The Income Tax Office, TDS-3, JAMNAGAR V. Barbados Maritime Agencies Pvt. Ltd., JAMNAGAR

ITA 170/RJT/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0059 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2016
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 24-11-2016
• Assessment Year: 2014-2015
• Appeal Filed On: 01-05-2015
• Court: TRIBUNAL
• Assessee Lawyers: ANKIT GOKANI
• Keywords: Reasonable cause
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AHMEDABAD] BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NOS.167 TO 170 RJT 2015 (ASSESSMENT YEARS:2011-12 & 2014-15) INCOME-TAX OFFICER, TDS-3, JAMNAGAR APPELLANT VS. BARBADOS MARITIME AGENCIES PVT. LTD., 103, FIRST FLOOR, CAMS CORNER, BEDI PORT ROAD, JAMNAGAR RESPONDENT PAN: AACCB6096L /BY REVENUE : USHA SHROTE, D.R. / BY ASSESSEE : ANKIT GOKANI, A.R. /DATE OF HEARING : 24.11.2016 /DATE OF PRONOUNCEMENT : 28.11.2016 ORDER PER S. S. GODARA, JUDICIAL MEMBER THESE FOUR REVENUES APPEALS FOR ASSESSMENT YEARS 2 011-12 TO 2014- 15 ARISE FROM THE CIT(A), JAMNAGARS COMMON ORDER D ATED 27.02.2015 PASSED IN APPEAL NOS. CIT(A)/JAM/204, 194, 195 AND 205/14-15 DELETING ITA NOS. 167 TO 170/RJT/2015 (ITO VS. BARBADOS MARI TIME AGENCIES PVT. LTD.) A.Y. 2011-12 & 2014-15 - 2 - PENALTIES OF RS.4,10,133/-, RS.32,12,740/-, RS.23,1 8,809/- AND RS.5,38,462/-, AS IMPOSED BY THE ASSESSING OFFICER, IN PROCEEDINGS U/S.271C OF THE INCOME TAX ACT IN SHORT THE ACT. 2. WE FIRST ADVERT TO COMMON FACTS IN THE INSTANT B ATCH OF FOUR APPEALS. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED I N THE BUSINESS OF SHIPPING AGENCY AND ALLIED ACTIVITIES. THE DEPARTME NT CONDUCTED A TDS SURVEY AT ITS BUSINESS PREMISES ON 04.10.2013. THI S MADE THE JOINT COMMISSIONER CONCERN ISSUE NOTICES ON 10.01.2014 AN D 11.07.2014 ON THE GROUND THAT THE ASSESSEE HAD FAILED TO PAY THE AMOU NT OF TDS TO THE GOVERNMENT ACCOUNT WITHIN THE SPECIFIED TIME PERIOD STIPULATED AS PERTAINING TO THE IMPUGNED ASSESSMENT YEARS. HIS CASE WAS THA T APPELLANTS PAYMENTS MADE TO ITS VARIOUS CLIENTS ARE IN THE NATURE OF PO RT CHARGES, SURVEY FEES ETC. LIABLE FOR TDS DEDUCTION. THE ASSESSEE APPEARS TO HAVE FILED LETTER DATED 26.10.2013 TO THE DEPARTMENTAL AUTHORITIES CONCERN THAT IT HAD ALREADY DEDUCTED TDS ON THE SAID PAYMENTS. WE NOTICE FROM T HE CIT(A)S ORDER NARRATING FACTS OF THE CASE THAT THE CONCERNED TDS AUTHORITIES VIEW WAS THAT THIS ASSESSEE HAD FAILED TO DEPOSIT TAX AFTER DEDUC TION AMOUNTING TO THE CORRESPONDING FIGURES FORMING SUBJECT MATTER OF INS TANT ADJUDICATION BEFORE US. IT FURTHER ALLEGED THAT THE ASSESSEES TDS DED UCTION AMOUNTS HAD NOT BEEN PAID THE GOVERNMENT WITHIN STIPULATED TIME PER IOD. THE SAID AUTHORITY ACCORDINGLY PENALIZED THE ASSESSEE BY IMPOSING THE IMPUGNED SECTION 271C LEVIES IN QUESTION AFTER QUOTING HONBLE KERALA HIG H COURTS JUDGMENT IN CASE OF US TECHNOLOGIES INTERNATIONAL (P) LTD. VS. CIT [ 2010] 195 TAXMAN 323. 3. THE ASSESSEE FILED FOUR SEPARATE APPEALS. THERE IS NO ISSUE THAT THE CIT(A) HEARD THESE FOUR APPEALS TOGETHER TO PASS TH E IMPUGNED COMMON ORDER UNDER CHALLENGE. HE FORMULATED FOUR ISSUES I .E. WHETHER THE IMPUGNED SECTION 271C PENALTY COULD BE LEVIED WHEN THERE IS NO DEFAULT IN TDS ITA NOS. 167 TO 170/RJT/2015 (ITO VS. BARBADOS MARI TIME AGENCIES PVT. LTD.) A.Y. 2011-12 & 2014-15 - 3 - DEDUCTION AND SAME IS DEPOSITED WITH INTEREST TO TH E GOVERNMENT. LD. CIT(A) APPEARS TO HAVE DISCUSSED NOT ONLY THE STATUTORY PR OVISION ITSELF TO OBSERVE THAT THE SAME ONLY DEALS WITH FAILURE ON AN ASSESSE E PART IN DEDUCTING TDS AND NOT QUA OTHER ISSUES. HE DULY TAKES INTO ACCOU NT HISTORICAL BACKGROUND OF SECTION 271C, CBDTS CIRCULAR NO.551 DATED 23.01.19 90 ISSUING CLARIFICATION FOR IMPOSITION OF PENALTY IN CASE OF FAILURE ON AN ASSESSEES PART IN DEDUCTING TDS FOLLOWED BY YET ANOTHER CIRCULAR NO.666 DATED 0 8.10.1993. THE CIT(A) ACCORDINGLY CONCLUDES THAT THE IMPUGNED PENALTY PRO VISION DOES NOT APPLY IN CASE AN ASSESSEE HAS DEDUCTED TDS BUT ITS FAILURE I S ONLY IN DEPOSITING THE SAME IN GOVERNMENT ACCOUNT. 4. THE CIT(A) THEREAFTER FRAMED SECOND ISSUE QUA VA LIDITY OF THE IMPUGNED PENALTY AS TO WHETHER SECTION 271C PENAL A CTION COULD BE LEVIED FOR NON PAYMENT OF TAXES AS PER HONBLE KERALA HIGH COURTS DECISION HEREINABOVE. HE OBSERVES THAT HONBLE APEX COURT I N ITS JUDGMENT DATED 19.08.2010 IN CASE OF RAJESWAR TIWARI VS. NANDA KIS HORE ROY [2011] 333 ITR 534(SC) HAS ALREADY CONCLUDED THAT THE IMPUGNED PENAL PROVISION IS NOT EXIGIBLE IN CASE OF LATE PAYMENT OF TAXES. 5. WE NOW COME TO CIT(A)S THIRD QUESTION FRAMED AS TO WHETHER SECTION 271C PENALTY COMES INTO PLAY WITHOUT PASSING OF ANY ORDER U/S.201(1) AND 201(1A) OF THE ACT. THERE DOES NOT APPEAR TO BE AN Y DISPUTE THAT NO SUCH ORDER HAS PASSED IN ASSESSEES CASES PERTAINING TO ALL FOUR ASSESSMENT YEARS. THE CIT(A) THEN TAKES INTO ACCOUNT THIS TRIBUNALS DECISION IN ITA NO.6349/MUM/2009 ACIT VS. AMERICAN SCHOOL OF BOMBA Y EDUCATION TRUST THAT THE PENAL PROVISION IN QUESTION IS NOT ATTRACT ED IN ABSENCE OF THE ABOVE SECTION 201 AND 201(1) & (1A) RECOVERY ORDERS. ITA NOS. 167 TO 170/RJT/2015 (ITO VS. BARBADOS MARI TIME AGENCIES PVT. LTD.) A.Y. 2011-12 & 2014-15 - 4 - 6. THIS LEAVES US WITH THE CIT(A)S ORDER FRAMING F OURTH ISSUE AS TO WHETHER ANY REASONABLE CAUSE OF DELAY IN DEPOSITING TAXES DEDUCTED INVITES SECTION 271C PENALTY OR NOT. HE OBSERVES THAT THE ABOVE REASON OF LATE PAYMENT WAS ON ACCOUNT OF DELAY ON PART OF ASSESSEE S PRINCIPALS. THE CIT(A) RELIES UPON HONBLE JURISDICTIONAL HIGH COUR TS DECISION IN TAX APPEAL NO.2149/09 DECIDED ON 04.04.2011 IN CASE OF BACKBON E ENTERPRISES THAT SUCH A DELAY ON ACCOUNT OF LATE REMITTANCES AT THE END O F PRINCIPALS OF A DEDUCTOR DOES NOT ATTRACT THE IMPUGNED PENAL PROVISION. THE CIT(A) ACCORDINGLY DELETES THE IMPUGNED PENALTIES IN ALL FOUR CORRESPO NDING ASSESSMENT YEARS LEAVING BEHIND THE REVENUE AGGRIEVED. 7. HEARD BOTH SIDES. CASE FILES PERUSED. RELEVANT FACTS NARRATED IN PRECEDING PARAGRAPHS ARE NOT REPEATED FOR THE SAKE OF BREVITY. WE NOTICE FROM THE CASE FILE THAT ASSESSEE HAS DULY DEDUCTED TDS IN ALL CASES AS DEMONSTRATED FROM THE VARIOUS COMPILATION CHART CON TAINED IN THE LOWER APPELLATE ORDER FROM PAGE 3 TO 18. WE FURTHER FIND THAT THE ASSESSING OFFICERS PENALTY ORDERS NOWHERE PINPOINT AS TO WHE THER THE ASSESSEE HAS IN FACT NOT DEDUCTED TDS OR NOT DEPOSITED THE SAME. A LL THE PENALTY ORDERS IN QUESTION CONTAIN AN IDENTICAL PARA NO.1TO THIS EFFE CT. IT THUS TRANSPIRES THAT THE ASSESSEES MAIN LAPSE IS NOT IN DEDUCTING TDS BUT T HAT IN CREDITING THE SAME IN THE GOVERNMENT ACCOUNT. WE DEEM IT APPROPRIATE AT THIS STAGE TO REFER TO CRUCIAL EXPRESSION USED IN THE STATUTORY PROVISION THAT SECTION 271C IS FOR IMPOSING PENALTY UPON A DEDUCTOR ASSESSEE WHO FAILS TO DEDUCT TDS AT SOURCE. SUB SECTION 1(A) THEREOF TALKS ABOUT TDS D EDUCTION ONLY. THIS IS FOLLOWED BY THE LATTER CLAUSE (B) STIPULATING PAYME NT OF THE TAX DEDUCTED U/S.115-O (2) AND 194 B PROVISO ADMITTEDLY NOT APPL ICABLE IN FACTS OF THE CASE. WE REITERATE THAT WE ARE DEALING WITH A PENA LTY PROVISION IN A TAX STATUE LIABLE TO BE STRICTLY INTERPRETED. LD. DEPARTMENTA L REPRESENTATIVE FURTHER FAILS TO POINT OUT ANY ILLEGALITY OR INFIRMITY IN THE CIT (A)S COMMON ORDER UNDER ITA NOS. 167 TO 170/RJT/2015 (ITO VS. BARBADOS MARI TIME AGENCIES PVT. LTD.) A.Y. 2011-12 & 2014-15 - 5 - CHALLENGE ON ALL FOUR ISSUES (SUPRA) FRAMED THEREIN . WE THUS FIND NO REASON TO INTERFERE IN THE CIT(A)S ORDER UNDER CHALLENGE IN ALL FOUR CASES. 8. THESE FOUR REVENUES APPEALS ARE DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 28 TH DAY OF NOVEMBER, 2016.] SD/- SD/- (N. K. BILLAIYA) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 28/11/2016 TRUE COPY S K SINHA COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, RAJKOT