Sukhdev Singh, Chandigarh V. JCIT (TDS), Chandigarh

ITA 116/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80925 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 30-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Bonafide belief; Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 116/CHD/2014 ASSESSMENT YEAR : 2009-10 SUKHDEV SINGH, VS. THE J.C.I.T.(TDS), # 230, INDUSTRIAL AREA, CHANDIGARH. PHASE I, CHANDIGARH. PAN: ABZPS6319J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI J.S.NAGAR, DR DATE OF HEARING : 24.09.2014 DATE OF PRONOUNCEMENT : 29.09.2014 O R D E R PER BHAVNESH SAINI, J.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LEARNED CIT (APPEALS), CHANDIGARH DATE D 19.12.2013 FOR ASSESSMENT YEAR 2008-09 CONFIRMING T HE PENALTY UNDER SECTION 271C OF THE INCOME TAX ACT. 2. IN THIS CASE IT WAS INFORMED THAT THE ASSESSEE H AS NOT DEDUCTED THE TAX AT SOURCE AS REQUIRED UNDER THE PR OVISIONS OF CHAPTER XVII-B OF THE INCOME TAX ACT. THE ASSESS ING OFFICER LEVIED PENALTY UNDER SECTION 271C OF THE INCOME TAX ACT FOR A SUM OF RS.40,254/- VIDE SEPARATE ORDER. THE ASSES SEE SUBMITTED BEFORE THE LEARNED CIT (APPEALS) THAT HE WAS UNDER BONAFIDE BELIEF THAT TDS WAS NOT TO BE DEDUCTED ON PAYMENT 2 MADE TO NON-BANKING FINANCIAL INSTITUTION. THE AS SESSEE RELIED UPON THE DECISION OF HON'BLE SUPREME COURT I N THE CASE OF M/S ELI LILLY & CO. (INDIA)(P) LTD., 312 ITR 225 (SC). THE LEARNED CIT (APPEALS), HOWEVER, FOUND THAT WHATEVER CONTENTION WAS RAISED HAS NOT BEEN SUBSTANTIATED TH ROUGH EVIDENCE. THE LEARNED CIT (APPEALS) FOUND THAT SI NCE THE ASSESSEE HAS FAILED TO PROVE THAT IT WAS UNDER BONA FIDE BELIEF, THEREFORE, THE APPEAL OF THE ASSESSEE WAS DISMISSED . 3. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT OMISSION TO DEDUCT TDS WAS UNDER BONAFIDE BELIEF THAT TDS WA S NOT TO BE DEDUCTED ON PAYMENT MADE TO NON-BANKING FINANCIA L INSTITUTION AS IN THE CASE OF THE BANKS. THE ASS ESSEE HAS ALREADY BEEN PENALIZED BY WAY OF ADDITION AT THE TI ME OF ASSESSMENT BY WAY OF DISALLOWANCE OF INTEREST UNDER SECTION 40(A)(IA) OF THE ACT. HE HAS SUBMITTED THAT WHATE VER ADDITION WAS MADE HAS BEEN ADMITTED BY THE ASSESSEE AND TAXE S HAVE BEEN PAID AND THE ASSESSEE ON REALIZING THIS MISTAK E HAS STARTED TO DEDUCT TDS IN FUTURE. THE COPY OF THE ASSESSMENT ORDER FOR THE YEAR UNDER CONSIDERATION AND DEMAND C REATED BY THE ASSESSING OFFICER ARE PLACED ON RECORD. THE COPY OF THE CHALLAN IS ALSO FILED ON RECORD TO PROVE THAT THE A SSESSEE ULTIMATELY ACCEPTED THE DEMAND CREATED AS PER ASSES SMENT ORDER, WHICH IS ALSO SUPPORTED BY THE AFFIDAVIT OF THE ASSESSEE. CONSIDERING THE SUBMISSIONS OF THE PARTIES AND IN T HE LIGHT OF THESES MATERIALS ON RECORD, IT IS CLEAR THAT THE AS SESSEE MAY BE UNDER THE BONAFIDE BELIEF THAT TDS IS NOT LIABLE TO BE 3 DEDUCTED ON PAYMENTS MADE TO NON-BANKING FINANCIAL INSTITUTION. IT IS WELL SETTLED LAW THAT THE PENA LTY NEED NOT TO BE IMPOSED IN EACH AND EVERY CASE AND DISCRETIONARY IN NATURE AND THE FACTS AND CIRCUMSTANCES OF THE CASE SHALL H AVE TO BE TAKEN INTO CONSIDERATION. SECTION 273B OF THE I NCOME TAX ACT PROVIDES THAT NO PENALTY UNDER SECTION 271C SHA LL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PROVISIONS, IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILUR E. THE CIRCUMSTANCES EXPLAINED BY THE LEARNED COUNSEL FOR THE ASSESSEE CLEARLY REVEAL THAT THE ASSESSEE PAID INTE REST TO NON- BANKING FINANCIAL INSTITUTION AND DID NOT DEDUCT TA X BECAUSE THE ASSESSEE WAS UNDER THE BONAFIDE BELIEF THAT NO TDS WAS TO BE DEDUCTED ON THE PAYMENTS MADE TO NON-BANKING FIN ANCIAL INSTITUTION. THE ASSESSING OFFICER MADE DISALLOW ANCE UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT AND OTHER A DDITIONS WERE ALSO MADE IN THE ASSESSMENT ORDER, WHICH ARE A CCEPTED BY THE ASSESSEE AND THE DEMAND RAISED AS PER ASSESS MENT ORDER HAS BEEN PAID. THEREFORE, THESE CIRCUMSTAN CES WOULD CLEARLY REVEAL THAT THE ASSESSEE HAS REASONABLE CAU SE FOR FAILURE TO COMPLY WITH THE PROVISIONS OF SECTION. THEREFORE, IN VIEW IT BEING A BEGINNING OF THE ASSESSEE FOR FA ILURE TO DEDUCT TAX AND THEN THE ASSESSEE IN FUTURE HAS STAR TING DEDUCTING TDS WOULD SUGGEST THAT THE PENALTY MAY NO T BE IMPOSED IN THE AFORESAID CASE. CONSIDERING THE AB OVE DISCUSSION, WE ARE OF THE VIEW THAT THE LEVY OF PEN ALTY IN THE FACTS AND CIRCUMSTANCES OF THE CASE IS NOT WARRANTE D. WE 4 ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND CANCEL THE PENALTY. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF SEPTEMBER, 2014. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29 TH SEPTEMBER, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH