AMJAY MEDIMAX INDIA PVT.LTD.,,AHMEDABAD vs. THE DCIT.,CIRCLE-1(1)(1),, AHMEDABAD

The assessee has raised the following ground of appeal :

The assessment was finalised under Section 143(3) of the Income Tax Act, 1961 vide order dated 01.12.2011 assessing total income at Rs.2,95,50,908/- as against returned income of Rs.2,63,31,960/- after making following additions/disallowances:

Penalty proceedings under Section 271(1)(c) were initiated for furnishing of inaccurate particulars of income/concealment of income. Accordingly, a notice under Section 274 read with Section 271(1)(c) of the Act dated 01.12.2011 was issued to the assessee. Being aggrieved by the assessment order, the assessee preferred appeal before the CIT(A) and the CIT(A) vide order dated 11.07.2012 deleted the addition made on account of employees’ contribution of PF and upheld the rest additions/disallowances. Against the order of the CIT(A) the assessee filed appeal before the Tribunal ITA No.1950/Ahd/2012. The Tribunal vide order dated 18.04.2017 granted partial relief to the assessee thereby deleting the disallowances under Section 14A read with Rule 8D and under Section 40(a)(ia) of the Act. The Tribunal upheld the additions related to interest income and disallowance under Section 40(a)(ia) amounting to Rs.94,385/-. At the time of penalty proceedings the Assessing Officer held that the assessee furnished inaccurate particulars of income in respect of the income to the tune of Rs.94,385/- and has concealed the income to the tune of Rs.6,13,616/- in respect of interest income and therefore imposed penalty of Rs.2,18,772/-.

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 Ld. A.R. submitted that the penalty can be sustained only if the assessee has furnished inaccurate particulars of income or concealed the income but in the present case the assessee has given all the details at the time of assessment proceedings and the same cannot be said that while filing the return of income thereby not giving the proper explanation relating to Section 40(a)(ia) of the Act in relation to the amount paid on which the tax was not deducted at source should come under purview of Section 271(1)(c) of the Act. Ld. A.R. relied upon the decision of Hon’ble High Court of Gujarat in the case of Nayan C. Shah vs. ITO, 386 ITR 304.

We have heard both the parties and perused the relevant material available on record. Ld. A.R. relied upon the decision of the jurisdictional High Court in the case of Nayan C. Shah (supra) where the issue was similar to the present assessee’s case. The Hon’ble High Court observed/held as under :-

From the perusal of the decision of the Hon’ble Jurisdictional High Court, which relied upon the decision of Hon’ble Apex Court in the case of CIT vs. Reliance Petroproducts (P) Ltd., 322 ITR 158 while invoking Section 271(1)(c) the concealment of particulars of income of the assessee has to be properly seen in the context of the additions made. By making inaccurate claim for not deducting tax at source does not tantamount to concealment of particulars of income or furnishing of inaccurate particulars of income. Merely submitting incorrect claim would not amount to furnishing of inaccurate particulars of income. In fact, notice has also not given a particular limb of Section 271(1)(c) of the Act. Therefore, the assessee cannot be penalised for any of the charge when the Assessing Officer has not made out as to exactly what was the inaccurate furnishing of particulars of income/concealment of income. Thus, the Assessing Officer was not right in imposing the penalty and the

In the result, appeal of the assessee is allowed.