2018 (12) TMI 1378 - AT - Income Tax

Penalty levied u/s 271(1)(c) - disallowance u/s 43B because of technical reason of non payment of the amount before the due date of filing the return of income under section 139(1) - Held that - Once all the relevant details which were disclosed by the assessee in the return of income and books of account were found to be correct, then the case would not fall in the category of furnishing inaccurate particulars of income or concealment of income. It is also not in dispute that the VAT was due and payable and, therefore, the same is an allowable business expenditure except the condition under section 43B that the assessee has to pay the said amount on or before the due date of filing the return of income under section 139(1). Once the claim of the assessee is not found to be bogus or false but because of the reason that the assessee could not pay the amount as required under section 43B, the same was to be disallowed. The disallowance under section 43B is only because of technical reason of non payment of the amount and not because of the reason that the claim itself is not an allowable claim - there will be no revenue effect due to the disallowance made for the year under consideration and the claim was allowed in the subsequent year except on account of interest. As relevant details and facts were disclosed by the assessee and available before the AO during the course of assessment proceedings, then the mere disallowance under section 43B would not amount to concealment of income or furnishing inaccurate particulars of income attracting the levy of penalty under section 271(1)(c). Hence, we delete the penalty levied by the AO on this account. - Decided in favour of assessee.

Summary

Issues:
Penalty under section 271(1)(c) of the IT Act for assessment year 2013-14 based on disallowance under section 43B for non-payment of VAT.

Analysis:
The appeal was against a penalty order under section 271(1)(c) of the IT Act for the assessment year 2013-14. The assessee declared a loss of ?5,62,668 and showed VAT payable at ?5,55,346 without proof of payment. The AO made an addition under section 43B and imposed a penalty of ?1,72,000. The assessee voluntarily disallowed the VAT in the revised computation of income. The assessee argued that the disallowance was due to non-payment before the due date and was later paid, thus no concealment of income. The AO claimed it was inaccurate particulars. The Tribunal noted that the assessee disclosed all facts and the disallowance was technical due to non-payment, not false claim. The disallowance had no revenue effect, as it was allowed in the subsequent year. Citing Supreme Court decisions, the Tribunal held that no penalty was warranted under section 271(1)(c) as no inaccurate particulars were furnished.

The Tribunal found that the assessee had provided complete details regarding the deduction under section 43B in the Tax Audit Report and income computation. It was a matter of opinion on allowance, not concealment. Relying on Supreme Court precedent, the Tribunal confirmed the CIT(A)'s decision to delete the penalty. Since all relevant details were disclosed to the AO, the disallowance under section 43B did not amount to concealment or furnishing inaccurate particulars, leading to the deletion of the penalty.

Therefore, the penalty under section 271(1)(c) was deleted as the disallowance under section 43B was not a case of concealment or furnishing inaccurate particulars, but a technical issue of non-payment before the due date. The appeal of the assessee was allowed, and the penalty was dismissed.