AdvanceMultisystem Broddband Communications pvt. Ltd., Hooghly V. Income Tax Officer, (TDS),Hooghly, Hooghly

ITA 2191/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4362 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 28-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 01-08-2013
• Court: TRIBUNAL
• Department Lawyers: P K CHAKRABORTYJCIT LD
• Assessee Lawyers: SOUMITRA CHOUDHURY LD
• Keywords: Initiation of penalty proceedings
• Section: 194C; 201(1)

Judgement Text

ITA NOS. 2191 TO 2193/KOL/13 ADVANCE MULTISYSTEM BROADBAND COMMNS.P.LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL,B BENCH, KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBE R AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBE R I.T.A. NO. 2191/KOL/2013 A.Y: 2008-09 (1 ST QTR) I.T.A. NO. 2192/KOL/2013 A.Y: 2008-09 (3 RD QTR) I.T.A. NO. 2193/KOL/2013 A.Y: 2008-09 (4 TH QTR) ADVANCE MULTISYSTEM VS. I.T.O (TDS), BROADBAND COMMUNICATIONS HOOGHLY PVT. LTD PAN: AAECA 6502C (APPELLANT) (RESPONDENT) APPEARANCES BY: SHRI SOUMITRA CHOUDHURY, ADVOCATE, LD.AR FOR THE ASSESSEE SHRI P.K. CHAKRABORTY, JCI T, LD.SR.DR DATE OF HEARING : 28-07- 2016 DATE OF PRONOUNCEMENT : 19-10-2016 O R D E R SHRI S.S. VISWANETHRA RAVI, JM :- THESE THREE APPEALS BY THE ASSESSEE ARE DIRECTED AG AINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS), KOLKATA ALL DATED 17-05-2013 FOR THE ASS ESSMENT YEAR 2008-09 (1 ST QTR, 3 RD QTR & 4 TH QTR), WHEREIN HE CONFIRMED THE PENALTY ORDER PASSED BY THE AO U/S. 221/201(1A) R.W.S. 194A AND 194C OF THE ACT. 2. SINCE THE ISSUES INVOLVED IN ALL THE APPEALS ARE COMMON, THEREFORE, THEY ARE HEARD TOGETHER AND CONSOLIDATE D ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE. ITA NOS. 2191 TO 2193/KOL/13 ADVANCE MULTISYSTEM BROADBAND COMMNS.P.LTD 2 3. IN THESE APPEALS, THE ASSESSEE HAS RAISED THE FO LLOWING COMMON GROUNDS OF APPEAL FOR THE ASSESSMENT YEAR (1 ST QTR/ 3 RD QTR AND 4 TH QTR) UNDER CONSIDERATION:- 1. FOR THAT ON THE FACTS OF THE CASE, THE ORDER PAS SED BY THE LD. C.I.T.(A) IS COMPLETELY ARBITRARY, UNJUSTIF IED AND ILLEGAL. 2. FOR THAT ON THE FACTS OF THE CASE, THE LD. CIT(A ) WAS WRONG IN DITTOING THE ORDER OF THE A.O. AND CONFIRM ING THE PENALTY U/S 221/201(1A) AMOUNTING TO RS.35,000/-, RS.40,000/- & RS.40,000/- WHICH IS COMPLETELY ARBIT RARY, UNJUSTIFIED AND ILLEGAL. 3. FOR THAT ON THE FACTS OF THE CASE, THE LD. CIT(A ) WAS WRONG AND NOT CONSIDERING THE FACTS THAT THE T.D.S. AMOUNT WAS DEPOSITED BY THE COMPANY EVEN BEFORE RECEIVING OF SHOW CAUSE NOTICE, THEREFORE, THE APPE LLANT COMPANY WAS NOT DEFAULT LEVIED PENALTY IX] S. 221 O F THE IT. ACT, THUS HIS ACTION IS COMPLETELY ARBITRARY, U NJUSTIFIED AND ILLEGAL. 