The Fiancial Co.Op.Bank Ltd., Surat V. The Jt.CIT.,(TDS), Surat

ITA 2062/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76770 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-05-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 19-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Bonafide belief; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SRI D.K TYAGI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTAN T MEMBER THE FINANCIAL CO-OP. BANK LTD, 3 RD FLOOR, ABHISHEK MARKET, RING ROAD, SURAT, PAN: AAAAT3157E (APPELLANT) VS JOINT COMMISSIONER OF INCOME TAX (TDS), SURAT (RESPONDENT) REVENUE BY: SRI P.L. KUREEL, SR.D.R. ASSESSEE BY: SRI MEHUL SHAH, A.R. DATE OF HEARING : 29-05-2014 DATE OF PRONOUNCEMENT : 30-05-20 14 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- ALL THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDERS OF LD. CIT(A) DATED 17-06-211 CONFI RMING THE PENALTY IMPOSED BY AO U/S. 271(1)(C) OF THE ACT. ITA NOS. 2061 TO 2064/AHD/2011 ASSESSMENT YEAR 2003-04,04-05,05-06 & 2006-07 I.T.A NOS.2461-2464/AHD/2011 A.Y. 2003-04,04-05 ,05-06 & 06-07 PAGE THE FINANCIAL CO-OP. BANK LTD VS. JCIT 2 2. SINCE THESE APPEALS BELONG TO SAME ASSESSEE AND ARE ON SIMILAR FACTS EXCEPT THE FIGURES, THEY ARE HEARD TOGETHER A ND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER BY TAKING THE FACTS FOR ASSESSMENT YEAR 2003-04. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A C O-OPERATIVE BANK. DURING THE ASSESSMENT PROCEEDINGS, AO OBSERVED THA T THE ASSESSEE HAS NOT DEDUCTED TDS FROM THE PAYMENT MADE TO THE STATE BANK OF INDIA AS MICR CHARGES DURING THE YEAR UNDER APPEAL. ACCORD ING TO AO ASSESSEE SHOULD HAVE DEDUCTED TDS ON THIS PAYMENT U/S. 194J OF THE ACT. SINCE SUCH PAYMENTS WERE TOWARDS FEES FOR TECHNICAL CHARG ES WHICH WAS CHARGED FOR PROVIDING MANAGERIAL SERVICES, PLACING RELIANCE ON THE DECISION OF HONBLE AHMEDABAD BENCH OF TRIBUNAL IN THE CASE OF CANARA BANK VS. ITO REPORTED IN 117 ITD 207 WHEREIN IT WAS HELD THA T THE ASSESSEE WAS LIABLE TO DEDUCT TDS U/S. 194J OF THE ACT FROM THE PAYMENT MADE TO THE STATE BANK OF INDIA AS MICR CHARGES. THE ASSESSEE BEING A DEDUCTOR WAS SUPPOSED TO BE AWARE OF THE TDS PROVISIONS IRRE SPECTIVE OF THE FACT WHETHER ITS OWN INCOME WAS TAXABLE OR NOT. IN ABSE NCE OF ANY REASONABLE CAUSE, THE AO LEVIED PENALTY U/S. 271(1)(C) FOR NON -DEDUCTION OF TDS ON MICR CHARGES OF RS. 40,533/-. THIS ACTION OF THE AO WAS CONFIRMED BY LD. CIT(A) WHEN ASSESSEE WENT IN APPEAL BEFORE HIM. 4. FURTHER AGGRIEVED NOW THE ASSESSEE IS BEFORE US. 5. AT THE TIME OF HEARING LEARNED COUNSEL OF THE AS SESSEE SUBMITTED THAT ASSESSEE WAS IN BONAFIDE BELIEF THAT TDS WAS N OT DEDUCTABLE ON MICR CHARGES AS IN EARLIER YEARS ALSO NO SUCH TDS W AS DEDUCTED AND NO ACTION WAS TAKEN BY THE REVENUE AGAINST THE ASSESSE E. THEREFORE, IN THE I.T.A NOS.2461-2464/AHD/2011 A.Y. 2003-04,04-05 ,05-06 & 06-07 PAGE THE FINANCIAL CO-OP. BANK LTD VS. JCIT 3 YEAR UNDER APPEAL ASSESSSEE DID NOT DEDUCT TDS UNDE R A BONAFIDE BELIEF THAT PAYMENT OF MICS CHARGES WAS NOT IN THE NATURE OF FEES FOR TECHNICAL CHARGES. HOWEVER AFTER THE DECISION OF HONBLE TRI BUNAL IN THE CASE OF CANARA BANK WHICH WAS DELIVERED ON 15 TH FEB, 2008 ASSESSEE HAS BEEN REGULARLY DEDUCTING TDS ON THESE CHARGES. CONCLUDI NG HIS ARGUMENT LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT ASSE SSEE WAS PREVENTED BY REASONABLE CAUSE IN NOT DEDUCTING THE TDS, THERE FORE PENALTY IMPOSED BY AO AND SUSTAINED BY LD. CIT(A) MAY KINDLY BE DEL ETED. FOR MAKING THIS SUBMISSION RELIANCE WAS PLACED ON THE DECISION OF A HMEDABAD BENCH OF TRIBUNAL IN THE CASE OF CENTRAL BANK OF INDIA VS. J CIT VIDE ITA NOS. 2322,2323,2324 & 2325/AHD/2011 DATED 15/10/2013 IN WHICH ON SIMILAR FACTS SUCH PENALTY WAS DELETED. LD. DR HOWEVER REL IED ON THE ORDERS OF LOWER AUTHORITIES. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT THERE IS NO DISPUTE ABOUT THE FACT THAT TDS WAS NOT DEDUCTED ON MICR CHARGES. IT IS ALSO NOT IN DISPUTE THAT IN EARLIER YEARS ALSO ASSESSEE WAS NOT DEDUCTING TDS ON THESE CHARGES AND NO PENAL ACT ION WAS INITIATED BY THE AO. THUS, IT CAN BE SAID THAT ASSESSEE WAS UND ER BONAFIDE BELIEF THAT ON PAYMENT OF MICR CHARGES NO TDS WAS TO BE DEDUCTE D BY IT. WE FURTHER FIND THAT AFTER THE CONTROVERSY WAS RESOLVE D BY THE HONBLE TRIBUNAL, IN THE CASE OF CANARA BANK VS. ITO (117 ITD 207) HO LDING THAT ASSESSEE WAS REQUIRED TO DEDUCT TDS ON MICR CHARGES ASSESSEE HAS BEEN REGULARLY DEDUCTING TAX ON SUCH PAYMENT. IN THE LIG HT OF THESE FACTS AND CIRCUMSTANCES, WE ARE SATISFIED THAT ASSESSEE WAS P REVENTED BY REASONABLE CAUSE IN NOT DEDUCTING TDS ON THE PAYMEN T OF MICR CHARGES. THIS VIEW OF OURS GETS SUPPORT FROM THE DECISION OF HONBLE TRIBUNAL IN THE CASE OF CENTRAL BANK OF INDIA VS. JCIT (SUPRA) WHER EIN UNDER SIMILAR FACTS I.T.A NOS.2461-2464/AHD/2011 A.Y. 2003-04,04-05 ,05-06 & 06-07 PAGE THE FINANCIAL CO-OP. BANK LTD VS. JCIT 4 HONBLE TRIBUNAL HAS DELETED THE PENALTY IMPOSED BY AO AND SUSTAINED BY LD. CIT(A) U/S. 271(1)(C). IN VIEW OF THE ABOVE, THE PENALTY IMPOSED BY AO AND SUSTAINED BY LD. CIT(A) IS HEREBY DELETED. 7. IN THE RESULT, APPEALS FILED BY ASSESSEE ARE ALL OWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (ANIL CHATURVEDI) ( D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 30/05/2014 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/ , / ,