Appeal details
Counselvise Citation
[2015] 140 COUNSELVISE.COM (IT) 89482 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 8 month(s) 9 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
22-05-2015
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
C
Next Hearing Date
20-05-2015
Assessment Year
2004-2005
Appeal Filed On
12-09-2011
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI RAJPAL YADAV, J.M. & SHRI ANIL CHATUR VEDI, A.M.) I.T. A. NOS. 2291 TO 2294 /AHD/2011 (ASSESSMENT YEARS: 2 003-04 TO 2006-07) RAJKOT NAGARIK SAHAKARI BANK LTD. SANGHAVI & CO., 112, ADITYA CENTRE, PHULCHHAB CHOWK, RAJKOT V/S JOINT COMMISSIONER OF INCOME TAX, TDS RANGE, SURAT (APPELLANT) (RESPONDENT) PAN: AAAAR2912F APPELLANT BY : NONE RESPONDENT BY : SHRI NIMESH YADAV, SR. D.R. ( )/ ORDER DATE OF HEARING : 20-05-2015 DATE OF PRONOUNCEMENT : 22 -05-2015 PER BENCH. 1. THESE 4 APPEALS ARE FILED BY THE ASSESSEE AGAINST T HE ORDER OF CIT(A)-I, SURAT DATED 30.06.2011 FOR A.YS. 2003-04 TO 2006-07 . 2. ON THE DATE OF HEARING I.E. ON 20.05.2015 NONE APPE ARED ON BEHALF OF ASSESSEE THOUGH FROM THE RECORDS, IT IS SEEN THAT T HE NOTICE OF HEARING WAS SERVED TO THE ASSESSEE. WE THEREFORE PROCEED TO DE CIDE THE ISSUE EX PARTE QUA THE ASSESSEE AND ON THE BASIS OF MATERIAL AVAIL ABLE ON RECORD. ITA NOS. 229 1 TO 2294/AHD/2011 . A.YS. 2003- 04 TO 2006-07 2 3. BEFORE US, AT THE OUTSET THE LD. D.R. SUBMITTED THA T THOUGH THE APPEALS OF ASSESSEE RELATE TO 4 ASSESSMENT YEARS BUT THE FACTS AND CIRCUMSTANCES OF ALL THE CASES ARE SIMILAR EXCEPT FOR THE ASSESSMENT YEA RS AND AMOUNTS AND THE SUBMISSIONS ARE ALSO COMMON FOR ALL THE APPEALS AND THEREFORE ALL THE APPEALS CAN BE HEARD TOGETHER. WE THEREFORE PROCEED TO DISPOSE OF ALL THE APPEALS TOGETHER FOR THE SAKE OF CONVENIENCE AND TH US PROCEED WITH THE FACTS IN A.Y. 2003-04. 4. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 5. ASSESSEE IS A CO-OPERATIVE BANK. IN THIS CASE, ITO TDS (1), SURAT NOTICED THAT ASSESSEE HAD MADE PAYMENT OF MICR CHARGES TO S TATE BANK OF INDIA BUT HAD NOT DEDUCTED TDS BEFORE MAKING THE PAYMENT. A.O WAS OF THE VIEW THAT ASSESSEE SHOULD HAVE DEDUCTED TDS U/S. 194J OF THE ACT SINCE THE PAYMENT OF MICR CHARGES WERE TOWARDS FEES FOR TECH NICAL CHARGES. HE ALSO RELIED ON THE DECISION OF ITAT, AHMEDABAD BENC H IN THE CASE OF CANARA BANK VS. ITO 117 ITD 207. THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY PENALTY U/S. 271C BE NOT LEVIED TO WHICH ASSESS EE INTERALIA SUBMITTED THAT IT WAS UNDER A BONA FIDE BELIEF THAT MICR CHAR GES WERE NOT COVERED UNDER THE PROFESSIONAL FEES AS DESCRIBED U/S. 19 4J OF THE ACT, THE PAYEE HAD PAID THE TAX AND THERE WAS NO LOSS TO THE REVEN UE. THE SUBMISSIONS OF THE ASSESSEE WERE NOT FOUND ACCEPTABLE TO THE A.O. HE WAS OF THE VIEW THAT ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE CIRC UMSTANCES BEYOND ITS CONTROL WHICH PREVENTED IT FROM COMPLYING WITH THE PROVISIONS OF THE ACT. HE THEREFORE VIDE ORDER DATED 09.09.2010 LEVIED A P