Shri Sudip Arvindbhai Patel, Ahmedabad V. The Addl.CIT, TDS Range, Ahmedabad

ITA 136/AHD/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94729 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 12-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P B PARMAR
• Keywords: Bonafide belief; Reasonable cause
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER SUDIP A PATEL, C - 11 KARNAVATI APARTMENT, OPP. NRI TOWER, BODAKDEV, AHMEDABAD - 54 PAN: AJKPP6231K (APPELLANT) VS ADDITIONAL COMMISSIONER OF INCOME TAX, TDS RANGE, AHMEDABAD (RESPONDENT) REVENUE BY : S H RI JAMES KURIAN , SR. D . R. ASSESSEE BY: S H RI P.B. PARMAR , A.R. DATE OF HEARING : 07 - 09 - 2 015 DATE OF PRONOUNCEMENT : 27 - 11 - 2 015 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 20 08 - 09 , ARISES FROM ORDER OF T HE CIT(A) - XX, AHMEDABAD DATED 13 - 11 - 2014 IN APPEAL NO. CIT(A) - XXI/582 / ADDL. CIT/13 - 14 , IN PROCEEDINGS U NDER SECTION 271C OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 136 / A HD/20 15 A SSESSMENT YEAR 200 8 - 09 I.T.A NO. 136 /AHD/20 15 A.Y. 2008 - 09 PAGE NO SUDIP ARVINDBHAI PATEL VS. ACIT 2 2. THE ASSESSEE S SOLE SUBSTANTIVE GROUND CHALLENGES SECTION 271C PENALTY OF RS. 96,015/ - IMPOSED BY BOTH THE LOWER AUTHO RI TIES ON ACCOUNT OF HIS FAILURE IN DEDUCTING TDS @ 10.2% ON INTEREST PAYMENTS AMOUNTING TO RS. 9,41,315/ - U/S. 194A(1) OF THE ACT. T HE CIT(A) S FINDINGS UNDER CHALLENGE ARE REPRODUCED AS FOLLOWS: - 4.3 I HAVE CONSID ERED THE FACTS OF THE CASE AND - SUBMI SSION MADE BY THE A PPELLANT. THE ADDL. CIT HAS LEVIED THE PENALTY U/S. 27IC FO R THE REASON THAT THE APPELLANT HAS NOT MADE THE T DS ON THE INTEREST PAYMENT OF RS. 9,41,3157 - TO VARIOUS PARTIES. IN COMPLIANCE TO THE SHOW CAUSE NOTICES THE APPELLANT DID NOT RESPOND AND ONLY REQUESTED FOR THE ADJOURNMENTS. FINALLY IN ABSENCE OF ANY REPLY FROM THE ASSESSEE, THE ADDL. CIT LEVIED THE P ENALTY FOR FAILURE TO DEDUCT THE TAX ON THE PAYMENT MADE TOWARDS INTEREST. 4.4 IN THE APPELLA TE PROCEEDINGS THE APPEL LANT SUBMITTED THAT HE ACTED ON BONAFIDES AS PER ADVICE OF HIS FINANCIAL ADVISOR AND THE AMOUNT HAS BEEN DISALLOWED U/S. 40(A)(IA) OF THE ACT BY HIS AUDITOR IN TAX AUDIT REPORT. FURTHER HE TOOK THE TAN NUMBER ONLY ON 25. 3.2009 AND AFTER THAT DATE IT WAS INFORMED BY VAR IOUS PARTIES THAT THEY HAVE ALREADY INCLUDED THE INTE REST INCOME IN THEIR RETURNS OF INCOME AND PAID THE TAX LIABILITY. IT WAS ALSO CLAIMED THAT ALL THE PARTIES EXCEPT ONE PA RTY HAS GIVEN THE CERTIFICATE OF THEIR CH ARTERED ACCOUNTANT IN RESPECT OF THE DISCHARGE OF TAX LIABILITY ON INTEREST PAID BY HIM TO THEM. IT WAS ALSO SUBMITTED THAT HE HA D ALREADY MADE THE PAYMENT IN RE SPEC T OF INTEREST LIABILITY U/S. 201 AND 201 A TOWARDS LOSS OF REVENUE DUE TO LATE PAYMENT OF TAX BY THE DEPOSITORS AS DETERMINED BY LTO(TDS) - 4. SO IT WAS PRAYED THAT THE DEFAULT OF TDS HAS BEEN DONE DUE TO IGNO RANCE OF LAW AND THERE WAS NO MALAFIDE INTENTI ON INVOLVED FOR NON - DEDUCTION OF TDS. IT WAS ALSO STATED THAT DU E TO SUCH MISTAKE THERE WAS NO L OSS OF REVENUE TO THE GOVERNMENT. HE RELIED UPON SOME C ASE LAWS ALSO AND REQUESTED TO DELETE THE PROCEEDINGS. 