Appeal details
Counselvise Citation
231720514 RSA 2011
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 6 month(s) 14 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-03-2015
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
C
Assessment Year
2003-2004
Appeal Filed On
13-09-2011
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBE R AND SHRI N.S. SAINI, ACCOUNTANT MEMBER SL. NO(S) ITA NO(S) ASSESSMENT YEAR(S) APPEAL(S) BY APPELLANT VS. RESPONDENT APPELLANT RESPONDE NT 1. 2317/AHD/2011 2003-04 BOMBAY MERCANTILE CO- OPERATIVE BANK LTD. 4/3163(A), SALABATPURA, MAIN ROAD NR.ZAMPA BAZAR SURAT-395 003 PAN: AAAAB2359J JT.CIT (TDS) SURAT-1, SURAT 2. 23 1 8 /AHD/201 1 2004 - 05 ASSESSEE REVENUE 3. 2319/AHD/2011 2005-06 ASSESSEE REVENUE 4. 2320AHD/2011 2006-07 ASSESSEE REVENUE / APPELLANT BY : WRITTEN SUBMISSIONS / RESPONDENT BY : SHRI M.K. SINGH, SR.DR / DATE OF HEARING 05/03/2015 / DATE OF PRONOUNCEMENT 27/03/2015 / O R D E R PER SHAILENDRA KUMAR YADAV, JM : THESE FOUR APPEALS BY THE ASSESSEE ARE DIRECTED AG AINST THE SEPARATE ORDERS OF THE LD.COMMISSIONER OF INCOME TA X(APPEALS)-I, SURAT (CIT(A) IN SHORT) ALL IDENTICALLY DATED 30/06/20 01 PERTAINING TO ASSESSMENT YEARS (AYS) 2003-04, 2004-05, 2005-06 & 2006-07. SINCE ITA NOS.2317,23 18,2319 & 2320/AHD/2011 BOMBAY MERCANTILE CO-OP.BANK LTD. VS. JCIT(TDS-1)S URAT AYS -2003-04,2004-05,2005-06 & 2006-07 RESPECTIVELY - 2 - COMMON ISSUES AND FACTS ARE INVOLVED IN THESE APPEA LS, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS C ONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE HAS RAISED THE FOLLOWING COMMON G ROUNDS OF APPEAL (EXTRACTED FROM ITA NO.2317/AHD/2011):- (1) THAT, THE PENALTY ORDER MADE BY LD.JCIT(TDS ), SURAT AND THE LD.COMMISSIONER OF INCOME TAX (APPEALS) IS BAD IN LAW/FACTS, ILLEGAL, WITHOUT JURISDICTION, AND NEEDS TO BE QUAS HED. (2) THAT, THE LD.JCIT(TDS), SURAT AND THE LD.COMMI SSIONER OF INCOME TAX (APPEALS) ERRED IN LAW/FACTS IN LEVYING PENALTY U/S.271C OF THE ACT. (3) THAT, THE PENALTY ORDER MADE WITHOUT CONSIDER ING REPLY OF THE APPELLANT, AGAINST THE FACTS OF THE CASE AS WELL AS SETTLED LAW BE VACATED AND PENALTY BE REMITTED. (4) WITHOUT PREJUDICE TO THE ABOVE, PENALTY PROCEE DINGS TO BE DROPPED. (5) THAT, THE APPELLANT RESERVES ITS RIGHT TO ADD, ALTER, MODIFY OR DELETE ANY OF THE GROUNDS OF APPEAL HEREUNTO TAKEN BEFORE. 