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Before: SHRI S.V. MEHROTRA & MS. SUCHITRA KAMBLE
ORDER PER SUCHITRA KAMBLE, JM
This appeal is filed by Revenue against the order dated 4/10/2011 by the Revenue passed by the Ld. CIT(A) XVII, New Delhi. 2. The grounds of appeal are as follows:-
“1. Whether on the facts and circumstances of the case the Ld. CIT(A) has erred in law and on facts by deleting the penalty u/s 271(1)(c), as the assessee was well aware of the facts pointed out in the Audit report that the payments of TDS on contract work and payment of Services tax was made after the filing of return of income.
Whether on the facts and circumstances of the case the Ld. CIT(A) has erred in law and on fcts by deleting the penalty u/s 271(1)(c), as the assessee failed to add back these amounts in the return of income filed, as these were in violation of SESction 40 (1a) of the I. T. Act, 1961.
Whether on the facts and circumstances of the case the Ld. CIT(A) has erred in facts by deleting the penalty u/s 271 (1) (c), as the assessee knowingly furnished inaccurate particulars of income.
2. In this case, the assessment was completed at Rs.1,35,17,790/- on 29/3/2007 as against the return income of Rs.56,76,930/- and penalty proceedings were initiated in the assessment order. The CIT(A) confirmed the addition made on account of disallowance of contract payment amounting to Rs.42,26,088/-, disallowance of late deposit of service tax u/s 43B at Rs. 15,71,870/- , disallowance of expenses incurred on Mercedes Cars at Rs.3,51,261/-. This order of CIT (A) was confirmed by ITAT. The Assessing Officer issued show cause notice on 15/3/2010 by fixing the date of hearing but no reply was filed by the assessee. As a result, the Assessing Officer levied a penalty of Rs.20, 63,092/- @ 100% of the tax sought to be evaded on 31/3/2010. The CIT (A) held that the assessee claimed deduction in the return income for A.Y 2005-06 and filed audit report with the same. The CIT(A) observed that the amount of TDS was deposited late. In the audit report it was also mentioned that Service Tax and Provident Fund (PF) was not deposited by the assessee on time. The Assessing Officer made disallowances of TDS, Service Tax and Provident Fund on the basis of information contained in the audit report. The CIT(A) further held that the assessee did not concealed any part of his income or filed inaccurate particulars of income relevant to A.Y 2005-06. The additions were made on account of unpaid TDS, Provident Fund and Service Tax cannot be considered as concealed income or inaccurate particulars and on the basis of such penalty cannot be levied. Therefore, the CIT(A) deleted the penalty levied in the case of the assessee.
The Ld. DR submitted that the Assessing Officer has rightly levied the penalty and he has relied upon the order of the Assessing Officer. The Ld. DR further submitted that by claiming these deductions in subsequent year are in appropriate and inaccurate return.
The Ld. AR relied upon the CIT(A)’s order and submitted that TDS and Service Tax was submitted late but the same was done much prior to the disallowance. The assessee also relied upon the judgment of PWC vs. CIT 2012 25 Taxman.com 400 (S.C) wherein it was held in para 19 as under:
“19. The contents of the Tax Audit Report suggest that there is no question of assessee concealing its income. There is also no question of the assessee furnishing any inaccurate particulars. It appears to us that all that has happened in the present case is that through a bona fide and inadvertent error, the assessee while submitting its return, failed to add the provision for gratuity to its total income. This can only be described as a human error which we are all prone to make. The caliber and expertise of the assessee has little or nothing to do with the inadvertent error. That the assessee should have been careful cannot be doubted, but the absence of due care, in a case such as the present does not mean that the assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income.”
The Hon'ble Supreme Court further held that the imposition of penalty on assessee is not justified and satisfied that the assessee had committed inadvertent and bonafide error and had not intended to or attempted to either conceal its income or furnish inaccurate particulars.
The Ld. AR further submitted that the late payment of TDS and Service Tax was due to the error of the assessee’s Chartered Accountant and thus it was a human error. Therefore, CIT (A) rightly set aside the penalty order.
7. We have perused all the records and heard both the parties. In the present case, the tax audit report clearly gives the picture that there was none submission of TDS, Service Tax and Provident Fund by the assessee and this information was known to the Assessing Officer and there was no concealment or inaccurate information given by the assessee. We have gone through the judgment given by the Apex Court in the case of PWC, the ratio of the said judgment will clearly apply in the present case as there was a human error committed by the Chartered Accountant in the present case as well. The Ld. CIT (A) rightly set aside the penalty order passed by the Assessing Officer.
In the result, the Revenue’s appeal is dismissed.