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TMI Blog2018 (6) TMI 1095X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation 1A of the Income Tax Act, without properly appreciating the factual and legal matrix as clearly brought out by the Assessing Officer. (ii) The learned CIT(A) erred in cancelling penalty levied u/s 271(l)(c) r.w. Explanation 1A of the Act on the disallowance u/s 40(a)(ia) of the Act, without appreciating that the impugned penalty imposed was on account of default hi deduction of tax at source on management fees paid and that the assessee had filed inaccurate particulars which had the effect of reducing its tax liability. 2. The brief facts of the case are that the assessee company is engaged in the business of cable network services, filed its return of income for AY 2011-12 on 29-09-2011 declaring total loss of Rs. 2,44,43 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate attempt to furnish inaccurate particulars of income so as to evade payment of taxes. The AO, after considering submissions of the assessee observed that as per Explanation (1A) of section 271(1)(c), any person, who failed to offer valid explanation, the amount added directly on indirectly to the total income of an assessee is deemed to represent the income of which particulars of income is concealed by the assessee. Since the assessee has not offered any valid explanation for the penalty valid explanation for the default, the AO opined that the assessee has deliberately concealed particulars of income by furnishing inaccurate particulars of income by furnishing inaccurate particulars with an intention to evade tax liability and hence it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd vs ACIT in ITA No.6036/Mum/2011 dated 21-02-2014 held that no penalty can be levied u/s 271(1)(c) if the assessee has filed necessary details alongwith return of income in respect of disallowance made u/s 40(a)(ia). The CIT(A) further observed tht once genuineness of the expenses and quantum of payment have not been doubted and disallowance has been made on the ground of technical or venial breach, for non deduction of tax at source, would not automatically leads to imposition of penalty u/s 271(1)(c); therefore, opined that no penalty can be levied for addition of Rs. 5 crores made u/s 40(a)(ia) of the Act for failure to deduct TDS. However, confirmed penalty levied by the AO in respect of disallowance in respect of addition made towa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.4 crores u/s.40(a)(ia) of the Act, is cancelled. 3.2 During the appellate proceedings, the Ld.AR, has submitted that lenient view can be taken against the addition made on account of discrepancies in the AIR statement, however, no reconciliation statement could be filed, even during the proceedings, therefore the contention of the Ld.AR is not acceptable and penalty against this addition is confirmed as evidently there is an instance of filing inaccurate particulars of income resulting into concealment of income. Similarly, no submission is made regarding the additions made on account of 40(a)(7) of the Act. As per the copy of the assessment order filed during the course of appellate proceedings, it is noted that the auditor has noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income and also the auditor has qualified such disallowance in his tax audit report. At the best, the mistake committed by the assessee can be considered as a human error for which rigors of provisions of section 271(1)(c) cannot be invoked. The CIT(A), after considering relevant submissions has rightly deleted penalty levied u/s 271(1)(c) and his order should be upheld. 7. We have heard both the parties and perused the materials available on record. The factual matrix of the case which lead to levy of penalty u/s 271(1)(c) are that during the financial year relevant to AY 2011-12, the assessee has paid management fees to Wire and Wireless India Ltd and M/s Tisai Satellite Services amounting to Rs. 5.4 crores without deduction of tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty provisions u/s 271(1)(c) if such disallowance is made for technical of venial breach of TDS provisions. The Hon'ble Supreme Court in the case of Pricewater Cooper Pvt Ltd vs CIT (supra) held that penalty for concealment cannot be levied in case of bona fide / inadvertent / human error. The Hon'ble Gujarat High Court in the case of CIT vs L.G. Choudhari (2013) 33 Taxman.com held that where the expenditure is disallowed due to failure to deduct TDS or late deposit of TDS, no penalty is leviable u/s 271(1)(c) on the ground that disallowance shall, at the most, a technical default, there being nothing to indicate any concealment of income. The coordinate bench of ITAT, MumbaI Bench "E" in the case of Satyajeet Movies Pvt Ltd (supra) hel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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