In ITA No.5107/Del/2019 -ITAT- ITAT (Delhi) rules in favour of TV Today Network, states no valid grounds for penalty under Section 271C of Income Tax Act
Members Saktijit Dey (Judicial) & N.K. Billaiya (Accountant) [19-06-2023]

Read Order: ACIT Circle – 76(1) New Delhi v. TV Today Network Ltd.

Chahat Varma

New Delhi, June 23, 2023: The Delhi bench of the Income Tax Appellate Tribunal has affirmed the decision of the Commissioner of Income Tax (Appeals) [CIT(A)] and rejected the Revenue's appeal, ruling that there were no justifiable grounds to impose a penalty on TV Today Network Ltd. (assessee) under Section 271C of the Income Tax Act.

Factual matrix of the case was that during the scrutiny assessment proceedings, it was discovered that the assessee had added back disallowance under Section 40 (a) (ia) of the Income Tax Act in the computation of income related to expenditure. Subsequently, a show cause notice was issued under Section 271C of the Income Tax Act, initiating penalty proceedings. The Assessing Officer (AO) determined that the assessee had failed to deduct tax at source and imposed a penalty equal to the TDS amount.

The assessee appealed the penalty imposition to the CIT(A) and argued that the payment in question was made and the expenditure was claimed in subsequent assessment years, where the assessee had deducted tax at source and deposited it. After considering the facts and submissions, the CIT(A) noted that the assessee had already disallowed the entire amount and did not claim the disputed expenditure. The CIT(A) also observed that in the subsequent years, the assessee not only claimed the expenditure but also deducted tax at source and deposited it. Based on these observations, the CIT(A) concluded that it was not a suitable case for imposing a penalty under Section 271C of the Income Tax Act and deleted the penalty.

The coram of Saktijit Dey (Judicial) and N.K. Billaiya (Accountant) noted that the DR supported the findings of the AO but failed to identify any factual errors in the findings of the CIT(A).

The bench further observed that no order under Section 201 of the Act had been framed by the AO, which indicated that the AO did not treat the assessee as being in default. The bench further observed that during the relevant year, the assessee had only made a provision for the liability of expenditure, and this provision was added back while computing the income for that year. In the subsequent year, when the liability crystallized, the assessee not only claimed the expenditure but also deducted tax at source.