ENALTY OF RS. 7,287/- U/S. 271C OF THE ACT. AGGRIEVED BY THE ORDER OF A.O., AS SESSEE CARRIED THE ITA NOS. 229 1 TO 2294/AHD/2011 . A.YS. 2003- 04 TO 2006-07 3 MATTER BEFORE CIT(A) WHO DISMISSED THE APPEAL OF TH E ASSESSEE BY HOLDING AS UNDER:- THE ARGUMENTS OF THE A.O AS WELL AS APPELLANT HAVE BEEN CONSIDERED. THERE IS CONSIDERABLE FORCE IN THE ARGUMENTS OF THE A.O. HAV ING REGARD TO THE STRONG ARGUMENTS PUT FORTH BY THE A.O AND THE DECISION OF THE HONBL E ITAT, B BENCH, AHMEDABAD, THE PENALTY IMPOSED U/S. 271(1)(C) OF THE I.T. ACT IS C ONFIRMED. 6. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW I N APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT THE LEARNED C.I.T., APPEALS-I, SURAT HAS GRIEV OUSLY ERRED IN CONFIRMING THE PENALTY LEVIED BY THE J.C.I.T.- TDS RANGE, SURAT UN DER SECTION 271C AMOUNTING TO RS.7,287/-. 7. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O AND LD. CIT(A). 8. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS ABOUT THE LEVY OF PENALTY U/S. 271C ON ACCOUNT OF NON DEDUCTION OF TDS U/S. 194J ON THE MICR CHARGES PAID BY THE ASSESSEE TO STATE BANK OF INDIA. WE FIND THAT A SIMILAR ISSUE I N THE CASE OF PRIME CO.- OP. BANK LTD. VS. JCIT (IN ITA NO. 2040 TO 2043/A/2 011 ORDER DATED 09.01.2015) WAS DECIDED BY THE TRIBUNAL IN FAVOUR O F THE ASSESSEE. THE RELEVANT PORTION OF THE AFORESAID ORDER READS AS UN DER:- 9. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATER IAL ON RECORD. IN THE PRESENT CASE IT IS AN UNDISPUTED FACT THAT ASSESSEE HAS PAID MICR CHARGES TO SBI AND IT IS SUBMITTED THAT THE MICR CHARGES WERE RECOVERED BY SBI AT REGULAR INTERVALS BY DEBITING THE ACCOUNT OF THE AS SESSEE. IT IS ALSO SUBMITTED THAT THE MICR CHARGES HAS BEEN OFFERED AS INCOME BY S.B.I. AND THE DEFAULT ITA NOS. 229 1 TO 2294/AHD/2011 . A.YS. 2003- 04 TO 2006-07 4 OF NON DEDUCTION OF TAX WAS NOT INTENTIONAL BUT ONL Y DUE TO ACCOUNTING ADOPTED BY S.B.I. BEFORE US, NO MATERIAL HAS BEEN P LACED ON RECORD BY REVENUE TO CONTROVERT THE SUBMISSIONS OF THE ASSESS EE. WE FIND THAT IN THE CASE OF WOODWARD GOVERNORS INDIA PVT. LTD. (SUPRA), THE HONBLE HIGH COURT HAS HELD THAT BEFORE LEVYING PENALTY U/S. 271 C, THE CONCERNED OFFICER IS REQUIRED TO FIND OUT THAT EVEN IF THERE WAS ANY FAILURE TO DEDUCT TAX AT SOURCE, THE SAME WAS WITHOUT REASONABLE CAUSE. THE INITIAL BURDEN IS ON THE ASSESSEE TO SHOWN THAT THERE EXISTS REASONABLE CAUS E WHICH WAS THE REASON FOR THE FAILURE, THEREAFTER THE OFFICER HAS TO CONS IDER WHETHER THE EXPLANATION OFFERED BY THE ASSESSEE WAS ON ACCOUNT OF REASONABL E CAUSE. IT HAS FURTHER HELD THAT REASONABLE CAUSE IS THAT WHICH WOULD ME AN AN HONEST BELIEF FOUNDED UPON REASONABLE GROUNDS OF THE EXISTENCE OF A STATE OF CIRCUMSTANCES, WHICH ASSUMING THEM TO BE TRUE, WOUL D REASONABLY LEAD ORDINARY, PRUDENT AND CAUTIOUS MAN, PLACED IN THE P OSITION OF THE PERSONS CONCERNED, TO COME TO THE CONCLUSION THAT THE SAME WAS RIGHT THING TO DO SO. THE CAUSE SHOWN HAS TO BE CONSIDERED AND ONLY IF IT IS FOUND TO BE FRIVOLOUS, WITHOUT SUBSTANCE OR FOUNDATION WOULD THE PRESCRIBE D CONSEQUENCES FOLLOW. 