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Income Tax Appellate Tribunal, DELHI BENCHES : SMC-I : NEW DELHI
Before: SHRI R.S. SYAL
ORDER This appeal by the Revenue arises out of the order passed by the CIT(A) on 25.6.2014 deleting the penalty of Rs.4,58,148/- imposed by the AO u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2010-11.
I have heard the ld. DR and perused the relevant material on record. There is no appearance from the side of the assessee despite notice. I am, therefore, proceeding to dispose of this appeal ex parte qua the assessee.
It is observed that the assessee paid Commission of Rs.14,65,940/- and incurred Advertisement expenses amounting to Rs.53,688/-.
Deduction was claimed for these two expenses. The AO disallowed these two expenses on the ground that tax was required to be deducted at source u/s 194H and 194C, respectively for these payments, which was not done. He, therefore, made disallowance u/s 40(a) (ia) in respect of these amounts. Thereafter, penalty was imposed which came to be deleted in the first appeal.
It is observed that the very basis of penalty is disallowance of two expenses for non-deduction of tax at source. Section 271(1)(c) can be invoked where the assessee conceals his income or furnishes inaccurate particulars of his income. Here is a case in which the assessee claimed deduction after due payment of these two expenses and this fact was properly disclosed which has not been disputed by the AO. The mere fact that the assessee did not deduct tax at source may be a good ground for disallowance in assessment, but cannot under any circumstance be considered as a case justifying imposition of penalty u/s 271(1)(c). I, therefore, approve the view taken by the ld. CIT(A) on this score.
In the result, the appeal is dismissed.
The order pronounced in the open court on 30.09.2015.