Canara Bank, Ahmedabad V. The Addl.CIT.,TDS Range, Ahmedabad

ITA 1634/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67524 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-07-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 17-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: S N DIVETIA
• Section: 201(1)

Judgement Text

, , , , B, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ # ## #. .. .% %% % . .. .&'( &'( &'( &'(, , , , %) * %) * %) * %) * % ' % ' % ' % ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND A. K. GARODIA, ACCOUNTANT MEMBER) ITA NO.1634/AHD/2010 [ASSTT.YEAR : 2005-2006] CANARA BANK SABARMATI BRANCH NR. PANCHSHEEL HOSPITAL SABARMATI, AHMEDABAD. PAN : AAACC 6106 G /VS. ADDL. CIT., TDS RANGE AHMEDABAD. ( (( (,- ,- ,- ,- / APPELLANT) ( (( (./,- ./,- ./,- ./,- / RESPONDENT) 01 2 3 %/ ASSESSEE BY : SHRI S.N. DIVETIA * 2 3 %/ REVENUE BY : SHRI P.L.KUREEL, SR.DR 5 2 16)/ DATE OF HEARING : 29 TH JULY, 2013 7&8 2 16)/ DATE OF PRONOUNCEMENT : 02-08-2013 %9 / O R D E R PER GARODIA, ACCOUNTANT MEMBER: THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDER OF THE CIT(A)-VI, AHMEDABAD DATED 31.12.2009 FOR A.Y.2005-2006. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THAT THE PENALTY U/S. 271C FOR VIOLATION U/S.19 4A WAS LEVIED WITHOUT PASSING ANY ORDER U/S. 201(1) AND 201(1A) I N THIS REGARD. FURTHER ASSESSEE HAD PAID THE TDS U/S. 194A IN PRES CRIBED TIME THROUGHOUT THE FINANCIAL YEAR 2004-05. THEREFORE, T HE PENALTY LEVIED U/S 271C OF RS.4,91,710/- BE DELETED AND SUI TABLE RELIEF BE GRANTED TO THE APPELLANT. 2. THAT THE TDS U/S. 1941 IS NOT APPLICABLE TO ASSE SSEE AS THE ITA NO.1634/AHD/2010 -2- RENT PAYMENTS TO INDIVIDUAL PARTIES WERE BELOW TDS LIMITS, THAT WHEN TDS ITSELF IS NOT APPLICABLE, NO PENALTY U/S. 271C FOR VIOLATION U/S. 1941 IS ATTRACTED THEREFORE, THE PEN ALTY LEVIED U/S 271C OF RS.54,800/- BE DELETED AND SUITABLE RELIEF BE GRANTED TO THE APPELLANT. 3. THE BRIEF FACTS AS NOTED BY THE AO IN THE PENALT Y ORDER ARE THAT THE DURING THE PRESENT YEAR, THERE WAS A FAILURE ON THE PART OF THE ASSESSEE IN DEDUCTING TAX UNDER SECTIONS 194A AND 194I, BECAUSE THE ASSESSEE DID NOT DEDUCT TAX AT THE RATE OF 10% UNDER SECTION 194A, AT THE TIME OF MAKING INTEREST PAYMENT AGAINST FIXED DEPOSITS TO THE EXTE NT OF RS.47,03,108/-, AND 20% UNDER SECTION 194I AT THE TIME OF MAKING OF RENT PAYMENT OF RS.2,62,080/-, AND SUCH DEFAULT WAS WORKED OUT AT R S.4,91,710/- AND RS.54,800/- RESPECTIVELY. THE AO ISSUED NOTICE TO THE ASSESSEE ON 25.2.2009 TO SHOW CAUSE AS TO WHY THE PENALTY UNDER SECTION 271C OF THE I.T.ACT. SHOULD NOT BE LEVIED FOR NOT DEDUCTING TAX ES. THE AO HAD NOTED IN THE PENALTY ORDER THAT THE ASSESSEE HAS NOT SUBM ITTED THEIR REPLY TILL 23 RD MARCH, 2009 I.E. DATE OF PASSING OF THE PENALTY ORD ER BY THE AO. IT IS ALSO NOTED BY THE AO IN THE PENALTY ORDER THAT SURVEY WA S CONDUCTED ON 17.3.2005 AT THE FAG END OF THE YEAR, AND IT IS OBS ERVED THAT THE ASSESSEE HAS NOT DEDUCTED TDS THROUGHOUT THE YEAR. HE ALSO NOTED