4. FOR THAT ON THE FACTS OF THE CASE, THE LD. CIT(A ) WAS NOT CONSIDERED THE FACTS AND FAILED TO APPRECIATE T HE APPELLANT'S EXPLANATIONS IN ITS TRUE PERSPECTIVE, H ENCE THE PENALTY ORDER U/S. 221/201(1A) IS LIABLE TO BE CAN CELLED AND/ OR QUASHED. 5. FOR THAT ON THE FACTS OF THE CASE, WHETHER THE L D. C.LT.(A) IS RIGHT IN LAW AND ON FACTS IN CONFIRMING THE ORDER PASSED BY THE A.O. IMPOSING PENALTY U/S. 221/201(1A) AMOUNTING TO RS. 35,000/- IN RESPECT OF DEFAULT OF T.D.S. WHICH HAS NOT BEEN DISPUTED IN AP PEAL. 6. FOR THAT THE ID. CIT(A) HAS MISINTERPRETED AND O R MISUNDERSTAND THE DECISION OF THE COURTS WHICH HAS RESULTED IN CONFIRMING PENALTY ORDER U/S. 221/201(1 A) 7. FOR THAT THE APPELLANT RESERVES THE RIGHT TO ADD UCE ANY FURTHER GROUND/GROUNDS, EVIDENCE OR EVIDENCES ON HE ARING OF APPEAL. 4. BRIEF FACTS OF THIS CASE ARE THAT THE ASSESSEE I S A PRIVATE LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF CABL E OPERATOR AND BROADBAND SERVICES. DURING THE PROCEEDINGS U/S. 221/201(1A) THE AO FOUND THAT THE ASSESSEE DEDUCTED THE TDS AMOUNT TO THE EXTENT OF RS.1,78,368/- U/S. 194A/194 C OF THE ACT AND DEPOSITED THE SAME BEYOND THE DUE DATE. THE AO ITA NOS. 2191 TO 2193/KOL/13 ADVANCE MULTISYSTEM BROADBAND COMMNS.P.LTD 3 FURTHER FOUND THAT THE ASSESSEE DEPOSITED THE INTER EST THEREON, WHICH ALSO PAID U/S. 201(1A) OF THE ACT BEYOND THE DUE DATE. THEREBY THE AO INITIATED PENALTY PROCEEDINGS U/S. 2 21/201(1A). AGAINST WHICH, THE ASSESSEE SUBMITTED ITS WRITTEN S UBMISSIONS ON 08-03-2010 STATING THAT THE DELAY WAS OCCURRED D UE TO MISTAKE OF ACCOUNT CLERK OF THE ASSESSEE COMPANY IN DEPOSITING THE TDS WAS IN RESPECT OF VARIOUS AMOUNTS ON DIFFER ENT DATES AND URGED BEFORE THE AO TO DROP THE PENALTY PROCEED INGS U/S. 221 BY NOT TREATING THE ASSESSEE IN DEFAULT IN TERM S OF PROVISIONS OF SECTION 201. HOWEVER, THE AO INITIATE D THE PENALTY PROCEEDINGS U/S. 221/201(1A) R.W.S 194A/194C AND IM POSED PENALTY OF RS.35,000, RS.40,000/- AND RS.40,000/- F OR THE FIRST QUARTER, THIRD QUARTER AND FOURTH QUARTER OF AY 200 8-09 RESPECTIVELY. 5. AGGRIEVED BY SUCH ORDER OF THE AO IN IMPOSING TH E IMPUGNED PENALTY THE ASSESSEE CHALLENGED THE SAME B EFORE THE CIT-A AND CONTENDED THE SAME SUBMISSIONS AS MADE BE FORE THE AO. THE CIT-A FOUND THAT THE PENALTY IMPOSED @ 20% BY THE AO IS REASONABLE BEING ASSESSEE IN DEFAULT FOR DEPO SITING THE TDS. ACCORDINGLY, HE CONFIRMED THE SAME. 6. AGGRIEVED BY SUCH ORDER OF THE CIT-A, NOW THE AS SESSEE IS IN APPEAL BEFORE US BY RAISING THE ABOVE MENTIONED COMMON GROUNDS OF APPEAL IN ALL THE THREE APPEALS. 7. BEFORE US THE LD.AR SUBMITS THAT THE AO DID NOT ISSUE NOTICE AS REQUIRED U/S. 201(1A) OF THE ACT STATING THAT THE ASSESSEE WAS IN DEFAULT FOR NON PAYMENT OF TDS IN T IME. HE FURTHER SUBMITS THAT THE DELAY WAS OCCURRED DUE TO CLERICAL ITA NOS. 2191 TO 2193/KOL/13 ADVANCE MULTISYSTEM BROADBAND COMMNS.P.LTD 4 MISTAKE OF ACCOUNT CLERK OF THE ASSESSEE. IN SUPPOR T OF HIS CONTENTIONS RELIED ON THE ORDER OF THE TRIBUNAL KO LKATA IN THE CASE OF ROYAL CALCUTTA TURF CLUB VS. DCIT REPORTED IN (2001) 76 ITD 237 (CAL). THE LD.AR FURTHER SUBMITS THAT THE A SSESSEE PAID INTEREST FOR NON DEPOSITING THE TDS IN TIME, WHICH IS PENAL IN NATURE AND AGAIN IMPOSING PENALTY U/S 221 OF THE AC T IS BAD IN LAW AND LIABLE TO BE CANCELLED. 8. IN REPLY, THE LD.DR SUBMITS THAT THE ASSESSEE HA VING DEDUCTED THE TDS AND DEPOSITED THE SAME BEYOND DUE DATE. THE AO CONSIDERED THE SAME BY TREATING THE ASSESSEE IS IN DEFAULT FOR TDS PAYMENT IN TIME. HE FURTHER ARGUED THAT IT IS A GROSS VIOLATION OF THE PROVISIONS OF THE I.T ACT. T HE ASSESSEE DEFEATED THE PURPOSE OF LEGISLATURE TO WHICH THE PR OVISIONS ARE INCORPORATED TO DETER AND PENALISE THE DEFAULT. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT T HE ASSESSEE HAS DEPOSITED INTEREST U/S. 201(1A) AND URGED BEFOR E THE AO NOT TO INITIATE ANY PROCEEDINGS U/S. 221 OF THE ACT . IT IS CLEAR THAT THE ASSESSEE HAS DEPOSITED THE TDS AMOUNTS AFT ER DUE DATE AND PAID INTEREST THEREON. SECTION 221 OF THE ACT EMPOWERS THE AO TO IMPOSE PENALTY FOR ANY CONTINUIN G DEFAULT. THE ASSESSEE SHOULD BE IN CONTINUING DEFAULT IN MAK ING THE PAYMENT OF TAX, IN ADDITION TO THE AMOUNT OF THE AR REARS AND AMOUNT OF INTEREST PAYABLE UNDER SUB-SECTION (2) OF SECTION 220. IN THE INSTANT CASE, THE ASSESSEE HAD DEPOSITE D THE TDS AMOUNT AND INTEREST THEREON FOR SUCH DEFAULT BEFORE INITIATION OF PENALTY PROCEEDINGS. WHEN THE ASSESSEE HAD DEPO SITED THE TDS AND INTEREST THEREON, THEN ASSESSEE WAS NOT IN DEFAULT FOR SUCH TDS PAYMENT AND NO PENALTY CAN BE IMPOSED U/S. 221 OF THE ACT. WE FIND THAT SUPPORT FROM THE ORDER OF THE CO-ORDINATE ITA NOS. 2191 TO 2193/KOL/13 ADVANCE MULTISYSTEM BROADBAND COMMNS.P.LTD 5 BENCH OF THE TRIBUNAL IN THE CASE OF SUPRA HELD THAT PENALTY CAN BE IMPOSED U/S. 221 WHEN THE ASSESSEE REMAINS TO BE IN DEFAULT AFTER PASSING AN ORDER U/S. 201(1) OF THE A CT. THE RELEVANT PORTION OF WHICH IS REPRODUCED HEREUNDER F OR THE SAKE CLARITY:- 17. WE FIND THAT THE ASSESSEE HAS BEEN TREATED TO B E IN DEFAULT IN RESPECT OF THE SAME ITEMS OVER AND AGAIN AND PENALTY UNDER SEC TION 221 HAS ALSO BEEN LEVIED IN RESPECT OF THE SAME