I.T.O Wd - 28(3),kolkata, Kolkata V. Shri RaN Vijay Singh, Kolkata

ITA 2038/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4816 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-05-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 28-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B PRAMANK J
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Additional evidence; Question of law; Reasonable cause
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 2038 - 2039 / KOL / 2013 ASSESSMENT YEARS :2004-05 & 2005-06 ITO WARD-28(3), AAYKAKAR BHAVAN, DAKSHIN, 3 RD FLOOR, 2, GARIAHAT ROA, SOUTH, KOLKATA-700 068 V/S . SHRI RAN VIJAY SINGH 2, HIDE ROAD, KOLKATA-700 043 [ PAN NO.AMHPS 8770 S ] /APPELLANT .. / RESPONDENT /BY ASSESSEE SHRI MIRAJ D SHAH, AR /BY RESPONDENT SHRI P.B.PRAMANK, JCIT-DR /DATE OF HEARING 24-05-2016 ! /DATE OF PRONOUNCEMENT 27-05-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- BOTH APPEALS BY REVENUE ARE ARISING OUT OF COMMON ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS)-XIV, KOLKATA D ATED 26.04.2013. PENALTY IMPOSED BY ACIT, RANGE-28, KOLKATA U/S 271C OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HI S ORDER DATED 29.08.2008 FOR ASSESSMENT YEARS 2004-05 & 2005-06 RESPECTIVELY. SHRI MIRAJ D SHAH, LD. AUTHORIZED REPRESENTATIVE AP PEARING ON BEHALF OF ASSESSEE AND SHRI P.B.PRAMANIK, LD. DEPARTMENTAL RE PRESENTATIVE APPEARING ON BEHALF OF REVENUE. ITA NO.2038-39/KOL/2013 A.YS 04-05 & 05 -06 ITO WD-28(3), KOL. V. SH RAN VIJAY SINGH PAGE 2 2. SINCE THE COMMON GROUNDS ARE INVOLVED EXCEPT FIG URE IN BOTH THE APPEALS, THEREFORE WE HEARD THEM TOGETHER AND DEEM IT APPROPRIATE TO DISPOSE THEM BY WAY OF COMMON ORDER. WE THEREFORE ARE TAKIN G THE FACTS OF THE CASE FOR AY 2004-05 AS A LEAD CASE FOR THE SAKE OF CONVENIENCE. GROUND REPRODUCED BELOW:- ITA NO.2038/KOL/2013 (A.Y.04-05) 1, THAT THE LD. C.I.T.(A)HAS ERRED BOTH IN THE QUE STION OF LAW AS WELL AS IN FACT BY DELETING THE PENALTY AMOUNT OF RS.18, 18,348/-, LEVIED U/S.271C ON THE BASIS OF HIS OBSERVATION THAT THE A SSESSEE HAD REASONABLE CAUSE FOR NOT DEDUCTING TAX AT SOURCE FR OM THE RENTAL PAYMENTS, AS IT IS NOT CLEAR FROM HIS ORDER WHETHER HE IS EXONERATING THE ASSESSEE FROM THE LIABILITY TO DEDUCT TAX ON THE GR OUND OF THE ASSESSEES LACK OF AWARENESS AS REGARDS HIS LIABILITY OF TAX D EDUCTION AS PER LAW OR ON THE GROUND TAKEN BY THE ASSESSEE IN HIS REVISED GROUNDS OF APPEAL THAT HE DID NOT DEDUCT TAX FROM THE RENTAL PAYMENTS ON THE PERCEPTIONS THAT THE KOLKATA PORT TRUST WAS EXEMPT FROM TAX AND PRESTIGE TRADING CO. IS A LOSS MAKING PUBLIC SECTOR UNDERTAKING . HERE, THE TWO PROPOSITIONS ARE NOT ONLY DIFFERENT BUT CONTRADICT EACH OTHER AS WELL. 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THIS AP PEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE PENALTY ORDER PASSED BY THE AO UNDER SECTION 271C OF THE ACT ON ACCOUNT OF NON-DEDUCTION OF TDS. 3.1 FACTS IN BRIEF ARE THAT ASSESSEE IS AN INDIVIDU AL AND IS RUNNING TWO PROPRIETORSHIP FIRMS IN THE NAME OF M/S SINGH TRADI NG COMPANY AND PRESTIGE TRADING COMPANY. FOR THE YEAR UNDER CONSIDERATION, BOTH THE CONCERNED OF THE ASSESSEE HAVE PAID RENT TO KOLKATA PORT TRUST ( KPT FOR SHORT) WITHOUT DEDUCTING TAX DEDUCTED AT SOURCE (TDS FOR SHORT) AS SPECIFIED U/S. 194I OF THE ACT. THE AO ALSO, DURING THE COURSE OF ASSESSME NT PROCEEDING, OBSERVED FROM THE TAX AUDIT REPORT THAT NO TDS WAS DEDUCTED AND CREDITED TO THE CENTRAL GOVT. IN ACCORDANCE WITH THE PROVISION UNDE R CHAPTER XVII-B ON THE PAYMENT OF RENT. IT WAS ALSO OBSERVED THAT THE TURN OVER OF ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS OF RS.1,35,39,362/- WHI CH EXCEEDS LIMIT OF GROSS RECEIPT AS MENTIONED IN THE PROVISION OF SEC.194I O F THE ACT. SUBSEQUENTLY, AO ISSUED NOTICES ON 29.02.2008 AND 21.08.2008 RESP ECTIVELY WHICH WAS DULY ITA NO.2038-39/KOL/2013 A.YS 04-05 & 05 -06 ITO WD-28(3), KOL. V. SH RAN VIJAY SINGH PAGE 3 SERVED UPON ASSESSEE FOR SEEKING CLARIFICATION BEFO RE IMPOSING PENALTY BUT NO COMPLIANCE WAS MADE THEREON. AS SUCH, THERE WAS NO OPTION AVAILABLE TO AO EXCEPT TO LEVY THE PENALTY U/S 271C OF THE ACT. ACC ORDINGLY, AO LEVIED PENALTY BY PASSING ORDER U/S 271C OF THE ACT ON 29.08.2008. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHERE IT WAS SUBMITTED THAT THE ASSESSEE COULD NOT UNDERSTAN D THE PROVISION OF TDS. THE ASSESSEE WAS UNDER THE WRONG IMPRESSION THAT BE ING INDIVIDUAL HE WAS NOT REQUIRED TO DEDUCT TDS. THE ASSESSEE ALSO HAD N O TAN NO. AND NEVER DEDUCTED TAX IN EARLIER YEARS OF BUSINESS. BESIDES ABOVE, THE LD. COUNSEL OF THE ASSESSEE NEVER GUIDED TO THE ASSESSEE FOR THE A PPLICABILITY OF TDS PROVISION. CONSIDERING THE SAME, LD. CIT(A) DELETED THE PENALTY IMPOSED U/S. 271C OF THE ACT BY OBSERVING AS UNDER:- I AM OF THE OPINION THAT SINCE THE ASSESSEE MISCON STRUED THE PROVISIONS OF LAW AND ALSO WAS WRONGLY ADVISED BY H IS CHARTERED ACCOUNTANT NO PENALTY U/S 271C IS IMPOSABLE IN THIS CASE. IN LIGHT OF THESE FACTS, I AM OF THE CONSIDERED VIEW THAT THERE WAS REASONABLE CAUSE FOR NOT DEDUCTING TAX AT SOURCE. HENCE, RESPE CTFULLY FOLLOWING THE DECISIONS CITED ABOVE I HOLD THAT NO PENALTY WAS LE VIBLE U/S. 271C ON THE APPELLANT. HENCE, I HEREBY DELETE THE PENALTY OF RS .18,18,318/- IMPOSED BY THE AO. ACCORDINGLY, REVISED GROUND NO-4 IS ALLO WED IN FULL. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 5. BEFORE US LD. DR SUBMITTED THAT THE PLEA TAKEN B Y ASSESSEE BEFORE THE FIRST APPELLATE STAGE THAT HE WAS NOT AWARE ABOUT T HE PROVISION OF TDS AS SPECIFIED UNDER THE IT ACT IS NOT TENABLE. THERE IS NO AMBIGUITY IN THE PROVISION OF SEC. 194I OF THE ACT AND THE LANGUAGE USED IN TH E SECTION IS PLAIN AND SIMPLE WHICH CAN BE UNDERSTOOD BY ASSESSEE. THE ASS ESSEE DOES NOT REQUIRE ANY GUIDANCE FROM CHARTERED ACCOUNTANT. FURTHER, LD . DR SUBMITTED THAT IT IS NOT A NEW BUSINESS ACTIVITY OF THE ASSESSEE. THEREF ORE, TDS PROVISION MUST BE WELL IN HIS KNOWLEDGE. THE LD. DR FURTHER SUBMIT TED THAT LD. CIT(A) DELETED THE PENALTY ON THE BASIS OF ADDITIONAL EVIDENCE SUB MITTED AT THE TIME OF ITA NO.2038-39/KOL/2013 A.YS 04-05 & 05 -06 ITO WD-28(3), KOL. V. SH RAN VIJAY SINGH PAGE 4 APPELLATE PROCEEDING. THE LD. CIT(A) FAILED TO REFE R THE ADDITIONAL EVIDENCE TO AO BEFORE ACCEPTING THE SAME AND HE VEHEMENTLY RELI ED ON THE ORDER OF AO. ON THE OTHER HAND, LD AR SUBMITTED PAPER BOOK WHICH IS RUNNING FROM PAGES 1 TO 54 AND STATED THAT THE PAYEE OF RENT IN THE IN STANT CASE IS KPT AND ITS INCOME IS NOT CHARGEABLE TO TAX. HE FURTHER SUBMITT ED THAT FOR THE AY 2005-06 THE PAYEE HAS SUBMITTED A CERTIFICATE ISSUED BY IT DEPARTMENT U/S 197 OF THE ACT FOR NIL DEDUCTION OF TDS. HE FURTHER SUBMITTED THAT ASSESSEE WAS OF THE VIEW THAT THE PROVISION OF TDS IS NOT APPLICABLE AN D NO LD. COUNSEL GUIDED HIM ABOUT THE APPLICABILITY OF PROVISION OF TDS. THE LD . AR ALSO SUBMITTED THAT RENT WAS PAID TO GOVT. ORGANIZATION AND SAME MUST HAVE B EEN INCLUDED IN THE TOTAL INCOME OF THE PAYEE AND AS SUCH THERE IS NO LOSS TO THE GOVT. FOR NON DEDUCTION OF TDS AND HE RELIED ON THE ORDER OF LD. CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE AFORESAID DISCUSSION, WE FIND THAT ASSESSEE IN THE INSTANT CASE FAILED TO DEDUCT TDS FROM THE PAYM ENT OF RENT TO M/S KPT. ACCORDINGLY, AO IMPOSED PENALTY U/S. 271C OF THE AC T BUT SUBSEQUENTLY THE SAME WAS DELETED BY LD. CIT(A). NOW THE QUESTION BE FORE US ARISE SO AS TO WHETHER THE ASSESSEE IS DEFAULTER OF TDS IN TERMS O F SEC. 271C OF THE ACT. FROM THE FACTS OF THE CASE, WE FIND THAT INCOME OF KPT IS EXEMPTED FROM TAX AND IN THIS CONNECTION, WE ARE PUTTING OUR RELIANCE IN THE ORDER OF THIS TRIBUNAL IN THE CASE OF M/S GOURISHANKAR BIHANI V. DCIT IN ITA NO.1127/KOL/2011 FOR AY 2007-08 DATED 18.12.2014, WHEREIN THIS TRIBUNAL HAS HELD AS UNDER:- 7. IN VIEW OF THE ABOVE FACTS, WE ARE OF THE VIEW THAT IN THE INSTANT CASE NO TAX WAS DEDUCTIBLE AT SOURCE UNDER SECTION 194I READ WITH SECTION 204 COMPRISED IN CHAPTER XVII-B FROM THE RENT PAID BY THE ASSESSEE TO KPT. THIS IS BECAUSE SUCH RENT WAS NOT TO BE INCLUD ED IN THE TOTAL INCOME OF THE KPT AND WAS, THEREFORE, NOT CHARGEABL E UNDER THE PROVISIONS OF THE ACT. IN THE CASE LAW REFERRED BY LD. SR.DR THE FACT RELATING TO THE CLAIM OF EXEMPTION OF THE INCOME OF KPT WAS NOT BEFORE TRIBUNAL OR THAT ISSUE WAS NOT RAISED BUT IN THE IN STANT CASE, KPT WAS NOT REQUIRED TO PAY ANY TAX AND IN TURN CANNOT BE T REATED TO BE IN DEFAULT WITHIN THE MEANING OF SECTION 201(1). ACCORDINGLY, WE ARE OF THE VIEW ITA NO.2038-39/KOL/2013 A.YS 04-05 & 05 -06 ITO WD-28(3), KOL. V. SH RAN VIJAY SINGH PAGE 5 THAT NO DISALLOWANCE OUGHT TO HAVE BEEN MADE UNDER SECTION 40(A)(IA) OF THE ACT. TAKING A CONSISTENT VIEW IN THE CASE OF GOURISHANKRA BIHANI (SUPRA) WE FIND THAT AS SUCH THERE WAS NO NEED ON THE PART OF ASSES SEE TO DEDUCT TDS FROM THE PAYMENT MADE TO KPT. IN THE SIMILAR FACTS OF TH E CASE IN CIVIL APPEAL NO. 1704 OF 2008 DATED 07.01.2016 OF HON'BLE SUPREME CO URT IN THE CASE OF CIT V. BANK OF NOVA