THAT THE TDS WAS DEDUCTED AND PAID TO THE GOVERNMENT ACCOUNT ONL Y BECAUSE OF SURVEY. THE AO IMPOSED PENALTY OF RS.4,91,710/- FOR DEFAULT UNDER SECTION 194A AND RS.54,800/- FOR DEFAULT UNDER SECTION 194I, AND IN THIS MANNER, HE IMPOSED A TOTAL PENALTY OF RS.5,46,510/- UNDER SECT ION 271C OF THE I.T.ACT. BEING AGGRIEVED THE ASSESSEE CARRIED TH E MATER IN APPEAL BEFORE THE LEARNED CIT(A), BUT WITHOUT SUCCESS, AND THE AS SESSEE IS IN FURTHER APPEAL BEFORE US. 4. IT WAS SUBMITTED BY THE LEARNED AR OF THE ASSESS EE THAT REGARDING THE PENALTY FOR NON-DEDUCTION OF TDS UNDER SECTION 194I IN RESPECT OF ITA NO.1634/AHD/2010 -3- RENT PAYMENT THAT THE PROPERTY WAS OWNED BY FIVE CO -OWNERS, AND HENCE, IF THE RENTAL PAYMENT IS DIVIDED AMONG FIVE CO-OWNE RS, THE AMOUNT OF EACH CO-OWNER IS BELOW THRESHOLD LIMIT OF RS.1.20 L AKHS, AND THEREFORE, THE ASSESSEE WAS UNDER BONA FIDE BELIEF THAT NO TDS WAS REQUIRED TO BE DEDUCTED, AND THEREFORE, THE PENALTY IMPOSED BY THE AO UNDER SECTION 271C IN RESPECT OF THIS DEFAULT IS NOT JUSTIFIED. 5. REGARDING THE PENALTY IMPOSED BY THE AO IN RESPE CT OF DEFAULT OF THE ASSESSEE UNDER SECTION 194A, IT WAS SUBMITTED T HAT IN SOME CASES, THE TDS WAS DEDUCTED UNDER SECTION 194A, AND ONLY IN SO ME CASES, THERE WERE FAILURE ON THE PART OF THE ASSESSEE TO DEDUCT TDS. HE FURTHER SUBMITTED THAT THE DEFAULT COMMITTED BY THE ASSESSE E FOR NON-DEDUCTION OF TDS UNDER SECTION 194A WAS IN RESPECT OF ONLY ABOUT 35 PERSONS BUT THE ASSESSEE HAS ALREADY DEDUCTED IN RESPECT OF 975 PER SONS, AND THEREFORE, THE DEFAULT OF THE ASSESSEE IS IN RESPECT OF ONLY A FRACTION OF THE TOTAL REQUIREMENT OF THE TDS, WHICH IS A TECHNICAL DEFAUL T, FOR WHICH THE PENALTY IS NOT JUSTIFIED. THE LEARNED DR SUPPORTE D THE ORDERS OF THE AO AND THE CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, AND AL SO PERUSED THE MATERIAL ON RECORD, AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FIRST, WE DECIDE THE ISSUE REGARDING THE LEVY OF PE NALTY FOR DEFAULT OF THE ASSESSEE FOR NON-DEDUCTION OF TDS IN RESPECT OF REN T PAYMENT UNDER SECTION 194I OF THE I.T.ACT. IN THIS REGARD, IT WA S SUBMITTED BY THE ASSESSEE THAT THE PREMISES IN QUESTION, FOR WHICH T HE RENT PAYMENT WAS MADE BY THE ASSESSEE, WAS CO-OWNED BY FIVE PERSONS, AND HENCE, IF THE TOTAL AMOUNT OF THE RENT PAYMENT OF RS.2,62,800/- I S DIVIDED AMONG THESE FIVE CO-OWNERS, THE AMOUNT OF RENT PAID TO EACH PER SON IS MUCH BELOW THE THRESHOLD LIMIT OF RS.1.20 LAKHS PER PERSON, AND HE NCE, IT HAS TO BE ACCEPTED THAT THERE MAY BE BONA FIDE BELIEF OF THE ASSESSEE THAT NO TDS IS ITA NO.1634/AHD/2010 -4- DEDUCTIBLE U/S.194I, AND HENCE, IN OUR CONSIDERED O PINION, THE PROVISION UNDER SECTION 271C IS NOT APPLICABLE IN THE PRESENT CASE FOR THIS DEFAULT U/S.194I, AND HENCE, THE PENALTY IS NOT JUSTIFIED F OR THIS DEFAULT. HENCE, PENALTY IMPOSED BY THE AO OF RS.54,800/- IN RESPEC T OF DEFAULT UNDER SECTION 194I IS DELETED. 