4.5 CONSIDERING THE FACTS AND SUBMISSIONS OF TH E APPELLANT, IT IS FOUND THAT THE APPELLANT WAS UNDER LEGAL OBL IGATION TO MAKE THE TDS ON THE I NTEREST PAYMENTS OF VARIOUS PARTIES IN SPITE THAT HE WAS WELL VERSED TO THE PROVISIONS WHICH IS APPARENT FROM THE FACT THAT THE CHARTERED ACCOUNTANT HAS ALREADY ADVISED HIM ABOUT SUCH DEDUCTION OVER THE INTEREST PAYMENT OF RS.5,000/ - TO EACH PARTY. I.T.A NO. 136 /AHD/20 15 A.Y. 2008 - 09 PAGE NO SUDIP ARVINDBHAI PATEL VS. ACIT 3 ALTHOUGH NOTHING WAS ON RECORD TO VERIFY WHETHER THE RECIPIENTS OF THE INTEREST INCOME HAVE INCLUDED THAT INTEREST INCOME IN THEIR RETURNS OF INCOME BUT THAT EVEN COULD NOT SAVE THE APPELLANT FROM THE PENALTY PROCEEDINGS U/S.271C AND AT THE BEST THE APPELLANT COULD HAVE TAKEN THE SHELTER TO GET THE RELIEF FROM THE DISALLOWANCE U /S.40(A)(IA) OF IT, ACT. SO THIS CONTENTION DOES NOT SURVIVE ON THE FACTS. EVEN MAKING THE PAY MENT OF INTEREST U/S.201A IS ALSO A DIFFERENT PROVISION F ROM THE PENALTY PROCEEDINGS U/S. 271C OF THE I.T. ACT. SO THERE IS NO BONAFIDE REASONS FOR NOT TO MAKE THE TDS ON THE INTEREST PAYMENTS AND THERE IS NO REASONABLE CAUSE TO ABSOLVE THE APPELLANT FROM THE PENALTY PROCEEDINGS. THE CASE LAWS RELIED UPON BY THE APPELLANT IS NOT APPLICABLE OVER THE FACTS OF THE CASE. IN VIEW OF THE AFORESAID FACTS, THE LEVY OF PENALTY IS CORRECT AND JUSTIFIED AND THE SAME IS CONFIRMED. 5. ACCORDINGLY, THE APPEAL STANDS DIS MISSED. 3. WE HAVE HEARD BOTH THE PARTIES. CASE FILE PERUSED . RELEVANT FACTS STATED HEREINABOVE ARE NOT REPEATED FOR THE SAKE OF BREVITY . THERE IS NO DISPUTE THAT THE ASSESSEE HAS NOT SUBJECTED HIS INTEREST PAYMENT TO TDS DEDUCTION. THERE IS FURTHER NO ISSUE THAT BUT FOR HIS ACCOUNTS BEING AUDITED U/S. 44AB, HE IS NO T OTHERWISE COVERED U/S. 194A OF THE ACT. THE ASSESSEE ACCORDINGLY CLAIMS HIS NON DEDUCTION OF TDS AS AN INADVERTENT MISTAKE ON A BONAFIDE BELIEF ENTITLED TO BE TREATED AS A REASONABLE CAU SE U/S. 234B. HE FILES BEFORE US ASSESSING OFFICER S ORDER DATED 07 - 03 - 2013 U/S. 201(1) AND 201(1A) OF THE ACT QUA THE VERY PAYMENT HOLDING THAT THE PAYEES IN QUESTION HAVE ALREADY DECLARED THEIR CORRESPONDING INCOME AND ASSESSEE HAS BEEN HELD LIABLE ONLY QUA INTEREST PORTION UNDER THE LATTER PROVISION AMOUNTING TO RS. 10,918/ - . THE REVENUE FAILS IN DISPUTING ALL THIS FACTUAL POSITION. WE OBSERVE IN THESE FACTS AND CIRCUMSTANCES THAT ASSESSEE S DEFAULT IN DEDUCTING TDS ON HIS INTEREST PAYMENTS IN I.T.A NO. 136 /AHD/20 15 A.Y. 2008 - 09 PAGE NO SUDIP ARVINDBHAI PATEL VS. ACIT 4 QUESTIO N H AS NOT CAUSED ANY LOSS TO THE REVEN UE. AND THE TDS DEDUCTING PROVISION U/S. 194A(1) APPLIES IN HIS CASE FOR THE FIRST TIME DUE TO HIS AUDITED BOOKS OF ACCOUNT AS INDICATED HEREINABOVE. WE ARE OF THE OPINION IN THIS PECULIAR FACTS AND CIRCUMSTANCES THA T ASSESSEE HAS BEEN ABLE TO SHOW HIS REASONABLE CAUSE FOR FAILURE IN DEDUCTING TDS. HIS SOLE SUBSTANTIVE GROUND SUCCEEDS. THE IMPUGNED SECTION 271C PENALTY OF RS. 96,015/ - IS DELETED . 4. THIS ASSESSEE S APPEAL IS ALLOWED . ORDER PR ONOUNC ED IN THE OPEN C OURT ON 27 - 11 - 2015 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 27 /11 /2015 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,