10.IN THE CASE OF MUTHOOT BANKERS (SUPRA), THE CO-O RDINATE BENCH OF TRIBUNAL HAS HELD THAT WHEN PAYMENT IS DISCLOSED IN THE RETURN, THERE IS NO CONCEALMENT OF FACTS AND FURTHER WHEN RECIPIENTS HA VE SHOWN THE RECEIPTS IN THE RETURNS AND HAD PAID TAXES THEREON, THERE WAS N O LOSS TO THE GOVERNMENT AND THEREFORE PENALTY CANNOT BE LEVIED. 11.IN THE CASE OF ITO VS. DISHERGARH POWER SUPPLY C OMPANY LTD. (SUPRA) , THE CO-ORDINATE BENCH OF TRIBUNAL HAS HELD THAT PEN ALTY U/S/ 271C IS NOT AN AUTOMATIC CONSEQUENCE OF NON DEDUCTION OR SHORT DED UCTION OF TAX AT SOURCE AND PENALTY CANNOT BE IMPOSED IN CASE THE PERSON CO NCERNED CAN ITA NOS. 229 1 TO 2294/AHD/2011 . A.YS. 2003- 04 TO 2006-07 5 DEMONSTRATE THAT THERE WAS A REASONABLE CAUSE FOR H IS FAILURE REFERRED TO IN SECTION 271C. IT FURTHER HELD THAT WHEN AN EXPLANA TION IS OFFERED, IT IS THE DUTY OF THE OFFICER TO OBJECTIVELY CONSIDER THE SAM E. 12.IN THE PRESENT CASE, REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO DEMONSTRATE THAT THE REASONS GIVEN BY ASSESSEE FOR NON DEDUCTION OF TAX WAS NOT BONA FIDE OR TO BE FALSE. WE FURTHER FIND THAT CIT(A) BY A VERY CRYPTIC ORDER HAS UPHELD THE ACTION OF A.O. CONSIDERING THE TOTALITY OF THE FACTS AND IN VIEW OF THE DECISIONS RELIED BY THE ASSESSEE, WE ARE OF THE VIEW THAT IN THE PRESENT CASE THE REASONS GIVEN BY ASSESSEE FOR NON DEDUCTION OF TDS APPEARS TO BE BONA FIDE AND THEREFORE THE PROVISION S FOR PENALTY U/S. 271C OF THE ACT ARE NOT ATTRACTED. WE ACCORDINGLY DIRECT IT S DELETION. 13. IN THE PRESENT CASE, WE FIND THAT IN THE SUBMIS SIONS BEFORE LD. CIT(A), IT WAS CONTENDED THAT ASSESSEE WAS UNDER THE BELIEF THAT NO TDS WAS DEDUCTIBLE ON THE MICR CHARGES PAID BY ASSESSEE, AS SESSEE CONSIDERING THE AMOUNT OF INTEREST LEVIED U/S. 201(1) & 201(1A) TO OK A DECISION OF NOT FILING APPEAL AGAINST ITS LEVY, AND THE PAYEE, NAMELY SBI, HAS ALREADY PAID THE TAX ON THE MICR CHARGES COLLECTED BY IT. THE AFORESAID SUBMISSIONS OF ASSESSEE MADE BEFORE LD. CIT(A) HAVE NOT BEEN CONTROVERTED B Y LD. D.R. WE FURTHER FIND THAT THE ISSUE RAISED IN THE PRESENT APPEALS A RE IDENTICAL TO THE CASE OF PRIME CO-OP. BANK LTD. (SUPRA) WHICH HAS BEEN DECID ED EARLIER BY THE CO- ORDINATE BENCH. BEFORE US, REVENUE HAS ALSO NOT PO INTED OUT ANY DISTINGUISHABLE FEATURES OF THE CASE WITH THAT OF P RIME CO-OP. BANK (SUPRA). WE THEREFORE CONSIDERING THE TOTALITY OF THE AFORES AID FACTS AND RELYING ON THE AFORESAID DECISION OF THE CO-ORDINATE BENCH OF TRIB UNAL, ARE OF THE VIEW THAT IN THE PRESENT CASE NO PENALTY IS LEVIABLE. WE THE REFORE DIRECT THE DELETION OF PENALTY IN ALL THE YEARS UNDER APPEAL. ITA NOS. 229 1 TO 2294/AHD/2011 . A.YS. 2003- 04 TO 2006-07 6 14. IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 22 - 05 - 2015. SD/- SD/- (RAJPAL YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD
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