7. NOW, WE EXAMINE THE LEVY OF PENALTY IN RESPECT O F DEFAULT UNDER SECTION 194A. AS PER THE LIST OF DEPOSITORS APPEAR ING AT PAGE NOS.29 AND 30 OF THE PAPER BOOK, IT IS SEEN THAT THE DEFAULT I S IN RESPECT OF ABOUT 35 PERSONS, AND THE TOTAL DEFAULT IS OF RS.4,91,710/- BEING THE AMOUNT OF TDS WHICH WAS REQUIRED TO BE DEDUCTED BY THE ASSESSEE U NDER SECTION 194A, BUT IT WAS NOT DEDUCTED. AS PER THE ORDER OF THE L EARNED CIT(A), IT IS ALSO SEEN THAT THE ASSESSEE HAS ALREADY DEDUCTED TDS TO THE EXTENT OF RS.9,78,292/- FOR THE YEAR UNDER CONSIDERATION, AS HAS BEEN NOTED BY THE LEARNED CIT(A) AT PAGE NO.9 OF HIS ORDER. AS PER T HE COPY OF THE TDS RETURN FILED BY THE ASSESSEE FOR THE PRESET YEAR IN FORM NO.26 & 27A SUBMITTED BEFORE US, IT IS SEEN THAT SUCH DEDUCTION OF TDS WAS IN RESPECT OF 975 PERSONS. THIS GOES TO SHOW THAT NUMBER OF P ERSONS FROM WHOM TDS WAS NOT DEDUCTED IS ABOUT 3.5% OF TOTAL PERSONS FROM WHOM TDS WAS TO BE DEDUCTED UNDER SECTION 194A. HENCE, IN OU R CONSIDERED OPINION, PENALTY UNDER THESE FACTS, IS NOT JUSTIFIE D BECAUSE THERE WAS SUBSTANTIAL COMPLIANCE OF TDS PROVISIONS U/S.194A. WE, THEREFORE, DELETE THE PENALTY IMPOSED BY THE AO AND CONFIRMED BY THE LEARNED CIT(A) IN RESPECT OF DEFAULT OF THE ASSESSEE UNDER SECTION 194A ALSO. 8. RELIANCE WAS PLACED ON BY THE LEARNED AR OF THE ASSESSEE ON THE DECISION OF THE TRIBUNAL RENDERED IN THE CASE OF IT O VS. SMT. BEENABEN P. SHAH, ITA NO.128/AHD/2013 DATED 26.7.20123. WE FIND THAT THIS TRIBUNAL DECISION IS IN RESPECT OF NON-DEDUCTION OF TDS UNDER SECTION 194I, AND WE HAVE ALREADY DELETED THE PENALTY IMPOS ED BY THE AO IN ITA NO.1634/AHD/2010 -5- RESPECT OF DEFAULT UNDER SECTION 194I, AND HENCE, T HIS TRIBUNAL DECISION IS NOT RELEVANT IN RESPECT OF DEFAULT OF THE ASSESSEE FOR NON-DEDUCTION OF TDS UNDER SECTION 194A. 9. RELIANCE WAS PLACED ON THIS DECISION OF THE TRIB UNAL IN SUPPORT OF THIS CONTENTION OF THE LEARNED AR OF THE ASSESSEE A LSO THAT PENALTY ORDER PASSED BY THE AO IS BARRED BY LIMITATION. IN THIS REGARD, WE FIND THAT AS PER THIS TRIBUNAL ORDER, CITED BY THE LEARNED AR OF THE ASSESSEE, IT IS NOTED BY THE TRIBUNAL IN THAT ORDER THAT AS PER THE JUDGM ENT OF THE HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT VS. HU TCHISON ESSAR TELECOM LTD., 323 ITR 230, IT WAS HELD THAT THE PRO CEEDINGS UNDER SECTION 201(1)/201(1A) SHOULD BE INITIATED ONLY WIT HIN THREE YEARS FROM THE END OF ASSESSMENT ORDER OR WITHIN FOUR YEARS FR OM THE END OF RELEVANT FINANCIAL YEAR. IN THE PRESENT CASE, THE FINANCIA L YEAR IN QUESTION IS 2004- 2005 AND THE RELEVANT ASSESSMENT YEAR IS 2005-2206, AND THE PENALTY ORDER IS DATED 23.3.2009 WHICH IS WITHIN THREE YEAR S FROM THE END OF THE ASSESSMENT YEAR, AND WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR, AND THEREFORE, THE SAME CANNOT BE SAID TO BE BARRED BY LIMITATION, IN VIEW OF THIS TRIBUNAL DECISION CITED BY THE LEARNED AR O F THE ASSESSEE, AS WELL AS, AS PER THE JUDGMENT OF THE HONBLE DELHI HIGH C OURT NOTED BY THE TRIBUNAL IN THAT CASE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT ( # ## #. .. .% %% % . .. .&'( &'( &'( &'( /A.K. GARODIA) %) * /ACCOUNTANT MEMBER