DEFAULT IN ADDITION T O PENALTY UNDER SECTION 271C. FIRSTLY, THE BASIS FOR LEVY OF PENALTY IN RES PECT OF THE FIRST TWO ITEMS ALREADY STANDS QUASHED AWAY BY OUR DECISION AS ABOV E. SECONDLY, WE FAIL TO UNDERSTAND HOW THE ASSESSEE CAN BE CONSIDERED TO BE IN DEFAULT IN RESPECT OF MAKING PAYMENT OF TAX DEDUCTED AT SOURCE LIKE THIS, SO FAR AS THE PROVISIONS OF SECTION 221 ARE CONCERNED. THE ITO AS WELL AS TH E CIT(A) HAS STATED IN THIS CONNECTION THAT THERE IS NOTHING IN THE INCOME -TAX ACT TO SHOW THAT THE PROVISIONS OF SECTIONS 271C AND 221 ARE MUTUALLY EX CLUSIVE. IT IS REQUIRED TO BE STATED IN THIS CONNECTION THAT SECTION 221 WILL APPLY TO SUCH CASES ONLY WHERE THE DEFAULT IS IN RESPECT OF MAKING A PAYMENT OF TAX. IN THE INSTANT CASE, THE DEFAULT IS IN RESPECT OF DEDUCTION OF TAX AT SOURCE AND DEPOSIT OF THE SAME. IN OUR VIEW, THE PROVISIONS OF SECTION 22 1 WOULD APPLY ONLY WHEN A TAX IS LEVIED ON THE ASSESSEE AND THEREAFTER HE R EMAINS IN DEFAULT IN PAYING THE TAX. SO FAR AS THE INSTANT CASE IS CONCERNED, O NCE THE ORDER UNDER SECTION 201 (1) WAS PASSED BY THE ITO AND IF THEREAFTER ALSO THE ASSESSEE CONTINUED TO REMAIN IN DEFAULT, IN SUCH CA SES ALONE, THE QUESTION OF LEVYING PENALTY UNDER SECTION 221 COULD HAVE ARISEN . HENCE, WE FEEL THAT THE LEVY OF PENALTY UNDER SECTION 221, IN THE INSTANT C ASE, HAS BEEN TOTALLY ILLEGAL. FROM THIS ANGLE ALSO, WE CANCEL THE PENALT Y ORDER PASSED UNDER SECTION 221. 10. IN VIEW OF OUR ABOVE DISCUSSION, WE ARE OF THE VIEW THAT THE ORDER U/S. 221 OF THE ACT PASSED BY THE AO IS M ISCONCEIVED AND LIABLE TO BE HELD AS INVALID AND THE PENALTY IM POSED FOR 1 ST QTR FOR 2008-09, 3 RD QTR 2008-09 AND 4 TH QTR 2008-09 OF RS.35,000/-, RS.40,000/- AND RS.40,000/- RESPECTIVE LY ARE HEREBY CANCELLED. THEREFORE, THE GROUNDS RAISED BY THE ASSESSEE IN ALL THE APPEALS FOR THE 1 ST QTR, 3 RD QTR AND 4 TH QTR OF AY 2008-09 ARE ALLOWED. ITA NOS. 2191 TO 2193/KOL/13 ADVANCE MULTISYSTEM BROADBAND COMMNS.P.LTD 6 11. IN THE RESULT, ALL THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH OCTOBER,2016. SD/- SD/- WASEEM AHMEED S.S.VISWANE THRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19 /10/2016 1. THE APPELLANT/ASSESSEE : M/S. ADVANCE MULTISYSTEM BROADBAND COMMUNICATIONS PVT. LTD, BANKIM KANAN, CHINSURAH ST ATION ROAD, CHINSURAH, HOOGHLY. 2 . THE RESPONDENT/DEPARTMENT: THE INCOME TAX OFFICER (TDS), G.T ROAD, CHINSURAH-712101. 3. CIT 4. CIT(A) 5. THE DEPARTMENTAL REPRESENTATIVE 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGIS TRAR ** PRADIP SPS INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA COPY OF THE ORDER FORWARDED TO:-