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

ITA 2282/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85754 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-02-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 09-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Reasonable cause; Ignorance of law
• Section: 273B; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAIN I , ACCOUNTANT MEMBER ITA NO . 2281, 2282, 2283 & 2 284 /AHD/20 1 1 A. Y S . 2003 - 04, 200 4 - 0 5 , 2005 - 06 & 2006 - 07 THE ADINATH CO - OP. BANK LTD ., B - 1 TO 6 VAKHARIA MARKET, BEHIND SURAT TEXTILE MARKET, RING ROAD, SURAT . PAN: AAAAT 8980B VS JCIT, ( TDS ) RANGE, SURAT . (APPELLANT) (RESPONDENT) REVENUE BY : SHRI DINESH SINGH , SR.D.R. , ASSESSEE(S) BY : NONE / DATE OF HEARING : 0 3 / 0 2 /201 5 / DATE OF PRONOUNCEMENT: 27 / 0 2 /201 5 / O R D E R PER SHRI MUKUL K R . SHRAWAT , JUDICIAL MEMBER : TH ESE FOUR A PPEAL S HAVE BEEN FILED BY THE A SSESSEE ARISING FROM THE O RDER S OF LEARNED CIT(A) - I , SURAT , DATED 29 TH JUNE , 201 1 . FOR ALL THE YEARS A COMMON GROUND HAS BEEN RAISED PERTAINING TO THE LEVY OF PENALTY U/S. 271C OF RS. 11,646/ - FOR A.Y. 2003 - 04, RS. 15,673 / - FOR A.Y. 2004 - 05, RS. 19,445 / - FOR A.Y. 2005 - 06, RS.1 6 , 157 / - FOR A.Y. 2006 - 07. 2. AT THE OUTSET, IT IS WORTH TO MENTION THAT FROM THE SIDE OF THE APPELLANT AN ADJOURNMENT APPLICATION HAS BEEN RAISED. HOWEVER, CONSIDERING THE DISPUTE BEING TRIFLE IN NATURE AS ALSO THE QUANTUM INVOLVED WAS VERY SMALL; HENCE , IT WAS D ECIDED TO PROCEED EX - PARTE QUA THE ASSESSEE. IT WAS ALSO IN OUR MIND THAT THE ISSUE AS RAISED IN THE ITA NO. 2281, 2282, 2283 & 2 284 /AHD/2011 THE ADINATH CO - OP. BANK LTD. VS. JCIT ( TDS ) RANGE, SURAT. FOR A.YS. 2003 - 04, 2004 - 05, 2005 - 06 & 2006 - 07 - 2 - GROUNDS OF APPEAL HAS ALREADY BEEN DEALT WITH BY US IN ONE OF THE ORDER IN THE RECENT PAST. 3. FROM THE SIDE OF THE REVENUE - DEPARTMENT, LEARNED SR.D.R., M R. DINESH SINGH HAS PLACED RELIANCE ON THE ORDERS OF AU THORITIES BELOW AS WELL AS THE ORDER OF ITAT B BENCH AHMEDABAD PRONOUNCED IN THE CASE OF CANARA BANK VS. ITO, (2009) 117 ITD 207 (AHD). 4. FACTS OF THESE APPEALS ARE VERY MUCH IDENTICAL WITH THE FAC TS OF THE CASE DECIDED BY US OF C ENTRAL BANK OF INDIA, SURAT IN ITA NOS.2322, 2323, 2324 & 2325/AHD/2011 DATED 15.10.2013. WE HAVE FOUND THAT THE ORDER OF CIT(A) CHALLENGED IN THAT APPEAL WAS ALSO BY CIT(A) - I, SURAT WHICH WAS DATED 30 TH OF JUNE, 2011 SO MU CH SO, THE PRESENT ORDER OF CIT(A) NOW CHALLENGED BEFORE US IS ALSO PASSED BY CIT(A) - I, SURAT IS DATED 29 TH OF JUNE, 2011. WHILE DECIDING THE APPEAL OF THE CENTRAL BANK OF INDIA (SUPRA) , WE HAVE TAKEN INTO CONSIDERATION THE DECISION OF CANARA BANK, 117 ITD 207 (AHD) WHEREIN IT WAS HELD THAT THE MICR CHARGES WERE LIABLE FOR TDS U/S.194J OF IT ACT. HOWEVER, WE HAVE NOTED THAT WHEN THE SAID ORDER OF CANARA BANK OF INDIA (SUPRA) WAS PASSED BY THE TRIBUNAL ON 15 TH OF FEBRUARY, 2008, THE ASSESSEE WAS NOT AWARE OF THAT ORDER BECAUSE THE ASSESSMENT YEARS INVOLVED WERE A.Y.2003 - 04 TO