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Income Tax Appellate Tribunal, DELHI BENCH: ‘D’ NEW DELHI
Before: SHRI N. K. BILLAIYA & MS SUCHITRA KAMBLE
This appeal is filed by the assessee against the order dated 06/02/2015 passed by CIT(A)-V, New Delhi for Assessment Year 2009-10.
The grounds of appeal are as under:-
“That the order dated 06-02-2015 passed u/s 250 of the Income- tax Act, 1961 by the Ld Commissioner of Income-Tax (Appeals) VIII, New Delhi is against law and facts on the file as much as he was not justified to partly uphold the action of the Ld Assessing Officer by directing him to compute the penalty with reference to the alleged concealed income of Rs. 15,76,767/- (comprising of Rs 15,76,038/- being disallowance u/s 40(A)(2)(b) of the Income-tax Act, 1961 and Rs 729/- on account of interest paid on late deposit of TDS which disallowances are not of a nature as to suggest either concealment of income or furnishing inaccurate particulars of income and as no such penalty is exigible in the facts & circumstances of the case.”
Assessment in this case was completed on 26.12.2011 u/s 143(3) at total income of Rs.5,03,13,520/- as against the return income of Rs 3,50,26,621/-. Addition was made of Rs. l,44,22,903/-on various heads. Following additions were made as under.
(1) Addition on a/c of commission paid to directors Rs. 60,00,000/-
(2) Addition on a/c interest disallowed being excessive and unreasonable as per the provision of Section 40A(2)(b) Rs. 63,04,151/-
(3) Addition on a/c of disallowance of depreciation Rs.1,99,324/- (4) Addition on a/c of disallowance of additional Depreciation Rs.19,18,699/- (5) Addition on a/c of interest paid on late deposit Of TDS Rs. 729/-
Penalty proceedings u/s 271(1)(c) were initiated by issue of notice u/s 271(1)(c) read with section 274 dated 26.12.2011 fixing the case of hearing on 31.01.2012. The assessee filed reply that penalty proceedings should be kept in abeyance till the disposal of appeal filed by the assessee company. As regards the additions/disallowances made by the Assessing Officer, the assessee preferred an appeal before the CIT(A) who vide order dated 08.02.2013 deleted the addition of Rs.8,64,000/- on a/c of salary and bonus and confirmed the additions of Rs. 1,44,22,903/-. A show cause notice u/s 271(1)(c) dated 24.02.2014 was issued to the assessee. The Assessing Officer passed penalty order by imposing the penalty of Rs. 49,03,000/- by holing that the assessee furnished concealed income or inaccurate particulars of income on account of commission paid to Directors, interest disallowance as per the provisions of Section 40A(2)(b), disallowance of depreciation, disallowance of additional depreciation and on account of interest paid on late deposit to TDS.
Being aggrieved by the penalty order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. The assessee filed the present appeal in respect of the penalty of Rs. 15,76,767/- comprising disallowance u/s 40A(2)(b) and Rs. 729/- on account of interest paid on late deposit of TDS.
The Ld. AR submitted that in respect of commission paid to Directors, interest disallowance as per the provisions of Section 40A(2)(b) and on account of interest paid on late deposit of TDS, the additions made in the assessment order dated 26/11/2012 were not of a nature which can lead to a conclusion as to the furnishing of inaccurate particulars of income or that of concealment of income so as to invite penal action u/s 271(1)(c) of the Income Tax Act, 1961. The CIT(A) while deleting the penalty partly, confirmed the penalty for disallowance u/s 40A(2)(b) and on account for interest paid of late deposit of TDS which is not concealment or inaccurate furnishing of particulars of income.
The Ld. DR relied upon the penalty order and order of the CIT (A).
We have heard both the parties and perused the material available on record. It is pertinent to note that the Assessing Officer has not made out any case as to which limb of the Section 271(1)(c) has not been compiled by the assessee. There is no specific provision as to concealment of income or inaccurate furnishing of particulars of income has been set out in the penalty order. Merely, addition has been made does not attract penalty. Therefore, it will be appropriate to set aside the order of the CIT(A) in respect of the penalty confirmed regarding disallowance 40A (2)(b) and late payment of interest deposits on TDS. Therefore, the appeal of the assessee is allowed.
In result, the appeal of the assessee is allowed.
Order pronounced in the Open Court on 15th JANUARY, 2019.