3. AT THE OUTSET, LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE (THROUGH WRITTEN SUBMISSIONS) SUBMITTED THAT THERE IS A DELAY OF 2 DAYS IN FILING ALL THESE APPEALS. THE ASSESSEE HAS FILED C ONDONATION OF APPLICATION FOR ALL THE APPEALS FOR DELAY OF 2 DAYS INTER-ALIA STATED THAT THE APPELLATE ORDER WAS SERVED ON THE ASSESSEE ON 13/07/2011 AND, AS SUCH THE LAST DATE OF FILING THE APPEAL WAS 10/09/2011. AS 10/09/201 1 & 11/09/2011 WERE SATURDAY & SUNDAY, THE LAST DATE OF LIMITATION OF F ILING APPEAL WAS ITA NOS.2317,23 18,2319 & 2320/AHD/2011 BOMBAY MERCANTILE CO-OP.BANK LTD. VS. JCIT(TDS-1)S URAT AYS -2003-04,2004-05,2005-06 & 2006-07 RESPECTIVELY - 3 - 12/09/2011. THE COUNSEL FOR THE ASSESSEE M/S.VIRAL P.MARFATIC & CO., CHARTERED ACCOUNTANTS DELIVERED ALL PAPERS CONCERNI NG THE FILING OF APPEALS TO MR.INDADALI SHARIF NANDOLIYA ON 07/09/20 11 WITH A DIRECTION THAT THE APPEALS SHOULD BE FILED BEFORE THE HONBLE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD BY 09/09/2011. THE SAID SHRI NANDOLIYA EMPLOYEE OF THE ASSESSEE-BANK BEING IGNORANT OF THE TECHNICALITIES LIMITATION, BUT UNDER THE BONAFIDE INTENTION THAT T HE PAPERS CONCERNING THE APPEAL, IF POSTED BY 12/09/2011 WILL SUFFICE THE PU RPOSE AND CONVEYED THE SAME MESSAGE TO THE BRANCH HIGHER AUTHORITIES. ON FOLLOW UP OF THE MATTER BY THE COUNSEL ON 12/09/2011, REGARDING FILI NG OF THE APPEALS, THE MATTER WAS CLARIFIED THAT THE ASSESSEE WAS UNDER A WRONG IMPRESSION AND ALTERNATE ARRANGEMENT FOR FILING OF THE APPEALS WAS MADE BY HAND- DELIVERY ON 12/09/2011 TO MR.RAJABH YUSUF AGHARIA S R.CLERK OF THE APPELLANT-BANK, BUT COULD REACH TO CONCERNED ASSTT. REGISTRAR ITAT ONLY AFTER THE CLOSE OF OFFICE AND APPEAL WAS FILED ON 1 3/09/2011 EARLY MORNING BY HAND-DELIVERY AT 10.30 AM. IN SUPPORT O F THE SAME, THE ASSESSEE-BANK HAS FILED AN AFFIDAVIT DATED 17/09/20 11 OF MR.IMDADALI SHARIF NANDOLIYA EMPLOYEE OF THE ASSESSEE-BANK. TH US, THE DELAY IN FILING THE APPEALS AS CLAIMED UNINTENTIONAL AND BON A FIDE ONE. THUS, ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FOR FILI NG THE APPEAL IN TIME. ON THE OTHER HAND, THE LD.DR OPPOSED THE CONDONATIO N OF DELAY IN FILING THE APPEALS AND SUPPORTED THE ORDER OF THE LD.CIT(A ). 3.1. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AN D HAVING GONE THROUGH THE MATERIALS AVAILABLE ON RECORD, WE ARE O F THE VIEW THAT THE DELAY IN FILING THE APPEALS BY THE ASSESSEE WAS UNI NTENTIONAL, BONA FIDE ITA NOS.2317,23 18,2319 & 2320/AHD/2011 BOMBAY MERCANTILE CO-OP.BANK LTD. VS. JCIT(TDS-1)S URAT AYS -2003-04,2004-05,2005-06 & 2006-07 RESPECTIVELY - 4 - AND ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE AS DISCUSSED ABOVE. SO, WE CONDONE THE DELAY. 4. COMING TO THE MERIT OF THE CASE IN AY 2003-04, T HE ASSESSING OFFICER LEVIED A PENALTY OF RS.12,270/- U/S.271C OF THE I.T.ACT, 1961. THE ASSESSING OFFICER STATED THAT THE ASSESSEE HAD NOT DEDUCTED TDS FROM THE PAYMENTS MADE TO THE STATE BANK OF INDIA A S MICR CHARGES DURING THE RELEVANT YEAR. THE ASSESSING OFFICER ST ATED THAT THE ASSESSEE SHOULD HAVE DEDUCTED TDS ON SUCH PAYMENTS U/S.194J OF THE ACT, SINCE SUCH PAYMENTS WERE TOWARDS FEES FOR TECHNICAL CHAR GES WHICH WAS CHARGED FOR PROVIDING MANAGERIAL SERVICES. THE A SSESSING OFFICER RELIED UPON THE DECISION OF ITAT B BENCH AHMEDABA D RENDERED IN THE CASE OF CANARA BANK VS. ITO TDS-1, SURAT REPORTED A T 117 ITD 207, WHEREIN IT HAS BEEN HELD THAT THE SAID ASSESSEE WAS LIABLE TO DEDUCT TDS U/S.194J OF THE ACT FROM THE PAYMENTS MADE TO THE S TATE BANK OF INDIA AS MICR CHARGES. THE ASSESSEE BEING A DEDUCTOR WAS SUPPOSED TO BE AWARE OF THE TDS PROVISIONS IRRESPECTIVE OF THE FA CT WHETHER ITS OWN INCOME IS TAXABLE OR NOT. ACCORDING TO ASSESSING O FFICER, ALL GOVERNMENT DEDUCTORS ARE ALSO ENTRUSTED WITH THE RESPONSIBILIT Y OF TAX DEDUCTION. IN ABSENCE OF ANY REASONABLE CAUSE, THE ASSESSING OFFI CER LEVIED PENALTY U/S.271C OF THE ACT FOR NON-DEDUCTION OF TDS ON MIC R CHARGES OF RS.12,270/-. 4.1. THE MATTER WAS CARRIED BEFORE THE FIRST APPEL LATE AUTHORITY AND THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER . BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED (THROUGH ITA NOS.2317,23 18,2319 & 2320/AHD/2011 BOMBAY MERCANTILE CO-OP.BANK LTD. VS. JCIT(TDS-1)S URAT AYS -2003-04,2004-05,2005-06 & 2006-07 RESPECTIVELY - 5 - WRITTEN SUBMISSIONS) THAT THE PENALTY LEVIED BY THE LOWER AUTHORITIES IS NOT JUSTIFIED UNDER THE PROVISIONS OF SECTION 271C OF THE ACT. IN THIS REGARD, THE MAIN CONTENTION OF THE LD.AR, AMONG OTH ERS, WAS THAT WHERE TAX HAS ALREADY BEEN PAID BY THE PAYEE, NO PENALTY COULD BE LEVIED ON THE ASSESSEE-PAYER FOR THE FAILURE TO DEDUCT THE TAX AT SOURCE AS HELD IN THE CASE OF WIPRO GE MEDICAL SYSTEMS LTD.A VS. ITO (20 05) 3 SOT 627 (BANG.). SO, PENALTY IN QUESTION BE DELETED IN ALL THE YEARS. ON THE OTHER HAND, THE LD.DR SUPPORTED THE PENALTY IN QUESTION. 4.2. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AN D HAVING GONE THROUGH THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE IS A SURAT BRANCH OF SCHEDULED CO-OPERATIVE BANK HAVING HEAD O FFICE LOCATED AT MUMBAI ENGAGED IN THE BUSINESS OF BANKING. UNDER T HE BANKING LICENCE OBTAINED FROM RBI, THE ASSESSEE HAS TO MAINTAIN BAL ANCE IN CURRENT ACCOUNT WITH EITHER RBI OR OTHER DESIGNATED BANK/BR ANCH I.E. SBI FOR SURAT LOCATION. AS PER PROCEDURE ADOPTED BY THE SB I, THEY HAVE ASCERTAINED MONTHLY MICR CHARGES AND DEBITED ASSESS EES ACCOUNT. AFTER DEBITING THE ACCOUNT, THEY SEND THE ADVICE/VO UCHERS FOR THE DEBIT AMOUNT. ON THE BASIS OF THE VOUCHERS/ADVICE ISSUED BY SBI, THE ASSESSEE- BANK IS PASSING NECESSARY ENTRY BY CREDITING THE BA NK ACCOUNT WITH SBI AND DEBITING MICR CHARGES. IN SUM, THE WHOLE PROCE SS OF CALCULATION OF MONTHLY MICR CHARGES, CHARGING AND RECOVERING MICR CHARGES FROM THE ACCOUNT IS UNDER DIRECT CONTROL OF SBI. THE ASSESS EE HAD RECEIVED SPECIFIC INSTRUCTION AND ACTED UNDER BONA FIDE BELI EF TO DEDUCT TDS AT 2.04% U/S.194C OF THE ACT. IN PARA-7.1 OF PAGE NO. 7 OF THE ORDER U/S.201(1) & 201(1A) OF THE ACT PASSED BY THE ASSES SING OFFICER DATED ITA NOS.2317,23 18,2319 & 2320/AHD/2011 BOMBAY MERCANTILE CO-OP.BANK LTD. VS. JCIT(TDS-1)S URAT AYS -2003-04,2004-05,2005-06 & 2006-07 RESPECTIVELY - 6 - 15/02/2010 STATED THAT, THE SBI HAS CONFIRMED THAT MICR CHARGES WERE DULY ACCOUNTED WHILE MAKING TAX PAYMENT BY SBI. HENCE, THE ASSESSEE- BANK IS NOT REQUIRED TO PAY ABOVE AMOUNT IN THIS RE GARD. CONSIDERING THE ABOVE, ASSESSEE IS NOT CONSIDERED AS ASSESSEE IN DEFAULT. THIS FACT IS SUBSTANTIATED BY SBIS LETTER DATED 27/06/2011 INTER-ALIA STATED AS UNDER:- WE HAVE RECOVERED PROCESSING CHARGES FROM ALL THE CLEARING MEMBERS OF SURAT BANKERS CLEARING HOUSE. WE HAVE PAID TAX ON THE PROCESSING CHARGES RECOVERED AT OUR APEX LEVEL FROM A.Y. 2003-04 TO 2010-11. THUS, IT IS VERY MUCH CLEAR THAT ASSESSEE WAS UNDER NO OBLIGATION TO PAY DIFFERENTIAL TDS DUE TO CHANGE IN INTERPRETA TION OF STATUTE AND SECTION AS ON DATED OF ORDER I.E. 15/02/2010. AND, HENCE NOT TO BE DEFINED AS ASSESSEE IN DEFAULT. 4.2.1. FOR DELAYED PAYMENT OF TDS, INTEREST WAS PAI D BY THE ASSESSEE ON 29/03/2010 FOR FOLLOWING YEARS:- S.NO. ASSESSMENT YEAR INTEREST AMOUNT DATE OF PAYM ENT 1. 2003-04 382.00 29/03/2010 2. 2004-05 201.00 29/03/2010 3. 2005-06 291.00 29/03/2010 4. 2006-07 284.00 29/03/2010 4.2.2. THE ASSESSEE RECEIVED SHOW-CAUSE NOTICE FOR LEVY OF PENALTY U/S.271C OF THE I.T.ACT, 1961 DATED 04/05/2010 FOR THE FOLLOWING YEARS. S.NO. ASSESSMENT YEAR LETTER NO. & DATE PENALTY AMOUNT 1. 2003-04 SRT/JCIT/TDS/SHOW CAUSE/2010-11 DT.04/05/2010 12,270.00 2. 2004-05 SRT/JCIT/TDS/SHOW 8,630.00 ITA NOS.2317,23 18,2319 & 2320/AHD/2011 BOMBAY MERCANTILE CO-OP.BANK LTD. VS. JCIT(TDS-1)S URAT AYS -2003-04,2004-05,2005-06 & 2006-07 RESPECTIVELY - 7 - CAUSE/2010-11 DT.04/05/2010 3. 2005-06 SRT/JCIT/TDS/SHOW CAUSE/2010-11 DT.04/05/2010 12,336.00 4. 2006-07 SRT/JCIT/TDS/SHOW CAUSE/2010-11 DT.04/05/2010 13,637.00 4.2.3. IN REPLY TO THE SHOW-CAUSE NOTICE, THE STAND OF THE ASSESSEE WAS AS UNDER:- A) THE APPELLANT ACTED HONESTLY ON SPECIFIC INSTR UCTION AND WAS IN BONA FIDE BELIEF FOR DEDUCTING TDS U/S.194C @ 2.04% UPTO MAR2006. AND ALSO WAS UNDER NO CONTROL AS THE SAM E WERE DEBITED, RECOVERED AND PAID BY THE CLEARING HOUSE I .E. SBI IN THE INSTANT CASE. AND HENCE, SHORT DEDUCTION OF TDS WA S NOT A DELIBERATE DEFIANCE