A.Y.2006 - 07. THE ASSESSEE WAS UNDER A BONA FIDE IMPRESSION THAT THERE WAS NO RESPONSIBILITY TO DETECT THE TDS ON PAYMENT OF MICR; THEREFORE, WHILE DECIDING THE APPEAL OF CENTRAL BANK OF INDIA (SUPRA) VIDE ORDER DATED 15.10.2013 WE HAVE NOTED THAT ALTHOUGH THERE WAS AN ORDER OF THE TRIBUNAL BUT THE FACTS OF THE PRESENT APPEAL HAVE REVEALED THAT THERE WAS A REASONABLE CAUSE FOR THE SAID DEFAULT AND THEREFORE AS PER THE PROVISIONS ITA NO. 2281, 2282, 2283 & 2 284 /AHD/2011 THE ADINATH CO - OP. BANK LTD. VS. JCIT ( TDS ) RANGE, SURAT. FOR A.YS. 2003 - 04, 2004 - 05, 2005 - 06 & 2006 - 07 - 3 - OF SECTION 273B OF IT ACT THE ASSESSEE SHOULD NOT BE SUBJECTED TO PENALTY. FOR READY REFERENCE, WE HEREBY REPRODUCED THE RELEVANT PORTIONS OF THE ORDER OF CANARA BANK OF INDIA, DATED15.10.2013 AS UNDER: 2. WHILE LEVYING THE PENALTY, IT WAS NOTED BY THE AO THAT THE A SSESSEE HAD NOT DEDUCTED TDS FROM THE PAYMENT MADE TO STATE BANK OF INDIA AS MICR CHARGES. ACCORDING TO AO, THE ASSESSEE WAS REQUIRED TO DEDUCT THE TDS ON PAYMENT OF MICR AS PRESCRIBED U/S. 194J OF IT ACT. ACCORDING TO AO , PAYMENT OF MICR WAS IN THE NATURE OF FEES FOR TECHNICAL CHARGES . THE SAID FEE WAS PAID FOR PROVIDING MANAGERIAL SERVICES. ON THIS ISSUE, A CASE CITED WAS, NAMELY, CANARA BANK V/S. ITO , (2009) 117 ITD 207 (AHD.) . IN THAT DECISION, IT WAS HELD THAT THE PAYMENT MADE TO STATE BANK OF INDIA AS MICR CHARGES IS LIABLE FOR TDS U/S.194J OF IT ACT. DUE TO SAID DEFAULT, A PENALTY U/S. 271C WAS INITIATED. THE AO HAS NOTED THAT THE PENALTY U/S.271C IS NOT IMPOSABLE IF THE ASSESSEE PROVES THAT THERE WAS A REASONABLE CAUSE FOR THE SAID DEFAULT. IN TH E ABSENCE OF ANY EXPLANATION, THE IMPUGNED PENALTY WAS IMPOSED FOR THE RESPECTIVE ASSESSMENT YEARS. 3. WHEN THE MATTER WAS CARRIED BEFORE LEARNED CIT(A), IT WAS PLEADED THAT THE PROVISIONS OF SECTION 273B PRESCRIBES THAT IF THERE IS A REASONABLE CAUSE FOR THE FAILURE TO DEDUCT THE TAX AT SOURCE THEN THE ASSESSEE MAY NOT BE PENALIZED U/S. 271C OF IT ACT. IT HAS ALSO BEEN PLEADED THAT THE SAID EXPLANATION COULD NOT BE MADE BEFORE THE AO WHILE IMPOSING THE PENALTY ; BUT THE PROVISIONS OF SECTION 273B HAVE EXPL AINED BEFORE THE FIRST APPELLATE AUTHORITY, WHO HAD CO - TERMINUS POWER WITH THE AUTHORITY IMPOSING THE PENALTY; THEREFORE, SUCH EXPLANATION SHOULD BE ENTERTAINED. CASE LAW CITED IN SUPPORT WAS SENIOR ACCOUNT OFFICER, THERMAL POWER OF PROJECT V/S. ACIT, 66 T TJ 529 (AHD) . LEARNED CIT(A) WAS NOT CONVINCED AND HELD THAT ONCE A VIEW WAS EXPRESSED THAT THE ASSESSEE IS REQUIRED TO DEDUCT THE TDS, SO THE PROVISIONS OF THE ACT HAVE NOT BEEN FOLLOWED, THEREFORE, PENALTY WAS RIGHTLY IMPOSED. BEING AGGRIEVED, THE ASSESS EE IS NOW BEFORE US. 4. THIS ISSUE IS HEARD AT SOME LENGTH. AS FAR AS THE DECISION OF CANARA BANK, 117 ITD 207 (AHD) IS CONCERNED NO DISPUTE WAS RAISED. THE DISPUTE BEFORE US ; WHICH WAS SERIOUSLY CONTESTED ; IS THAT WHETHER THE ASSESSEE HAS ACTED UPON A BON A FIDE BELIEF OR NOT. LEARNED AR HAS PLEADED THAT THE DECISION OF CANARA BANK (SUPRA) WAS DELIVERED VIDE AN ORDER DATED 15 TH FEBRUARY, 