Central Bank of India, Surat V. The Jt.CIT.,TDS Range, Surat

ITA 2324/AHD/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67765 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 13-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Assessee Lawyers: S N DIVETIA
• Keywords: Reasonable cause; Ignorance of law
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO.2322, 2323, 2324 & 2325/AHD/2011 A.YS.2003-04, 2004-05, 2005-06 & 2006-07 CENTRAL BANK OF INDIA MAIN BRANCH, M.G. ROAD KANPITH, SURAT. PAN: AAACC 2498P VS JCIT, TDS RANGE, SURAT. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI J.P. JHANGID, SR.D.R. , ASSESSEE(S) BY : SHRI S.N. DIVETIA / DATE OF HEARING : 07/10/2013 / DATE OF PRONOUNCEMENT: 15/10/2013 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THESE FOUR APPEALS HAVE BEEN FILED BY THE ASSESSEE ARISING FROM THE ORDERS OF LEARNED CIT(A)-I, SURAT, DATED 30 TH JUNE, 2011. FOR ALL THE YEARS A COMMON GROUND HAS BEEN RAISED IN RESPECT OF PENAL TY LEVIED U/S. 271C OF RS.97,157 FOR A.Y. 2003-04, RS.90,172/- FOR A.Y. 2004-05, RS.1,02,825/- FOR A.Y. 2005-06, RS.1,06,330/- FOR A .Y. 2006-07. 2. WHILE LEVYING THE PENALTY, IT WAS NOTED BY THE A O THAT THE ASSESSEE HAD NOT DEDUCTED TDS FROM THE PAYMENT MADE TO STATE BANK OF INDIA AS MICR CHARGES. ACCORDING TO AO, THE ASSESSEE WAS REQ UIRED TO DEDUCT THE TDS ON PAYMENT OF MICR AS PRESCRIBED U/S. 194J OF I T ACT. ACCORDING TO AO, PAYMENT OF MICR WAS IN THE NATURE OF FEES F OR TECHNICAL CHARGES. THE SAID FEE WAS PAID FOR PROVIDING MANAG ERIAL 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 MA DE TO ITA NO.2322, 2323, 2324 & 2325/AHD/2011 CENTRAL BANK OF INDIA VS. JCIT, TDS RANGE, SURAT. FOR A.YS. 2003-04, 2004-05, 2005-06 & 2006-07 - 2 - STATE BANK OF INDIA AS MICR CHARGES IS LIABLE FOR T DS U/S.194J OF IT ACT. DUE TO SAID DEFAULT, A PENALTY U/S. 271C WAS I NITIATED. 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 DE FAULT. IN THE ABSENCE OF ANY EXPLANATION, THE IMPUGNED PENALTY WAS IMPOSED F OR 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 T HEN 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 I MPOSING THE PENALTY; BUT THE PROVISIONS OF SECTION 273B HAVE EX PLAINED BEFORE THE FIRST APPELLATE AUTHORITY, WHO HAD CO-TERMINUS POWE R WITH THE AUTHORITY IMPOSING THE PENALTY; THEREFORE, SUCH EXPLANATION S HOULD BE ENTERTAINED. CASE LAW CITED IN SUPPORT WAS SENIOR ACCOUNT OFFICER, THERMAL POWER OF PROJECT V/S. ACIT, 66 TTJ 529 (AHD) . LEARNED CIT(A) WAS NOT CONVINCED AND HELD THAT ONCE A VIEW WAS EXPRESSED T HAT THE ASSESSEE IS REQUIRED TO DEDUCT THE TDS, SO THE PROVISIONS OF TH E ACT HAVE NOT BEEN FOLLOWED, THEREFORE, PENALTY WAS RIGHTLY IMPOSED. B