INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Leviability - Fact of non-deduction of tax at source disclosed in tax audit report itself -

AO came to know about the non-deduction of tax at source from the tax audit report and made disallowance under section 40(a)(ia) and initiated penalty proceedings under section 271(1)(c) alleging furnishing of inaccurate particulars of income. Assessee contended that it could not be accused of furnishing of inaccurate particulars of income since in the tax audit report itself the auditor had reported that the amount was disallowable under section 40(a)(ia). It further contended that non-disallowance of expenditure was due to bona fide mistake on its part. Held: Since the assessee had furnished full particulars about the expenditure incurred including the fact of non-deduction of tax at source in the tax audit report itself, it could not be accused of furnishing inaccurate particulars of income. Therefore, contention of assessee that failure to disallow the amount under section 40(a)(ia) was due to a bona fide mistake was acceptable. Hence, no penalty could be levied under section 271(1)(c).

Relied on:Price Waterhouse Coopers (P.) Ltd. v. CIT (2012) 348 ITR 306 (SC): 2012 TaxPub(DT) 2967 (SC)

REFERRED : Nayan C. Shah v. ITO (2016) 386 ITR 304 (Guj.): 2016 TaxPub(DT) 1955 (Guj-HC),M/s. Netambit Value First Services (P) Ltd. v. DCIT [ITA No. 1704/Del./2016, dated 16-2-2018] : 2018 TaxPub(DT) 1423 (Del-Trib),Tanushree Basu v. ACIT [ITA No.2922/Mum./2012, dated 22-5-2013] : 2014 TaxPub(DT) 1326 (Mum-Trib)

FAVOUR : In assessee's favour.

A.Y. : 2014-15

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