SCOTIA WHEREIN THE HON'BLE SUPREME COURT HAS UPHELD THE ORDER OF ITAT DELHI BENCH IN FAVOUR OF ASSESSEE AND RELEVANT EXTRACT OF THE DECISION IS REPRODUCED BELOW:- 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS. IN THE INSTANT CASE WE ARE NOT DEALING WITH COLLECTION OF TAX U/S. 201(1) OR COMPENSATORY INTEREST US. 201(1A). THE CASE OF THE ASSESSEE IS THAT THESE AMOUNTS HAVE ALREADY BEEN PAID SO AS TO END DISPUTE WITH REVENUE. IN THE PRESENT APPEALS WE ARE CONCERNED WI TH LEVY OF PENALTY U/S. 271-C FOR WHICH IT IS NECESSARY TO ESTABLISH T HAT THERE WAS CONTUMACIOUS CONDUCT ON THE PART OF THE ASSESSEE. W E FIND THAT ON SIMILAR FACTS HON'BLE DELHI HIGH COURT HAVE DELETED LEVY OF PENALTY US. 271-C IN THE CASE OF M/S ITOCHU CORPORATION, REPORT ED IN 268 ITR 172 (DEL) AND IN THE CASE OF CIT VS. MITSUI & COMPANY LTD., REPORTED IN 272 ITR 545. RESPECTFULLY FOLLOWING THE AFORESAID JUDGM ENTS OF HON'BLE DELHI HIGH COURT AND THE DECISION OF THE ITAT, DELH I IN THE CASE OF TELEVISION EIGHTEEN INDIA LTD., WE ALLOW THE ASSESS EES APPEAL AND CANCEL THE PENALTY AS LEVIED U/S. 271-C. ACCORDINGLY IN OUR CONSIDERED VIEW THE ADDITIONS UN DER THE ASSESSMENT WERE NOT REQUIRED TO BE MADE AND CONSEQUENTLY PENALTY IM POSED BY AO U/S 271C OF THE ACT WILL NOT STAND. BUT REVENUE TOOK UP THE AFORESAID MATTER BEFORE HON'BLE DELHI HIGH COURT WHICH WAS DISMISSED ON THE GROUND THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IN THE MATTER AN D SUBSEQUENTLY SAME WAS AFFIRMED BY HON'BLE SUPREME COURT. ACCORDINGLY, WE FIND THAT IN THE INSTANT CASE, THE PAYEE WAS NOT LIABLE TO TAX ON THE RENTAL INCOME RECEIVED BY ASSESSEE AND AS SUCH THERE WAS NO REQUIREMENT ON TH E PART OF ASSESSEE TO DEDUCT TDS U/S. 194-I OF THE ACT. RESPECTFULLY FOLL OWING SUCH PRECEDENTS, PENALTY IMPOSED ON ACCOUNT OF NON-DEDUCTION OF TDS ON THE PAYMENT OF RENT WILL NOT STAND IN TERMS OF PROVISION OF SEC. 271-C OF THE ACT. IN THIS VIEW OF THE ITA NO.2038-39/KOL/2013 A.YS 04-05 & 05 -06 ITO WD-28(3), KOL. V. SH RAN VIJAY SINGH PAGE 6 MATTER, WE HAVE NO HESITATION IN UPHOLDING THE ORDE R OF LD. CIT(A). THIS GROUND OF REVENUES APPEAL IS DISMISSED. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. COMING TO ITA NO 2039/KOL/2013 (A.Y.05-06) 8. AT THE TIME OF HEARING BOTH THE PARTIES CONCEDED THAT WHATEVER VIEW TAKEN IN THE APPEAL IN ITA NO.2038/KOL/2013 MAY BE TAKEN IN THIS APPEAL ALSO, WE HOLD ACCORDINGLY. 9. IN COMBINED RESULT, BOTH THE APPEALS OF REVENUE STA ND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 27/ 05/2016 SD/- SD/- (S.S.VISHWANETHRA RAVI) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP '#$- 27 / 05 /201 6 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-RAN VIJAY SINGH, 2, HIDE ROAD, KOLKATA-70 0 043 2. /REVENUE-ITO, WARD-28(3), AAYAKAR BHAVAN, DAKSHIN, 3 RD FL, 2, GARIAHAT ROAD SOUTH, KOLKATA -700 068 3.#,#-. / / CONCERNED CIT KOLKATA 4. /- / CIT (A) KOLKATA 5.2 3455-., -.!, / DR, ITAT, KOLKATA 6.489:; / GUARD FILE. BY ORDER/ , /TRUE COPY/ /# -.!,