Law:

Section:

Section 271(1)(c), read with section 40(a)(i) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 2000-01 - Assessing Officer disallowed certain amount payable by assessee outside India to a foreign company by invoking provisions of section 40(a)(i) - Appellate authorities upheld order of Assessing Officer - Assessing Officer also levied penalty under section 271(1)(c) upon assessee on account of disallowance of aforesaid amount - Tribunal deleted levy of penalty upon assessee holding that disallowance of aforesaid amount by invoking provisions of section 40(a)(i) could not be a ground to levy penalty under section 271(1)(c) upon assessee - Whether, on facts and in circumstances of case, order of Tribunal was justified - Held, yes [In favour of assessee] FACTS The assessee-company in its books of account had credited a certain amount on 31-3-2001 in the account of a foreign company, namely, 'A' situated in Singapore for the services, which had been rendered by 'A' to the assessee. Further, the assessee, in the assessment year 2001-02, claimed deduction of the said amount payable outside India to 'A'. The Assessing Officer having found (i) that the bill raised by 'A' on the assessee for the aforesaid amount was dated 23-11-2001, (ii) that the said bill was entered by the assessee in its books of account for the year ending on 31-3-2001 at the time of finalization of audit, i.e., on 23-11-2001, and (iii) that the tax on the aforesaid amount was deducted and paid by the assessee on 23-11-2001, held that as the assessee had deducted and paid tax in respect of amount payable outside India to 'A' in the subsequent year relevant to the assessment year 2002-03, it was not entitled to claim deduction for the said amount in the year under consideration as per specific provisions contained in section 40(a)(i ). He, therefore, disallowed the deduction claimed by the assessee and added the said amount to its income. Both the first appellate authority and the Tribunal upheld the order of the Assessing Officer. In the meantime, the Assessing Officer also levied the penalty under section 271(1)(c) upon the assessee on account of disallowance of…

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