Whether assessee can escape from the rigour of penalty by merely disowning his representative alleged of tampering with the TDS certificates for reducing assessee's taxable receipt - NO:

 THE question before the Bench is - Whether assessee can escape from the rigour of penalty by merely disowning his representative alleged of tampering with the TDS certificates for reducing assessee's taxable receipt. And the answer is NO.
Facts of the case

The AO found that there was considerable discrepancy in the return of Income as filed by the assessee and income as disclosed as business income from the activity of Civil Contract, whereas the payments received by the assessee as indicated by the client for whose benefit the assessee had executed Civil works and who had deducted tax at source indicated a much larger quantum of receipts. The AO realized that for the purpose of filing of the return of income the assessee had tampered with the TDS certificate which had been issued by the person deducting tax at source and given to the assessee. While producing the certificate with the return the figures relating to the actual payment had been tampered and reduced as indicated above. The AO was of the opinion that the provisions of Section 271(1)(c) were attracted and therefore, proceeded to levy penalty. The CIT(A) and Tribunal affirmed the penalty.

On Appeal before the HC the assessee's counsel submitted that the assessee had voluntarily accepted the discrepancy and had also agreed to bring to tax the actual amount as had been indicated by the client and when the assessee himself had co-operated with the revenue, the question of levying of penalty u/s 271(1)(c) did not arise. The counsel further submitted that being an ignorant illiterate person he was not aware of what had happened and who handed over the papers to the advocate and what discrepancy had taken place at their end. The Revenue's counsel submitted that this was a clear case of concealment of fact, not merely concealment but tampering of the certificate of TDS by altering the figures in the certificate.

Having heard the parties the HC held that,

++ the record does indicate the tampering of record on the part of the assessee, though the explanation given is that the assessee is an ignorant, illiterate person. That explanation itself cannot in any way absolve the assessee and even if the assessee is dependant upon his representative, it cannot be said that if it is to the assessee's benefit he takes advantage of it but disowns his representative, when the violating act is detected;

++ it is for the assessee to take such action with regard to his representative concerned, but that cannot constitute a ground or proper explanation for not to levy penalty;

++ as it indicates that the refund was only as a result of the manipulation by the assessee and the assessee has not paid any tax. It is precisely because of the refund, the problem arose for the assessee and concealment was detected by scrutiny etc.