M/s. Intercontinental Consultants and Technocrats Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 2362/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4638 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 22-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRAVEEN DWIVEDI
• Keywords: Double taxation relief; Bonafide belief; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.2362/DEL/2015 ASSESSMENT YEAR: 2007-08 INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD., A-8, GREEN PARK, NEW DELHI. VS. DY. CIT, CIRCLE-74(1), NEW DELHI. TAN/PAN: AAACI 1674B (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI PRAVEEN DWIVEDI, CA RESPONDENT BY: SHRI AMIT JAIN, SR.D.R. DATE OF HEARING: 26 07 2018 DATE OF PRONOUNCEMENT: 07 08 2018 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 20.02.2015, PASSED BY THE CIT(APPEALS)-XIII, NEW DELHI IN RELATION TO PENALTY PROCEEDINGS INITIATED U/S.271(1)(C) FOR THE ASSESSMENT YEAR 200 7-08. THE ASSESSEE IS MAINLY AGGRIEVED BY LEVY OF PENALTY U/S . 271(1)(C) OF RS.2,31,839/-. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGA GED IN PROVIDING ENGINEERS AND TECHNICAL CONSULTANTS FOR INFRASTRUCTURES PROJECTS. DURING THE SURVEY CONDUCT ED BY THE DEPARTMENT ON 11.02.2008, IT WAS FOUND THAT THERE W AS NON- DEDUCTION/SHORT DEDUCTION OF TAX AT SOURCE AND ORDE R PASSED U/S. 201(1)/201(1A) TREATING ASSESSEE AS ASSESSEE I N DEFAULT. I.T.A. NO.2362/DEL/2015 2 THE ASSESSING OFFICER INITIATED PROCEEDINGS AND LEV IED PENALTY U/S. 271(1)(C) FOR THE AMOUNT NOT DEDUCTED AT RS.2, 31,839/-. THE ASSESSEES CONTENTION BEFORE THE ASSESSING OFFI CER WAS THAT IT HAS PAID PROFESSIONAL CHARGES OF RS.49.24 L ACS TO NONRESIDENT PERSONS WHO ARE COVERED UNDER THE DTAA, AND THEREFORE, IT WAS A UNDER BONA FIDE BELIEF THAT NO TDS WAS TO BE DEDUCTED. HOWEVER, ASSESSING OFFICER HELD THAT T HERE IS NO REASONABLE CAUSE FOR NON DEDUCTION OF TDS. ACCORDIN GLY, HE LEVIED THE PENALTY OF RS.2,31,839/- FOR THE IMPUGNE D ASSESSMENT YEAR . 3. BEFORE THE LD. CIT (A), THE ASSESSEE HAS MADE FO LLOWING SUBMISSIONS:- I. AS REGARDS THE PAYMENT OF PROFESSIONAL CHARGES T HE TDS WAS SHORT DEDUCTED AS THE ASSESSEE WAS THE BONAFIDE BELIEF TH AT THE TDS WAS NOT DEDUCTIBLE AS THE RELEVANT PORTION OF PAYMENT W ERE COVERED UNDER THE DOUBLE TAXATION AVOIDANCE AGREEMENT THIS REASON HAS BEEN REJECTED BY THE ADDITIONAL COMMISSIONER WITHOUT REJ ECTED DETAILED REASONS FOR REJECTION OF THE ASSESSEES SUBMISSION IN THIS REGARD, II. THE TDS ON PAYMENT TO PERSONS COVERED IN (II) A BOVE HAS BEEN DEPOSITED VOLUNTARILY AND SUO MOTO IMMEDIATELY ON T HE DEFAULT BEING POINTED OUT AND MUCH BEFORE THE DEFAULT CAME TO THE KNOWLEDGE OF THE DEPARTMENT ON 11.02.2008 UNDER SURVEY PROCEEDINGS. III. SINCE, THE TDS WAS DEPOSITED BY THE VOLUNTARIL Y AND SUO MOTO AND THE NON DEPOSIT WAS SOLELY DUE TO BONA FIDE REASONS THERE IS NO REASONS FOR THE LEVY OF PENALTY UNDER APPEAL. 4. HOWEVER, THE LD. CIT (A) HAS CONFIRMED THE PENALTY ON THE GROUND THAT THE ASSESSEE IS ASSISTED BY HIGHLY QUALIFI ED PROFESSIONALS AND SUCH AN EXPLANATION CANNOT BE HEL D TO BE A BONA FIDE BELIEF. I.T.A. NO.2362/DEL/2015 3 5. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE IMPUGNED ORDER, IT IS SEEN THAT ON THE PAYMENT OF PROFES SIONAL CHARGES, THERE WAS A SHORT DEDUCTION OF TDS. THE EXPLA NATION OF THE ASSESSEE WAS THAT IT WAS UNDER A BONA FIDE BELIEF THAT TDS WAS NOT DEDUCTIBLE AS THE RELEVANT PORTIONS OF THE PAYMENT WER E COVERED UNDER THE DTAA. FURTHER, THE TDS HAS ALREADY BEEN DEPOSITED VOLUNTARILY AND SUO MOTO IMMEDIATELY ON THE DEFAULT BEING POINTED OUT AND MUCH BEFORE THE DEFAULT COMING TO THE KNOWLEDGE OF THE DEPARTMENT ON 11.02.2008 UNDER THE SUR VEY PROCEEDINGS. THUS, IF THE ASSESSEE HAS VOLUNTARILY SUO MOTO DEPOSITED THE TAX MUCH BEFORE THE DEFAULT COMING INTO NO TICE AND AT THE TIME OF PAYMENT IF THERE WAS A BONA FIDE BELIEF THAT THE PAYMENTS ARE COVERED UNDER DTAA IT CANNOT BE HELD THAT TH ERE WAS ANY CONTUMACIOUS CONDUCT ON THE PART OF THE ASSESS EE FOR NOT DEDUCTING / SHORT DEDUCTING THE TDS. ACCORDINGLY, WE H OLD THAT UNDER THESE FACTS, THE ASSESSEE HAD REASONABLE AND BON AFIDE REASON FOR NON-DEDUCTION OF TDS ON PAYMENTS MADE TO NONRESIDENTS AND WILL FALL IN THE REALM OF BONA FIDE BELIEF AS CONTEMPLATED U/S.273B; AND ACCORDINGLY, THE PENALTY L EVIED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT (A) IS DIRECTED TO BE DELETED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH AUGUST, 2018. SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7 TH AUGUST, 2018 PKK: