Additional District Magistrate Land Acquisition U.P. Avas and Vikas Parishad, Lucknow V. Joint Commissioner of Income Tax, TDS, Lucknow

ITA 174/LKW/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3978 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 07-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: YOGESH AGARWAL
• Keywords: Principle of natural justice; Non-deduction of tax; Ignorance of law; TDS
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI. A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO. 173 TO 175/LKW/2018 ASSESSMENT YEAR: 2010 - 11, 2011 - 12 & 2012 - 13 ADDL. DISTRICT MAGISTRATE LAND ACQUISITION UP AVAS AND VIKAS PARISHAD LUCKNOW V. JCIT (TDS) LUCKNOW TAN/PAN: LKNAO7381D (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI YOGESH AGARWAL, ADVOCATE RESPONDENT BY: SHRI AMIT NIGAM, D.R. DATE OF HEARING: 24 10 201 9 DATE OF PRONOUNCEMEN T: 08 11 201 9 O R D E R PER A. D. JAIN, V.P.: THESE ARE ASSESSEES APPEALS AGAINST THE RESPECTIVE ORDERS OF THE LD. CIT(A)-4, LUCKNOW, ALL DATED 12/1/2018, FOR ASSESSMENT YEARS 2010-11, 2011-12 & 2012-13. 2. THE ASSESSEE HAS RAISED COMMON GROUNDS OF APPEAL FOR ALL THE ASSESSMENT YEARS, WHICH ARE AS UNDER: 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-4, LUCKNOW [HERE- IN-AFTER REFERRED TO AS THE LD. CIT (A)'S] ERRED ON FACTS AND IN LAW IN PARTLY CONFIRMING THE INITIATION AND LEVY OF PENALTY U/S 271C OF THE I.T. ACT, 1961 FOR AN AMOUNT OF RS.1,99,411/- FOR ASSESSMENT YEAR 2010-11, RS.23,25,505/- FOR ASSESSMENT YEAR 2011-12 AND RS.79,363/- FOR ASSESSMENT YEAR 2012-13 ON THE PRESENT SET OF FACTS AND CIRCUMSTANCES. ITA NO.173 TO 175/LKW/2018 PAGE 2 OF 7 2. THE CIT (A) WAS NOT AT ALL JUSTIFIED IN CONFIRMING THE ACTION OF THE LD. JCIT WHILE INITIATING AND LEVYING THE PENALTY IN A MECHANICAL MANNER AND WITHOUT APPLICATION OF MIND. 3. THE IMPOSITION AND CONFIRMATION OF PENALTY IS BAD-IN-LAW AND VOID- AB-INITIO AS THE APPELLANT WAS NOT AWARE THAT HE WAS REQUIRED TO DEDUCT TAX AT SOURCE FROM THE INTEREST SO PAID ALONG WITH THE COMPENSATION AMOUNT PAID TO FARMERS FOR AGRICULTURAL LAND AND ALSO BECAUSE FORM 15G WERE FILED BY THE FARMERS AND HENCE THE APPELLANT WAS UNDER A BONA-FIDE BELIEF THAT HE IS NOT REQUIRED TO DEDUCT TDS AND THUS THIS BEING AN INADVERTENT DEFAULT THE PENALTY IS NOT EXIGIBLE IN THIS CASE AND MAY KINDLY BE ORDERED TO BE DROPPED. 4. THE LD. CIT (A) WAS FURTHER NOT AT ALL JUSTIFIED IN CONFIRMING THE LEVY OF PENALTY IN THE PRESENT CASE MORE SO BECAUSE THE APPELLANT HAD ACTED IN A BONA-FIDE BELIEF AND FURTHER HE DID NOT HAVE ANY LEGAL ADVICE FROM ANY PROFESSIONAL WHO COULD HAVE GUIDED HIM AND THUS THE DEFAULT BEING PURELY UNINTENTIONAL AND LEGITIMATE THE PENALTY SHOULD NOT HAVE BEEN LEVIED AND THEREFORE THE SAME MAY KINDLY ORDERED TO BE DELETED. 5. THE PENALTY SO LEVIED IS BAD-IN-LAW, CONTRARY TO FACTS, LAWS AND PRINCIPLES OF NATURAL JUSTICE AND FAIR-PLAY AND THUS MAY KINDLY BE ORDERED TO BE DELETED. 6. THAI THE LD. CIT (A) DID NOT AFFORD THE APPELLANT FIRM ANY PROPER OR SUFFICIENT OPPORTUNITY TO HAVE ITS SAY OR MAKE NECESSARY COMPLIANCE OF THE REASONS RELIED UPON BY HIM IN PASSING THE PRESENT ORDER AND THUS THE ORDER PASSED WITHOUT AFFORDING ADEQUATE OPPORTUNITY MAY KINDLY BE ORDERED TO BE QUASHED. 3. THE SOLE ISSUE INVOLVED IN THESE APPEALS, RELATES TO LEVY OF PENALTY UNDER SECTION 271C OF THE INCOME TAX ACT, 1961 FOR FAILURE TO DEDUCT TAX UNDER SECTION 194A OF THE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, THE LAND ACQUISITION AUTHORITY, A GOVT. AUTHORITY, ACQUIRED LANDS ON BEHALF OF UP AWAS EVAM VIKAS PARISHAD AND PAID COMPENSATION ITA NO.173 TO 175/LKW/2018 PAGE 3 OF 7 TO THE FARMERS, FOR THEIR LANDS. THE COMPENSATION ALSO INCLUDED THE AMOUNT OF INTEREST FOR THE DELAYED PAYMENT. ON PERUSAL OF RECORDS, DURING SPOT VERIFICATION CONDUCTED IN THE OFFICE OF THE ADDL. DISTRICT MAGISTRATE, LAND ACQUISITION, COLLECTORATE, LUCKNOW, IT WAS NOTICED THAT TDS HAS NOT BEEN DEDUCTED ON THE INTEREST PAID TO THE VARIOUS FARMERS/PERSONS. THEREFORE, THE ASSESSING OFFICER HELD THE ASSESSEE IN DEFAULT FOR NON-DEDUCTION OF TAX @ 10% AND WORKED OUT THE SHORT DEDUCTION OF TAX AND INTEREST CHARGEABLE UNDER SECTION 201(1A) OF THE ACT FOR THE DELAYED PERIOD, AS BELOW: S.NO. ASSESSMENT YEAR TOTAL SHORT DEDUCTION OF TAX INTEREST U/S. 201(1A) TOTAL SHORT DEDUCTION + INTEREST U/S 201(1A) 1 2010-11 1,55,716/- 43,695/- 1,99,411/- 2 2011-12 20,70,175/- 2,55,330/- 23,25,505/- 3 2012-13 74,871/- 4,492/- 79,363/- 5. THE ASSESSING OFFICER ACCORDINGLY INITIATED PENALTY PROCEEDINGS UNDER SECTION 271C OF THE ACT AND IMPOSED PENALTY EQUIVALENT TO THE AMOUNT OF TOTAL SHORT DEDUCTION + INTEREST UNDER SECTION 201(1A) OF THE ACT, AT RS.1,99,411/- FOR ASSESSMENT YEAR 2010-11, RS.23,25,505/- FOR ASSESSMENT YEAR 2011-12 AND RS.79,363/- FOR ASSESSMENT YEAR 2012-13. 6. AGGRIEVED, THE ASSESSEE PREFERRED APPEALS BEFORE THE LD. CIT(A), WHO CONFIRMED THE ORDER OF THE ASSESSING OFFICER LEVYING PENALTY UNDER SECTION 271C OF THE ACT AND DISMISSED THE APPEALS OF THE ASSESSEE. ITA NO.173 TO 175/LKW/2018 PAGE 4 OF 7 7. BEFORE US, THE LD. A.R. OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD FURNISHED COPIES OF FORM NO.15G OF THE RESPECTIVE DEDUCTEES FOR NON-DEDUCTION OF TAX, WHICH WERE SUBMITTED TO THE INCOME TAX DEPARTMENT IN DUE TIME; THAT THE DEPARTMENT DID NOT ACCEPT THE FORM NO. 15G FURNISHED BY THE ASSESSEE FOR THE REASON THAT THE PAN DETAILS WERE NOT MENTIONED THEREIN, BECAUSE, AS PER RULE 29C OF THE INCOME TAX RULES, W.E.F. 1/4/2010, NO DECLARATION IN FORM NO.15G OR 15H WILL BE TREATED AS VALID UNLESS THE DECLARANT (DEDUCTEE) HAS FURNISHED HIS CORRECT PAN IN SUCH DECLARATION; THAT THE ASSESSEE WAS IGNORANT OF RULE 29C, WHICH CAME INTO EFFECT FROM 1/4/2010, THEREFORE, UNDER A BONA FIDE BELIEF, THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE ON THE INTEREST PAID ON THE COMPENSATION; THAT SINCE THIS IS AN INADVERTENT MISTAKE AND DUE TO IGNORANCE OF LAW, THE TECHNICAL BREACH MAY BE IGNORED AND THE PENALTY MAY BE DELETED. THE LD. A.R. OF THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING DECISIONS: (1) CIT VS. CADBURY INDIA LIMITED IN ITA NOS.1397/2008, 1398/2008 AND 429/2009 (DELHI). (2) CIT VS. ITOCHU CORPORATION, 268 ITR 172 (DELHI). (3) CIT VS. MITSUI AND CO. LTD. AND ANOTHER, 272 ITR 545 (DELHI). (4) ITO VS. M/S CINCOM SYSTEMS INDIA (P) LTD. IN ITA NO.634/DEL/2010, ITAT DELHI BENCH. (5) ACIT (TDS) VS. EX. ENGINEER, PHED IN ITA NO297/JODH/2016, ITAT JODHPUR BENCH. (6) ITO (TDS) VS. PUSHPANJALI HOSPITAL AND RESEARCH CENTRE PVT. LTD. IN ITA NO.450/AGR/2015, ITAT AGRA BENCH. ITA NO.173 TO 175/LKW/2018 PAGE 5 OF 7 8. THE LD. D.R., ON THE OTHER HAND, PLACING RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW, HAS SUBMITTED THAT SINCE THE ASSESSEE DID NOT DEDUCT TDS UNDER SECTION 194A OF THE ACT ON THE INTEREST AMOUNT PAID TO THE FARMERS/PERSONS, THE AUTHORITIES BELOW HAVE RIGHTLY HELD THE ASSESSEE IN DEFAULT AND LEVIED PENALTY UNDER SECTION 271C OF THE ACT; AND THAT RULE 29C OF THE RULES IS VERY SPECIFIC THAT W.E.F. 1/4/2010, NO DECLARATION IN FORM 15G OR 15H WILL BE TREATED AS VALID UNLESS THE DECLARATION (DEDUCTEE) HAS FURNISHED HIS CORRECT PAN IN SUCH DECLARATION, THEREFORE, THE FORMS 15G OF THE DEDUCTEES, SUBMITTED BY THE ASSESSEE WITHOUT MENTION OF PAN, ARE INVALID, AND HENCE THE CHARGING OF INTEREST UNDER SECTION 201(1A) OF THE ACT ON THE DELAYED PAYMENT OF TDS AND LEVY OF PENALTY UNDER SECTION 271C OF THE ACT, HAS RIGHTLY BEEN MADE BY THE AUTHORITIES BELOW, AND HENCE, NO INTERFERENCE IS CALLED FOR IN THE ORDERS OF THE AUTHORITIES BELOW. THE LD. D.R. FURTHER SUBMITTED THAT THE PLEA OF THE ASSESSEE REGARDING IGNORANCE OF LAW CANNOT BE ACCEPTED, AS THE ASSESSEE IS A STATE GOVERNMENT DEPARTMENT, WHO HAS COMPETENT TAX PROFESSIONALS TO ASSIST IN THE TAX MATTERS, MOREOVER, NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE TO SHOW THAT THE ASSESSEE WAS UNDER A BONA FIDE BELIEF THAT ON THE PAYMENT OF INTEREST, TDS WAS NOT DEDUCTIBLE. 9. HEARD. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAD PAID COMPENSATION TO THE FARMERS FOR THE LANDS ACQUIRED BY IT, ALONG WITH INTEREST FOR THE DELAYED PAYMENT, BUT NO TDS, AS ELIGIBLE, HAS BEEN DEDUCTED ON THE INTEREST AMOUNT. THE DEPARTMENT WORKED OUT THE SHORT DEDUCTION OF TAX AND INTEREST THEREON AND ACCORDINGLY INITIATED PENALTY PROCEEDINGS UNDER SECTION 271C OF THE ACT FOR EACH YEAR. THE SUBMISSION OF THE ITA NO.173 TO 175/LKW/2018 PAGE 6 OF 7 ASSESSEE WAS THAT THE ASSESSEE HAD PAID THE COMPENSATION ALONG WITH INTEREST VOLUNTARILY AND THERE EXISTED A BONA FIDE BELIEF THAT TAX WAS NOT DEDUCTIBLE AT SOURCE, AS THE ASSESSEE WAS IGNORANT OF THE AMENDMENT IN RULE 29C OF THE I.T. RULES, RELATING TO FURNISHING OF PAN IN FORM 15G, WHICH WAS BROUGHT INTO STATUTE W.E.F. 1/4/2010, I.E., THE YEAR UNDER CONSIDERATION. 10. WE FIND MUCH SUBSTANCE IN THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE. RULE 29C OF THE I.T. RULES CAME INTO FORCE W.E.F. 1/4/2010 AND, THE YEARS UNDER CONSIDERATION WERE THE INITIAL YEARS IN WHICH THE APPLICABILITY OF THE SAID RULE CAME INTO EFFECT. IT WAS, UNDOUBTEDLY UNDER A BONA FIDE BELIEF, IN IGNORANCE OF RULE 29C THAT THE ASSESSEE DID NOT MAKE TDS ON THE INTEREST PAID ON THE LAND ACQUISITION COMPENSATION. THIS, EVIDENTLY, COMPRISES AN INADVERTENT MISTAKE AND AMOUNTS TO A MERE TECHNICAL BREACH, FOR WHICH THE PENALTY IN QUESTION OUGHT NOT TO HAVE BEEN LEVIED. EVEN OTHERWISE, IT GOES WITHOUT SAYING THAT THE ASSESSEE INSTITUTION, A PUBLIC AUTHORITY IS A GOVERNMENT AUTHORITY, I.E., THE LAND ACQUISITION AUTHORITY, WHICH ACQUIRED LANDS ON BEHALF OF U.P. AVAS EVAM VIKAS PARISHAD. THE COMPENSATION AND INTEREST ON DELAYED PAYMENT THEREOF, AS SUCH, WAS PAYMENT MADE BY THE GOVERNMENT AUTHORITY. THOUGH IT HAS BEEN ARGUED ON BEHALF OF THE DEPARTMENT THAT NOTHING HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE TO SHOW THAT THE BELIEF ENTERTAINED BY THE ASSESSEE WAS A BONA FIDE BELIEF, WE FIND THE POSITION TO BE JUST REVERSE. IT IS THE DEPARTMENT, WHICH HAS REMAINED UNABLE TO PRODUCE ANYTHING ON RECORD TO PROVE THAT THE BELIEF ENTERTAINED BY THE ASSESSEE WAS A MALA FIDE BELIEF. IT CANNOT BE GAINSAID THAT IN MATTERS LIKE ONES AT HAND, NO ELEMENT OF PERSONAL PROFIT TO THE ASSESSEE, IS ATTRIBUTABLE. TOO, IT IS ITA NO.173 TO 175/LKW/2018 PAGE 7 OF 7 UNDENIABLE THAT THE COMPENSATION AS WELL AS INTEREST ON DELAYED PAYMENT THEREOF HAS BEEN MADE OVER TO THE FARMERS VOLUNTARILY. 11. IN VIEW OF THE ABOVE, FINDING THE GRIEVANCE OF THE ASSESSEE TO BE JUSTIFIED, THE SAME IS ACCEPTED. THE PENALTIES OF RS.1,99,411/- FOR ASSESSMENT YEAR 2010-11, RS.23,25,505/- FOR ASSESSMENT YEAR 2011-12 AND RS.79,363/- FOR ASSESSMENT YEAR 2012-13 ARE DELETED. 12. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/11/2019. SD/ - SD/ - [ T. S. KAPOOR ] [ A. D. JAIN ] ACCOUNTANT MEMBER VICE PRESIDENT DATED:08/11/2019 JJ:3110 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSISTANT REGISTRAR