A division bench of the ITAT Delhi, on Wednesday deleted penalty against the assesse, M/s. Bhayana Builders Pvt. Ltd, who mistakenly collected collected TDS on the gross billing amount including service tax.
The bench considered the fact that the assesse was able to explain the addition so made which is the basis for levy of the penalty.
Assesse, in the instant case, mistakenly collected TDS on the gross billing amount including service tax form its customers. Assessing Officer initiated penalty on the assessee on ground that it has furnished inaccurate particulars of income.
Before the appellate authorities, assesse-Company contended that the gross amount/total amount as per statement and the TDS figures are verifiable and matched with 26AS, which gives complete break-up in respect of M/s. Pioneer Urban Land & Infrastructure Ltd. They also duly explained the details of tax deducted at source. Assessee also explained that since service tax is not income of the assessee and therefore, it would not form part of total receipts of the assessee and has to be given treatment separately in the Balance Sheet.
The bench noticed the circular dated 19th July, 2017 wherein it was clarified that “in the light of fact that even under New GST Regime, the rational of excluding the tax component from the purview of TDS remains valid.”
The bench noted that “the assessee has declared in the return of income along with statement of taxable income, disallowance under section 43B in a sum of Rs.1,35,91,866 which is also adopted by the A.O. In the assessment order, would clearly prove that the same includes the service tax. When A.O. had taken the figure of the taxable income and made separate addition of Rs.38,39,628, it would certainly amount to double addition. It is well settled law that quantum and penalty proceedings are independent and distinct proceedings.”
It further noted that even if the addition is agreed by the assessee, if the assessee is able to explain the addition, then, penalty may not be leviable in the facts and circumstances of the case.
“The above facts clearly indicate that the explanation of assessee at the penalty stage was factually correct based on the material on record and assessee successfully explained the addition so made which is the basis for levy of the penalty. Since the difference is reconciled at the penalty stage and claim of assessee have not been doubted or rejected, therefore, Ld. CIT(A) was not justified in confirming the levy of penalty merely because assessee conceded for addition of the amount in question. Considering the totality of the facts and circumstances of the case, we are of the view that since the assessee explained the above addition, therefore, penalty need not be imposed in the facts and circumstances of the case.”
It further noted that the A.O. has not mentioned as for which limb, the penalty have been levied against the assessee, no penalty would be leviable.
Read the full text of the Order below.
