The General Manager Ranger Breweries Ltd., Una V. Addl. CIT (TDS), Shimla

ITA 1039/CHANDI/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8380 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 30-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: R R THAKUR
• Keywords: Reasonable cause; Bonafide mistake
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 1039/CHD/2016 ASSESSMENT YEAR: 2009-10 THE GENERAL MANAGER, VS THE ADDL.CIT, RANGER BREWERIES LTD., TDS RANGE, 130-IA,MEHATPUR, SHIMLA (HP). DISTT. - UNA (HP). TAN: PTLR11293C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.R.THAKUR RESPONDENT BY : SHRI S.K.MITTAL, DR DATE OF HEARING : 16.01.2017 DATE OF PRONOUNCEMENT : 17.01.2017 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) PALAMPUR DATED 26.07. 2016 FOR ASSESSMENT YEAR 2009-10, CHALLENGING THE LEVY O F PENALTY UNDER SECTION 271C OF INCOME TAX ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SING OFFICER LEVIED THE PENALTY FOR NOT CHARGING SURCHAR GE ON THE PAYMENTS EXCEEDING RS. 10 LACS ( INDIVIDUALS) A ND RS. 1 CRORE (OTHERS) THEREBY RAISING DEMAND OF RS.1,37, 101/- THERE WAS NO SURCHARGE ON TDS UPTO RS. 10 LACS FOR 2 INDIVIDUAL AND RS. 1 CRORE FOR OTHERS AND THE TDS H AS BEEN DEDUCTED ACCORDINGLY. HOWEVER, SURCHARGE WAS APPLICABLE IN THE PAYMENTS EXCEEDING THE ABOVE AMOU NT AND DUE TO BONAFIDE MISTAKE, THE SURCHARGE ON THE S AME COULD NOT BE APPLIED DUE TO OVERSIGHT. IT WAS, THE REFORE, PLEADED THAT IT IS BONAFIDE TECHNICAL MISTAKE DUE T O OVERSIGHT AS THE DEDUCTOR HAS NO MALAFIDE INTENTION NOT TO CHARGE SURCHARGE ON TDS. MOREOVER, THE SHORT DEDUCTION AS CALCULATED BY THE ASSESSING OFFICER ALONGWITH INTEREST THEREON HAS BEEN DULY DEPOSITED BY THE DEDUCTOR. THE ASSESSING OFFICER, HOWEVER, LEVI ED THE PENALTY WHICH WAS CHALLENGED BEFORE LD. CIT(APPEALS ). 3. THE ASSESSEE REITERATED SAME FACTS BEFORE LD. CIT(APPEALS) AND IT WAS SUBMITTED THAT PENALTY HAVE BEEN LEVIED FOR NON DEDUCTION OF SURCHARGE ON TDS. IT W AS SUBMITTED THAT DUE TO LACK OF KNOWLEDGE AND AWARENE SS OF THE APPLICABILITY OF SURCHARGE ON TDS, THE STAFF OF THE ASSESSEE COMPANY HAS DEDUCTED TDS WITHOUT SURCHARGE . THE ASSESSEE, AS SOON AS CAME TO KNOW OF THIS MISTA KE, DURING SURVEY, HAS DEPOSITED THE SHORTFALL ALONGWIT H INTEREST AND REMITTED THE SAME TO THE GOVERNMENT ACCOUNT. IT WAS, THEREFORE, SUBMITTED THAT ASSESSE E HAS REASONABLE CAUSE FOR FAILURE TO COMPLY WITH THE PROVISIONS OF LAW. THEREFORE, PENALTY MAY NOT BE IMPOSED. THE ASSESSEE RELIED UPON DECISION OF DELH I HIGH COURT IN THE CASE OF WOODWARDS GOVERNOR INDIA PVT. LTD. 253 ITR 745 AND AZADI BACHAO ANDOLAN VS UNION OF 3 INDIA 252 ITR 471. THE LD. CIT(APPEALS), HOWEVER, DISMISSED THE APPEAL OF THE ASSESSEE. 4. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM OF THE VIEW PENALTY NEEDS NOT BE IMPOSED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. SECTION 271C PROVIDES F OR LEVY OF PENALTY, IF ANY PERSON FAILS TO DEDUCT THE WHOLE OR PART OF THE TAX AS REQUIRED TO BE DEDUCTED. SECTIO N 273B OF THE ACT PROVIDES THAT, NO PENALTY SHALL BE IMPO SABLE ON THE PERSON/ASSESSEE AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN SECTION 271C OF INCOME TAX A CT IF HE PROVES THAT THERE WAS A REASONABLE CAUSE FOR THE SAID FAILURE. THE ASSESSEE PLEADED BEFORE THE AUTHORIT IES BELOW THAT TDS WAS DEDUCTED AND PAID TO THE GOVERNM ENT ACCOUNT BUT IN CERTAIN CASES, SURCHARGE COULD NOT B E CHARGED ON TDS BECAUSE OF THE IGNORANCE AND IGNORAN CE OF THE STAFF OF THE ASSESSEE COMPANY. SINCE WHEN T HIS MISTAKE WAS REALIZED, THE SHORTFALL OF THE SURCHARG E WITH INTEREST WAS DEPOSITED INTO THE GOVERNMENT ACCOUNT. IT, THEREFORE, CLEARLY PROVES THAT DUE TO REASONABLE CA USE, THE ASSESSEE FAILED TO COMPLY WITH THE PROVISIONS O F LAW AND ULTIMATELY REVENUE DEPARTMENT HAVE BEEN ADEQUAT ELY COMPENSATED BY THE ASSESSEE BY PAYING THE SURCHARGE ALONGWITH THE INTEREST. IT IS WELL SETTLED LAW THA T PENALTY IS NOT AUTOMATIC IN EACH AND EVERY CASE AS IT DEPEN DS UPON FACTS AND CIRCUMSTANCES OF THE CASE. IN MY VIE W, IT IS NOT A FIT CASE OF LEVY OF THE PENALTY UNDER SECT ION 271C 4 OF THE ACT. I, ACCORDINGLY, SET ASIDE THE ORDERS O F AUTHORITIES BELOW AND CANCEL THE PENALTY. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED : 17 TH JANUARY,2017. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH