt by the assessee to conceal income or furnish inaccurate particulars. The genuineness of the expenditure was established, and the provisions of Section 194H/194C were deemed inapplicable. The appeal filed by the Revenue was dismissed.

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