2017 (4) TMI 514 - AT - Income Tax

Penalty under Section 271(1)(c) - Disallowance under Section 40(a)(ia) towards non-deduction of TDS on interest payment to Reliance Consumer Finance and Capital contribution - Held that - There is a variation in the figure of confirmed concealed income in the impugned order. We also observe that at the time of completion of assessment under Section 143(3) addition of ₹ 7,65,000/- was made towards unexplained capital contribution. But when the issue came up before the ld. CIT(A), it was contended that out of ₹ 7,65,000/-, ₹ 7,50,000/- was a loan received from Reliance Consumer Finance in the personal capacity and was accordingly introduced as capital in the firm and balance sum of ₹ 15,000/- was transferred from Savings Bank account of the partners held with Dena Bank to the account of the assessee-firm. Ld. CIT(A) admitted the additional evidence furnished by the assessee in relation to the alleged sum of ₹ 7,65,000/- and directed the Assessing Officer to verify the genuineness of these two documents and if they are found correct, he has also directed the Assessing Officer to delete the impugned addition. However, during the course of hearing before us, it was submitted that till date no opportunity has been provided by the Assessing Authority calling for necessary details so that the assessee can prove the genuineness of the unexplained cash credit of ₹ 7,65,000/-. This fact has also not been controverted by the ld. Departmental Representative. We also observe that the impugned addition of ₹ 4,56,455/- under Section 40(a)(ia) of the Act is towards the non-deduction of TDS on the payment of interest to Reliance Consumer Finance which is well observed in para 4.2 of the of the order under Section 143(3) of the Act, which further adduce the fact that there is a loan from Reliance Consumer Finance. We are of the considered view that penalty under Section 271(1)(c) of the Act needs to be framed afresh as the present order is having lots of deficiencies in form of variation of figures, and also it is not complying to the directions of ld. CIT(A) in the quantum appeal orders - Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
Appeal against penalty under Section 271(1)(c) of the Income-tax Act, 1961 for Assessment Year 2008-09. Delay in filing appeal condoned. Grounds raised by the assessee challenging penalty imposition. Discrepancies in penalty order by the Assessing Officer. Disallowance under Section 40(a)(ia) and unexplained capital contribution.

Analysis:

1. Delay Condonation: The appeal was initially time-barred by 40 days, but the delay was condoned by the Appellate Tribunal as the assessee had a reasonable cause for the delay due to misplaced documents necessary for filing the appeal. The Tribunal admitted the appeal for adjudication.

2. Grounds Raised by Assessee: The assessee challenged the penalty imposed under Section 271(1)(c) by the Assessing Officer. The grounds included contentions regarding the assessment made by the CIT(A), specifically questioning the penalty on non-deduction of TDS, confirmation of penalties on various additions, and the pending rectification application under Section 154 of the Act.

3. Discrepancies in Penalty Order: The Tribunal noted discrepancies in the penalty order issued by the Assessing Officer. There were contradictions in the figures of confirmed concealed income mentioned in different paragraphs of the order. The penalty was imposed on a higher concealed income amount than the confirmed additions, indicating errors in the penalty calculation.

4. Disallowance under Section 40(a)(ia) and Unexplained Capital Contribution: The Tribunal observed that the disallowance under Section 40(a)(ia) and the unexplained capital contribution needed further verification and clarification. The issue of non-deduction of TDS on interest payment and the unexplained capital contribution required proper assessment and verification by the Assessing Officer.

5. Decision and Directions: Considering the deficiencies in the penalty order and the discrepancies in the figures, the Tribunal set aside all issues raised in the appeal and directed the Assessing Officer to frame the penalty order afresh under Section 271(1)(c) of the Act. The assessee was to be given an opportunity to provide necessary evidence and be heard during the process.

6. Outcome: The appeal of the assessee was allowed for statistical purposes, indicating that the decision was made to set aside the penalty order and have it re-evaluated by the Assessing Officer to rectify the errors and ensure compliance with the directions given by the CIT(A) in the quantum appeal orders.