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TMI Blog2014 (2) TMI 1335X X X X Extracts X X X X X X X X Extracts X X X X ..... the same has not been challenged, however this does not lead to any inference that assessee is liable for levy of penalty for either furnishing of any inaccurate particulars or for concealment of particulars of income. The disallowance is purely based on adhoc basis, dehors any adverse material on record, therefore, no penalty is warranted u/s 271(1)(c) on adhoc disallowance of the expenses claimed by the assessee in the profit & loss account. Disallowance u/s 40(a)(ia), on account of payment of technical and professional fees and publicity expenses, it is seen from the record that the AO has made the disallowance on the ground that TDS has not been deducted on such payment - The disallwoance has been made merely on account of technica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 271(1)(c). Hence on this disallwoance also no penalty is warranted. - Assessee appeal allowed. - ITA NO.6306/Mum/2011 - - - Dated:- 21-2-2014 - SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER Assessee by Shri K.K.Lalkaka Revenue by Shri Ashok Suri ORDER PER AMIT SHUKLA, JM This appeal has been preferred by the assessee against the order dated 10.08.2011 passed by CIT(Appeals)-3, Mumbai, in relation to the penalty proceedings u/s 271(1)(c) for the assessment year 2005-06. The assessee in this appeal has raised following grounds to challenge the impugned order:- 1. On the facts and in the circumstances of the case and in law, the learned CIT(Appeals) has failed to appreciate that show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has claimed a sum of ₹ 22,05,138/- as technical and professional expenses and ₹ 3,00,000/- as publicity expenses. The AO noted that on these payments, the assessee has not deducted TDS as required and accordingly he made disallowance u/s. 40(a)(ia). He further noticed that assessee has claimed various film production expenses and administrative expenses which were not open to full verification, accordingly he made adhoc disallowance @ of 20%, aggregating to ₹ 9,83,145/-. Further the AO noted that assessee has claimed preliminary expenses written off of ₹ 9,700/- u/s 35D. As per the provisions of section 35D, total allowability is restricted to 2.5% of the capital employed and in the assessee s case the capital em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for sums aggregating to ₹ 25,05,138/-, he submitted that the genuineness of these expenses and quantum of payments has not been doubted. The disallowance has been made only on account of technical default of non deduction of TDS, for which there is a separate provision for levy of interest and penalty under the Act. Regarding the preliminary expenses also, he submitted that the entire information were furnished with regard to the claim of preliminary expenses, therefore, it cannot be held that inaccurate particulars have been furnished by the assessee. 7. Ld. DR on the other hand strongly relied upon the observation and finding of Ld. CIT(A) and submitted that during the course of assessment proceedings, the assessee could not furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quantum of payment have not been disputed at all. The disallwoance has been made merely on account of technical default of non deduction of TDS. Under the Income Tax Act, failure to deduct TDS, entails levy of interest and penalty under different provisions of the Act and certainly not u/s 271(1)(c), which can be levied only if the assessee has concealed particulars of his income or has furnished inaccurate particulars of income. In this case assessee has neither furnished any inaccurate particulars of income nor has concealed any particulars of income because all the details of expenses, genuineness of the payment and quantum has been accepted. Once the payments made to professional and technical persons have not been doubted and on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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