EING AGGRIEVED, THE ASSESSEE IS NOW BEFORE US. 4. THIS ISSUE IS HEARD AT SOME LENGTH. AS FAR AS TH E DECISION OF CANARA BANK, 117 ITD 207 (AHD) IS CONCERNED NO DISPUTE WAS RAISED. THE DISPUTE BEFORE US; WHICH WAS SERIOUSLY CONTESTE D; IS THAT WHETHER THE ASSESSEE HAS ACTED UPON A BONA 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 INVO LVED ITA NO.2322, 2323, 2324 & 2325/AHD/2011 CENTRAL BANK OF INDIA VS. JCIT, TDS RANGE, SURAT. FOR A.YS. 2003-04, 2004-05, 2005-06 & 2006-07 - 3 - WERE A.YS. 2003-04, 2004-05, 2005-06 AND 2006-07; H ENCE, DURING THE PERIOD WHEN THE TDS WAS REQUIRED TO BE DEDUCTED THE ASSESSEE WAS NOT AWARE ABOUT THE AFORESAID DECISION. IT HAS BEEN PLE ADED BEFORE US THAT ALTHOUGH THE ASSESSEE WAS MAKING THE PAYMENT OF MIC R IN THE PAST SEVERAL YEARS WITHOUT DEDUCTION OF TDS BUT NO SUCH ACTION WAS TAKEN AGAINST THE ASSESSEE. THEREFORE, IN THE LIKE MANNER , FOR THE YEARS UNDER CONSIDERATION THE ASSESSEE HAS NOT DEDUCTED THE TDS UNDER A BONA FIDE IMPRESSION THAT THE PAYMENT OF MICR IS NOT IN THE N ATURE OF FEES FOR TECHNICAL CHARGES. 5. AFTER HEARING BOTH THE SIDES, OUR HUMBLE UNDERST ANDING IS THAT THE WORD REASONABLE CAUSE CAN BE INTERPRETED AS APPLI ED TO A PERSON HAVING AN ORDINARY PRUDENCE. THEREFORE, THE EXPRESSION RE ASONABLE GIVES AN IMPRESSION THAT PRIMA FACIE, IF A PERSON OF AVERAGE INTELLIGENCE HAS ACTED AND UNDER THOSE CIRCUMSTANCES THE SAID ACTION WAS A T THAT POINT OF TIME NOT INFRINGED THE SETTLED LAW THEN IT CAN BE REASON ABLY HELD THAT THE ASSESSEE WAS PREVENTED BY A REASONABLE CAUSE UNDE R THOSE CIRCUMSTANCES NOT TO ACT AS PRESCRIBED OR DETERMINE D BY A CASE LAW SUBSEQUENTLY. ALTHOUGH IGNORANCE OF LAW IS NOT AN E XCUSE BUT SIDE BY SIDE IT IS ALSO NOT EXPECTED THAT EVERY TAX PAYER S HOULD BE AWARE ABOUT THE LATEST DEVELOPMENT OF TAX LAW; WHICH ARE OTHERWISE FAST CHANGING. WE, THEREFORE, DEEM IT JUSTIFIABLE TO HOLD THAT IN A SI TUATION WHEN AN ASSESSEE WAS NOT AWARE ABOUT THE LATEST POSITION OF LAW DURI NG THE ASSESSMENT YEARS UNDER CONSIDERATION; HENCE, HE WAS PREVENTED BY A REASONABLE CAUSE NOT TO DEDUCT THE TDS, THEREFORE, AS FAR AS THE QUE STION OF LEVY OF PENALTY IS CONCERNED, ENTITLED FOR THE RELIEF. ASSIGNING TH IS REASON, WE HEREBY ITA NO.2322, 2323, 2324 & 2325/AHD/2011 CENTRAL BANK OF INDIA VS. JCIT, TDS RANGE, SURAT. FOR A.YS. 2003-04, 2004-05, 2005-06 & 2006-07 - 4 - DIRECT TO DELETE THE PENALTY. GROUNDS ALLOWED FOR A LL THE YEARS UNDER APPEAL. 6. IN THE RESULT, THESE APPEALS OF THE ASSESSEE ARE HEREBY ALLOWED. SD/- SD/- (N.S. SAINI) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 15/10/2013 PRABHAT KR. KESARWANI, SR. P.S. TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD