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Income Tax Appellate Tribunal, DELHI BENCH ‘E’ : NEW DELHI
Before: SHRI KULDIP SINGH & SHRI PRASHANT MAHARISHI
PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, M/s. Bhawani Castings Private Ltd. (hereinafter referred to as the ‘assessee’) by filing the present appeal sought to set aside the impugned order dated 29.12.2015 passed by the Commissioner of Income-tax (Appeals)-2, New Delhi affirming the penalty order dated 22.08.2014 passed u/s 271(1)(c) of the Income-tax Act, 1961 (for short ‘the Act’), qua the assessment year 2011-12 on the grounds inter alia that :-
“1. That the order of the learned C.I.T.(A) is bad In Law and against the facts of the case.
That the assessee has not concealed any .particulars of Income during the year. Even otherwise the assessed loss was Rs.1,17,52,220/- and there could be no intention to conceal the Income. The disallowance of Interest was made only on account of deeming Provision u/s 40(a)(ia) of the Income Tax Act, 1961.
3. That on the facts and circumstances of the case, the learned C.I.T.(A) has erred in confirming penalty of Rs.4,32,290/- on the disallowance of Interest u/s. 40(a)(ia).” 2. Briefly stated the facts necessary for adjudication of the issue at hand are : On the basis of assessment framed under section 143 (3) of the Income-tax Act, 1961 (for short ‘the Act’) at the loss of Rs.1,31,95,685/- making disallowance of Rs.13,01,394/- on account of non-deduction of TDS on the interest payment, penalty proceedings have been initiated u/s 271(1)(c) of the Act. Declining the contentions raised by the assessee, Assessing Officer (AO) levied the penalty of Rs.4,32,290/- @ 100% for furnishing inaccurate particulars of income. 3. Assessee carried the matter by way of an appeal before the ld. CIT (A) who has confirmed the penalty by dismissing the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Undisputedly, assessee has failed to deduct TDS on the interest payment on all secured and unsecured loans of Rs.13,01,394/- made to various NBFC’s. It is also not in dispute that the assessment order passed in this case has since attained finality.
In the backdrop of the aforesaid facts and circumstances of the case, order passed by the lower authorities and arguments addressed by the authorized representatives of both the parties, the sole question arises for determination in this case is:-
“as to whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income during assessment proceedings?”
From the impugned assessment order as well as order passed by the ld. CIT (A), it is proved that the assessee has come up with consistent plea that under bonafide plea, the assessee has not deducted any TDS on interest payment made to NBFCs and that there was no reason on the part of the assessee to furnish inaccurate particulars as it did not affect the taxability nor there was any such motive to claim the expenditure.
Issue in controversy has already been set at rest by the Hon’ble Gujarat High Court in Nayan C. Shah vs. ITO (2016) 386 ITR 304 (Gujarat) and coordinate Bench of the Tribunal in New Horizon India Ltd. vs. DCIT (2011) 12 ITR (T) 332 (Delhi) by deciding the issue in favour of the assessee that merely submitting incorrect claim in law for expenditure would not amount to furnishing inaccurate particulars of income. 9. In the instant case, AO has levied the penalty for furnishing inaccurate particulars by the assessee for not making disallowance u/s 40(a)(ia) of the Act. It is the case of the assessee that under bonafide belief, no TDS is required to be deducted for interest payment to NBFCs and as such, there is no question of furnishing inaccurate particulars of income by the assessee. Even otherwise, in the audited finance, the entire payment has been quantified as inadmissible u/s 40(a)(ia) of the Act. Furthermore, when the assessee has brought on record all the necessary facts as to making the payment of interest to the NBFCs and also brought on record the fact that there was bonafide belief that no TDS was required to be deducted on the amount, it would not amount to furnishing of inaccurate particulars of income by any stretch of imagination even. Hon’ble Supreme Court in a case cited as Reliance Petro 10.
Products Pvt. Ltd. – 322 ITR 158 (SC) while interpreting the provisions contained u/s 271(1)(c) of the Act decided the identical issue in favour of the assessee. Operative part of which is reproduced for ready reference as under :-
“A glance at the provisions of section 271(1)(c) of the I.T. Act, 1961 suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word “particulars” used in section 271(1)(c) would embrace the detail of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous.
Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars.”
Following the decisions rendered by Hon’ble Supreme Court in 11. the case cited as Reliance Petro Products Pvt. Ltd. (supra), order of coordinate Bench of the Tribunal in New Horizon India Ltd. (supra) and Hon’ble Gujarat High Court in Nayan C. Shah (supra), we are of the considered view that the AO has failed to make out the case of furnishing inaccurate particulars of income by the assessee to levy penalty because at no point of time, the assessee has furnished inaccurate particulars of income rather made the claim under bonafide belief that no TDS is required to be deducted on the payment of interest to NBFCs, hence penalty levied by AO u/s 271(1)(c) of the Act and confirmed by ld. CIT (A) is ordered to be deleted and consequently, the appeal filed by the assessee is allowed. Order pronounced in open court on this 13th day of September, 2019.