ON THE PART OF THE APPELLANT. B) THE SBI HAS CONFIRMED VIDE THEIR LETTER THAT MI CR CHARGES WERE DULY ACCOUNTED WHILE MAKING THE TAX PAYMENT BY SBI. HENCE, THE ASSESSEE BANK IS NOT REQUIRED TO PAY ABO VE AMOUNT IN THIS REGARD. C) AS PER THE PROVISION OF SEC.271C, PENALTY CANNO T BE LEVIED AUTOMATICALLY. IF THERE IS A REASONABLE CAUSE THEN THE PENALTY CANNOT BE LEVIED. D) THE APPELLANT RELIED ON BELOW:- I) BONAFIDE BELIEF LEADING TO SHORT DEDUCTION OF T AX COUPLED WITH VOLUNTARY COMPLIANCE IN TERMS OF DEPOSITING TH E SAME IMMEDIATELY ON COMING TO KNOW OF THE SAME, WOULD CONSTITUTE REASONABLE CAUSE CIT V. SMS INDIA LTD [2006] 7 SOT 424 (MUM). ITA NOS.2317,23 18,2319 & 2320/AHD/2011 BOMBAY MERCANTILE CO-OP.BANK LTD. VS. JCIT(TDS-1)S URAT AYS -2003-04,2004-05,2005-06 & 2006-07 RESPECTIVELY - 8 - II) WHERE TAXES WERE PAID VOLUNTARILY BEFORE ANY D ETECTION BY THE DEPARTMENT, THAT WOULD CONSTITUTE REASONABLE CAUSE INDO NISSIN FOODS LTD. V. CIT [2004] 3 SOT 495 (BAN G.). III) WHERE TAX HAS ALREADY BEEN PAID BY THE PAYEE, NO PENALTY CAN BE LEVIED ON THE ASSESSEE-PAYER FOR THE FAILURE TO DEDUCT TAX AT SOURCE WIPRO GE MEDICAL SYSTEMS LTD . V. ITO [2005] 3 SOT 627 (BANG.). 4.3. THESE FACTS HAVE NOT BEEN DISPUTED BY THE REVE NUE AUTHORITIES. SINCE TAX HAS ALREADY BEEN PAID BY THE PAYEE, NO PE NALTY COULD BE LEVIED ON ASSESSEE-PAYER FOR FAILURE TO DEDUCT TAX AT SOUR CE AS HELD BY THE ITAT BANGALORE BENCH RENDERED IN THE CASE OF WIPRO GE ME DICAL SYSTEMS LTD. VS. ITO AREPORTED AT (2005) 3 SOT 627 (BANG.). IN VIEW OF THE ABOVE, PENALTIES LEVIED BY THE AUTHORITIES BELOW U/ S.271C ARE DIRECTED TO BE DELETED IN ALL THE FOUR YEARS AS THESE PERTAIN T O SAME ISSUE. 5. IN THE RESULT, ALL FOUR APPEALS OF THE ASSESSEE ARE ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE COURT ON 27/3/15 A T AHMEDABAD. SD/- SD/- ( N.S. SAINI ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 27/ 03 /2015 !. .,.$. ./ T.C. NAIR, SR. PS ITA NOS.2317,23 18,2319 & 2320/AHD/2011 BOMBAY MERCANTILE CO-OP.BANK LTD. VS. JCIT(TDS-1)S URAT AYS -2003-04,2004-05,2005-06 & 2006-07 RESPECTIVELY - 9 - ! ' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. %&%'( ) / CONCERNED CIT 4. ) ( ) / THE CIT(A)-I, SURAT 5. , -.$$'( , '( , & / DR, ITAT, AHMEDABAD 6. .123 / GUARD FILE. / BY ORDER, ,$ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 12.3.15 (DICTATION-PAD 19- P AGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13.3.15/24.3.15 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S .. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.27.3.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 27.3.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER
