2022 (7) TMI 626 - AT - Income Tax

Penalty u/s 271(1)(c) - non-deduction of tax at source from payment made for supply of water - disallowance of deduction claimed u/s 80G - HELD THAT - By looking into the facts and circumstances and the quantum involved in the appeal, we are of the considered opinion that, the assessee has not made any concealment of income to initiate the penalty proceedings. Therefore, we inclined to delete the penalty. - Decided in favour of assessee.

Summary

Issues:
1. Levy of penalty under section 271(l)(c) of the Income-tax Act, 1961 for disallowance under section 40(a)(ia) and section 80G.

Analysis:
1. The appeal was filed against the order passed by CIT(A) directing the levy of penalty under section 271(l)(c) for disallowance under section 40(a)(ia) and section 80G. The grounds of appeal included contentions about inaccurate particulars of income, sustaining penalties, and the validity of penalty proceedings initiation.

2. The Counsel for the assessee argued that most additions/disallowances were deleted by CIT(A) except for disallowances under sections 40(a)(ia) and 80G. The assessee chose not to appeal on these issues to avoid litigation. The Department challenged CIT(A)'s order, but the Tribunal dismissed the appeal. The Counsel emphasized that the tax was paid with interest, and there was no concealment of income to warrant penalty.

3. The Tribunal noted that the expenses incurred by the assessee for water supply were not disallowed in the return of income, and the tax auditor did not report any violations. The penalty was imposed for failure to deduct tax under section 194C, which was rectified by the assessee by depositing the TDS along with interest. The deduction claimed under section 80G was partially disallowed due to lack of documentary evidence, but the Tribunal agreed with the assessee that penalty should not be levied solely based on missing receipts for small donations.

4. Considering the facts and quantum involved, the Tribunal concluded that there was no concealment of income to justify penalty proceedings. Consequently, the penalty imposed by the Assessing Officer and confirmed by CIT(A) was deleted, and the appeal by the assessee was allowed.

5. The Tribunal pronounced the order on 12th July 2022, allowing the appeal and deleting the penalty imposed by the authorities.

This comprehensive analysis covers the issues of penalty levied under sections 40(a)(ia) and 80G, the arguments presented by both parties, the Tribunal's evaluation of the facts, and the final decision to delete the penalty.