2020 (12) TMI 5 - AT - Income Tax

Penalty u/s 271(1)(c) - excessive retainership expenses and not supported by the evidences and difference in the income as per TDS claimed in return of income and 26AS - HELD THAT - Keeping in view the conduct and nature of the assessee that he has filed the appeal, but failed to appear before us on the aforementioned dates nor submitted any documents in support of his appeal nor appointed any authorized representative to appear on his behalf. There are no reasons for us to interfere into or deviate from the findings so recorded by CIT(A). Hence, we are of the considered view that the findings so recorded by the CIT (A) are judicious and are well reasoned. Resultantly, the grounds raised by the assessee stands dismissed.

Summary

Issues Involved:
1. Disallowance of 40% of retainership expenses.
2. Addition due to discrepancy in TDS as per return of income and 26AS.
3. Levy of penalty under section 271(1)(c) and interest under sections 234A/B of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Disallowance of 40% of Retainership Expenses:
The assessing officer (AO) disallowed 40% of the total retainership expenses amounting to ?63,93,330/- out of ?1,59,83,328/-, citing the expenses as excessive and unsupported by evidence. The assessee argued that these payments were genuine, made to temporary staff for client liaison work, and supported by cash vouchers. However, the AO found the evidence inconclusive and noted the lack of supporting documents like bank statements and identity proofs of the temporary staff. The Commissioner of Income Tax (Appeals) [CIT(A)] reduced the disallowance to 30%, amounting to ?47,94,998/-, granting relief of ?15,98,332/- to the assessee. The Appellate Tribunal upheld the CIT(A)'s decision, finding it judicious and well-reasoned.

2. Addition Due to Discrepancy in TDS:
The AO added ?3,77,971/- to the income due to a discrepancy between the TDS claimed in the return of income and the TDS reflected in Form 26AS. The CIT(A) confirmed this addition, stating that it was not a case of double taxation but a genuine discrepancy. The Tribunal agreed with the CIT(A) and dismissed the assessee's appeal on this ground.

3. Levy of Penalty Under Section 271(1)(c) and Interest Under Sections 234A/B:
The appeal did not contest the penalty imposed under section 271(1)(c). Regarding the interest levied under sections 234A and 234B, no submissions were made by the assessee. Consequently, the Tribunal dismissed this ground but directed the AO to levy consequential and mandatory interest as applicable.

Conclusion:
The Tribunal dismissed the appeal filed by the assessee, upholding the CIT(A)'s order. The Tribunal found no reason to interfere with the CIT(A)'s findings, which were deemed judicious and well-reasoned. The order was pronounced beyond the standard 90-day period due to the exceptional circumstances of the COVID-19 lockdown, following judicial precedents that allowed for such extensions.