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TMI Blog2021 (5) TMI 938X X X X Extracts X X X X X X X X Extracts X X X X ..... made to control risk, the same also does not impugned to FTS as per the provisions of Article 12(4) of India Singapore DTAA as the same does not result in making available technical knowhow to the recipient. Thus, these two elements upon which the penalty has been imposed by the Revenue Assessment Year contesting in nature and the assessee though has not opted for any appeal, it cannot be stated that these are the element of concealment of income and furnishing of inaccurate particulars. The case laws given by the assessee are clearly applicable in assessee s case specially that of Reliance Petroproducts Pvt. Ltd.[ 2010 (3) TMI 80 - SUPREME COURT ] . Hence we delete the penalty and allow the appeal of the assessee. - I.T.A. No. 2188/DEL/2017 (A.Y 2007-08) - - - Dated:- 22-3-2021 - SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER Appellant by: Sh. S. K. Aggarwal, CA And Sh. Piyush Gupta, CA Respondent by: Sh. Mahesh Thakur, Sr. DR ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by the assessee against order dated 01/02/2017 passed by CIT(A)-22, New Delhi for assessment year 2007-08. 2. The grounds of appeal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es made in the assessment order is merely due to difference of opinion. The CIT(A) further erred in observing that the fact of non-deduction of TDS on the payments made to non-residents was not disclosed in the return of income filed electronically. 7. That on the facts and circumstances of the case and in law the CIT (A) has failed to appreciate that the disallowance made by the Id. AO were debatable question of law and were subject matter of judicial interpretation. The CIT(A) failed to appreciate that the penalty cannot be levied in the case involving question of law in the light of decision of the Apex Court in the case of CIT vs Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR 158 (SC). 8. That on the facts and in the circumstances of the case and in law, the CIT(A) has failed to take cognizance of the decision of jurisdictional High Court in the case of Commissioner of Income-tax v. AT T Communication Services India (P.) Ltd (18 taxmann.com 144 (Delhi) wherein it has been held that a mere disallowance under section 40(a)(i) of the Act will not result in levy of penalty. 9. The above grounds of appeal are independent and without prejudice to one another. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance under section 40(a)(i) of the Act on account of recruitment and training expenses 1,401,295 Total 3,119,414 The assessee has not filed any appeal thereafter to the Tribunal in respect of quantum. In the meanwhile, the Assessing Officer initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961. The Assessing Officer passed penalty order dated 27 November 2013 under section 271(1)(c) of the Act and held that the assessee has concealed the particulars of its income and has also furnished inaccurate particulars of its income. The Assessing Officer levied penalty of 100 percent of the tax which works out to ₹ 10,49,995/-. 4. Being aggrieved by the penalty order, the assessee filed appeal before the CIT(A), the CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted in respect of penalty for disallowance of professional fees amounting to ₹ 17,18,119 for non-deduction of TDS, the assessee in order to buy peace with revenue and considering the time and cost involved in the litigation did not challenge the order passed by the CIT(A) order befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the details were submitted before the Assessing Officer and the CIT(A) in quantum proceedings and thus, the assessee has furnished correct particulars of income and never concealment any income. Besides this as relates to Penalty on disallowance of expenses debited to the account Recruitment and Training expenses amounting to ₹ 14,01,295 upheld by the CIT(A) for non-deduction of TPS in quantum proceedings, the Ld. AR submitted that during the year under consideration, the amount of ₹ 14,01,295 was paid to non-residents for movers and packers services in respect of expat employees seconded to the assessee company, which was debited under the head- Recruitment and Training expenses . The assessee duly withheld taxes on the expenses charged under the head- Recruitment and Training expenses , wherever applicable. In the assessment order, the Assessing Officer disallowed the entire amount changed under the head - Recruitment and Training expenses of ₹ 35,47,953. However, the CIT(A) restricted the disallowance to aforesaid expenses of ₹ 14,01,295 for non-deduction of TDS, ignoring the submission of the assessee that withholding was not required as it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12] 18 taxmann.com 144 (Delhi High Court) has held that disallowance under section 40(a)(i) cannot be a reason to impose penalty under section 271(1)(c) of the Act. Further, the Apex Court in the case of CIT vs Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR158(SC) has held that mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. The Ld. AR further submitted that in the matter under consideration, there is no Concealment of Income or furnishing of inaccurate particulars of income by the assessee. In this regard, the Ld. AR submitted that the words conceal means to hide, to keep secret. In Commissioner of Income-tax vs. Indian Metals And Ferro Alloys Limited reported in [1995] 211 ITR 35, it was held by the Hon ble Orissa High Court that the offence of concealment is thus a direct attempt to hide an item of income or a portion thereof from the knowledge of the income-tax authorities . The admission or rejection of a claim is a subjective exercise and whether a claim is accepted or rejected has nothing to do with furnishing of inaccurate particulars of income. What is a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of the claim of the assessee were furnished. Therefore, it cannot be said that the assessee was not able to substantiate its claim. The Ld. AR summarized its contentions as under: No particulars of income have been concealed; No inaccurate particulars of income has been furnished; The additions made during the assessment proceedings/ appellate Proceedings were on account of difference in opinion and debatable question of law; No evidence has been brought on record to establish that the assessee had acted deliberately or was guilty of contumacious conduct; The conditions provided under Explanation 1 to section 271(1)(c) are not satisfied in the present case of the Appellant. The Ld. AR further submitted that the assessee has not furnished any inaccurate particulars during the course of any proceedings. Further, the case of the assessee also does not fall within Explanation 1 to section 271 (l)(c) of the Act. In this regard, the Ld. AR submitted that the Hon ble Supreme Court in the case CIT vs. Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR158(SC) while deciding the matter in relation to an addition in respect of interest expenditure made during the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se laws relied upon by the assessee in this regard are as under:- a) Ananthram Veersinghaiah Co. [1980] (123 ITR 457 (Supreme Court) b) CIT vs. Chetan Dass Lachhman Dass (1995)214 1TR 726 (Delhi HC) c) CIT vs JK Synthetics Ltd (1996)219 ITR 267 (Delhi HC) d) CIT vs Dharmachand L. Shah (1993)204 ITR 462 (Bombay HC) e) CIT vs Ishtiaq Hussain (1998) 232 ITR 673 (Allahabad HC) IV) Disallowance under section 40(a)(i) cannot be a reason to impose penalty under section 271(l)(C)of the Act. Case laws relied upon by the assessee in this regard are as under: a) CIT v. AT T Communication Services India (P.) Ltd [2012] 18 taxmann.com 144 (Delhi High Court) held that Tribunal was justified in deleting levy of penalty upon assessee holding that disallowance of an amount by invoking provisions of section 40(a)(i) could not be a ground to levy penalty under section 271(1)(c) upon assessee. b) CIT v. Filtrex Technologies (P.) Ltd. [2015] 59 taxmann.com 371 (Karnataka High court) c) DCIT v. IndiahitCom (P.) Ltd [2007] 15 SOT 440 (Delhi ITAT) d) DCIT, New Delhi v. M/s Poddar Pigments Ltd [2014] ITA No. 2219/Del/2014 (Delhi - Tribunal) V) Merely non filing of appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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