C.S. Datamation Research Services (P) Ltd. v. ITO

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The Tax Publishers2020 TaxPub(DT) 2499 (Del-Trib)

INCOME TAX ACT, 1961

Section 271(1)(c)

Failure to strike off irrelevant words in penalty notice issued under section 274 read with section 271(1)(c) made the notice defective and no penalty could be levied on the basis of such notice especially when subject matter of levy of penalty being disallowance under section 43B on account of non-payment of service tax liability when same had not been debited to Profit & Loss Account nor claimed as an expenditure, had become a debatable issue.

Penalty under section 271(10)(c) - Concealment or furnishing of inaccurate particulars - Defective notice and debatable issue -

AO levied penalty under section 271(1)(c) as regards disallowance made under section 43B on account of non-payment of service tax liability. Assessee challenged this on the ground of non-mention of particular charge of offence in penalty notice. Further, assessee submitted that when assessee did not deposit part of service tax collections with concerned authoriteis and had neither claimed any deduction in this regard nor did it debit the same as an expenditure in Profit and Loss Account, no disallowance under section 43B could be made. Held: A perusal of notice issued under section 274 showed that inappropriate words in said notice had not been struck off. It did not specify as to under which limb of section 271(1)(c) penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. Even the last line of the said notice only spoke of section 271 and did not even mention section 271(1)(c). Further, disallowance under section 43B on account of non-payment of service tax liability when same had not been debited to Profit & Loss Account nor claimed as an expenditure, had become a debatable issue and, accordingly, penalty under section 271(1)(c) was not leviable.

Relied:Sahiwal Investment & Trading Co. v. ITO, vide [ITA No. 4913/Del/2015 for assessment year 2006-07, order dt. 18-7-2018] : 2018 TaxPub(DT) 4723 (Del-Trib), Sanjay Mittra v. Dy. CIT, [ITA No. 5206/Del/2016, order dt. 1-10-2018] : 2018 TaxPub(DT) 6513 (Del-Trib) and CIT v. Noble & Hewitt (I) P. Ltd. (2008) 305 ITR 324 (Del) : 2008 TaxPub(DT) 0983 (Del-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

IN THE ITAT, DELHI BENCH