2008. HOWEVER, THE ASSESSMENT YEARS INVOLVED WERE A.YS. 2003 - 04, 2004 - 05, 2005 - 06 AND 2006 - 07; HENCE, DURING THE PERIOD W HEN THE TDS WAS REQUIRED TO BE DEDUCTED THE ASSESSEE WAS NOT AWARE ABOUT THE AFORESAID DECISION. IT HAS BEEN PLEADED BEFORE US THAT ALTHOUGH THE ASSESSEE WAS MAKING THE PAYMENT OF MICR IN THE PAST SEVERAL YEARS WITHOUT DEDUCTION OF TDS BUT NO SUCH ACTION W AS TAKEN AGAINST THE ASSESSEE . T HEREFORE , IN THE LIKE MANNER, FOR THE YEARS UNDER CONSIDERATION THE ASSESSEE HAS NOT DEDUCTED THE TDS ITA NO. 2281, 2282, 2283 & 2 284 /AHD/2011 THE ADINATH CO - OP. BANK LTD. VS. JCIT ( TDS ) RANGE, SURAT. FOR A.YS. 2003 - 04, 2004 - 05, 2005 - 06 & 2006 - 07 - 4 - UNDER A BONA FIDE IMPRESSION THAT THE PAYMENT OF MICR IS NOT IN THE NATURE OF FEES FOR TECHNICAL CHARGES . 5. AFTER HEAR ING BOTH THE SIDES, OUR HUMBLE UNDERSTANDING IS THAT T HE WORD REASONABLE CAUSE CAN BE INTERPRETED AS APPLIED TO A PERSON HAVING AN ORDINARY PRUDENCE . T HEREFORE, THE EXPRESSION REASONABLE GIVES AN IMPRESSION THAT PRIMA FACIE, IF A PERSON OF AVERAGE INTE LLIGENCE HAS ACTED AND UNDER THOSE CIRCUMSTANCES THE SAID ACTION WAS AT THAT POINT OF TIME NOT INFRINGED THE SETTLED LAW THEN IT CAN BE REASONABLY HELD THAT THE ASSESSEE WAS PREVENTED BY A REASONABLE CAUSE UNDER THOSE CIRCUMSTANCES NOT TO ACT AS PRESCRIB ED OR DETERMINED BY A CASE LAW SUBSEQUENTLY. ALTHOUGH IGNORANCE OF LAW IS NOT AN EXCUSE BUT SIDE BY SIDE IT IS ALSO NOT EXPECTED THAT EVERY TAX PAYER SHOULD BE AWARE ABOUT THE LATEST DEVELOPMENT OF TAX LAW; WHICH ARE OTHERWISE FAST CHANGING. WE, THEREFORE, DEEM IT JUSTIFIABLE TO HOLD THAT IN A SITUATION WHEN AN ASSESSEE WAS NOT AWARE ABOUT THE LATEST POSITION OF LAW DURING THE ASSESSMENT YEARS UNDER CONSIDERATION; HENCE, HE WAS PREVENTED BY A REASONABLE CAUSE NOT TO DEDUCT THE TDS , THEREFORE, AS FAR AS THE QUESTION OF LEVY OF PENALTY IS CONCERNED, ENTITLED FOR THE RELIEF. A SSIGNING THIS REASON, WE HEREBY DIRECT TO DELETE THE PENALTY. GROUNDS ALLOWED FOR ALL THE YEARS UNDER APPEAL. 5. SINCE , A VIEW HAS ALREADY BEEN TAKEN BY US IN THE PAST ON SIMILAR FACTS A ND CIRCUMSTANCES; THEREFORE, WE FIND NO REASON TO TAKE ANY OTHER VIEW BUT TO ACCEPT THE VIEW ALREADY ADOPTED ; HENCE, A DECISION OF LEARNED CIT(A) IS HEREBY REVERSED AND DIRECT TO DELETE THE PENALTY LEVIED U/S.271C OF IT ACT ON THE GROUND THAT THERE WAS REA SONABLE CAUSE ON THE PART OF THE ASSESSEE FOR WHICH NO PENALTY WAS REQUIRED TO BE LEVIED. GROUNDS RAISED ARE HEREBY ALLOWED. 6 . IN THE RESULT, ALL THE PRESENT A PPEAL S OF THE A SSESSEE ARE ALLOWED. SD/ - SD/ - ( N.S. SAINI ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD ; DATED 27 / 02 /20 1 5 PRABHAT KR. KESARWANI , SR. P . S . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT ITA NO. 2281, 2282, 2283 & 2 284 /AHD/2011 THE ADINATH CO - OP. BANK LTD. VS. JCIT ( TDS ) RANGE, SURAT. FOR A.YS. 2003 - 04, 2004 - 05, 2005 - 06 & 2006 - 07 - 5 - 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) , AHMEDABAD 5. , , / DR, ITAT, AHMED ABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR)