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Rushi Builders and Developers Hotel Bay View, Gorai Khadi, L. T. Road, Borivali (W), Mumbai-400 091 Vs. Asst. CIT-15(3), Mumbai
March, 09th 2015

      . .  ,       ,                                      

                     ./I.T.A. No. 6684/Mum/2012
                    (   / Assessment Year: 2007-08)

Rushi Builders and Developers                      Asst. CIT-15(3),
Hotel Bay View, Gorai Khadi,                       Mumbai
L. T. Road, Borivali (W),                 /
Mumbai-400 091                            Vs.

     . /  . /PAN/GIR No. AAHFR 4343 J
         ( /Appellant)                       :            (     / Respondent)

         / Appellant by                      :    None

           /Respondent by                    :    Shri Love Kumar

                           /                 :    04.03.2015
                     Date of Hearing
                                             :    04.03.2015
           Date of Pronouncement

                                    / O R D E R
Per Sanjay Garg, Judicial Member :

       The present appeal has been preferred by the assessee against the order of the ld.
CIT(A)-26 dated 13.08.2012. The assessee has agitated the sustaining of the levy of
penalty at Rs.3,83,890/-.

2.     The brief facts of the case are that during the assessment proceedings it was
observed by the A.O. that the assessee had claimed deduction of interest expenses of
Rs.11,40,492/- without deducting TDS. He, therefore, made a disallowance of the said
                                                  ITA No. 6684/Mum/2012 (A.Y. 2007-08)
                                                    Rushi Builders and Developers vs. Asst. CIT

expenditure as per the provision of section 40(a)(ia) of the Act. The penalty proceedings
u/s.271(1)(c) of the Act were also initiated. In the penalty proceedings, the assessee
submitted before the A.O. that there was only a technical lapse on the part of the assessee
in non production of proof of Forms No. 15G, which were misplaced and not traceable.
The assessee also submitted that certain payments of interest were made to HUF's and
the assessee was under bona fide belief that the payments of interest to HUF did not call
for any deduction of tax at source. The A.O., however, did not agree with the submissions
of the assessee and held that the assessee had furnished wrong particulars of income and
thereby had concealed its income. He, therefore, levied the impugned penalty
u/s.271(1)(c) of the Act.

3.     In the first appeal, the ld. CIT(A) confirmed the penalty so levied by the A.O. The
assessee is thus in appeal before us.

4.     We have heard the rival contentions and have also gone through the records. In
this case, the penalty has been levied for disallowance of expenditure u/s.40(a)(ia) of the
Act. It is not a case of furnishing of inaccurate particulars of income or concealment of
income. The failure to deduct the TDS on the part of the assessee has resulted in
disallowance of expenditure. The assessee had not furnished any inaccurate particulars of
income or expenditure. The assessee has already faced the consequences by way of
disallowance of expenditure for non-deduction of TDS as per the provisions of section
194C of the Act. It is not the case of the Revenue that the assessee had not incurred the
expenditure claimed or that the claim of expenditure was bogus or incorrect. The
disallowance of expenditure was attracted due to non-deduction of TDS and it cannot be
said to be a case of concealment of income or furnishing of inaccurate particulars of
income. The levy of penalty u/s.271(1)(c) of the Act is not attracted in this case and the
same is accordingly ordered to be deleted.
                                                  ITA No. 6684/Mum/2012 (A.Y. 2007-08)
                                                    Rushi Builders and Developers vs. Asst. CIT

5.     In the result, the assessee's appeal is hereby allowed.

                 Order pronounced in the open court on March 4, 2015

             Sd/-                                        Sd/-
      (B. R. Baskaran)                              (Sanjay Garg)
        / Accountant Member                           / Judicial Member
 Mumbai;  Dated : 04.03.2015
. ../Roshani, Sr. PS
         /Copy of the Order forwarded to :
1.  / The Appellant
2.  / The Respondent
3.     () / The CIT(A)
4.      / CIT - concerned
5.                ,     ,   / DR, ITAT, Mumbai
6.     / Guard File
                                                    / BY ORDER,

                                             /  (Dy./Asstt. Registrar)
                                         ,  / ITAT, Mumbai
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