2018 (1) TMI 1744 - AT - Income Tax

Penalty u/s 271(1)(c) - disallowance u/s 40(a)(ia) - assessee has made certain payments without deducting tax at source - HELD THAT - We have gone through the record and have also heard the Ld. DR on the issue who relied on the order of the CIT(A) and we find that it is not a case of concealment of income or furnishing inaccurate particulars of income as the assessee has shown in the audit report about the non deduction of TDS and also accepted the bonafide mistake of not adding the disallowance to the total income before the AO - we hereby order that the penalty levied by the AO to be deleted. Appeal of the assessee is allowed.

Summary

The appeal was filed against the order of the Ld. CIT(A)-2 Ludhiana confirming the penalty under section 271(1)(c) for disallowance under section 40(a)(ia). The AO noted non-deduction of TDS by the assessee, leading to the disallowance and penalty. The assessee claimed oversight as the reason for not adding the disallowance to the return of income. The Tribunal ruled in favor of the assessee, citing bonafide belief and precedents, and deleted the penalty.