M/s. State Bank Of India, Bangalore V. Additional Commissioner Of Income Tax, TDS Range-3, Bangalore

ITA 2378/BANG/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9980 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 18-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJEET SINGH
• Assessee Lawyers: MURALIDHARA H
• Keywords: Question of law; Non-deduction of tax; Reasonable cause; TDS; Set aside
• Section: 273B; 133A; 201(1); 201; 192; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI. B. R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.2378/BANG/2019 ASSESSMENT YEAR : 2012 13 STATE BANK OF INDIA, CENTRALIZED CLEARING PROCESSING CENTER, 1 ST FLOOR, A BLOCK, BKG COMPLEX, E SBM HEAD OFFICE CAMPUS, K.G ROAD, BENGALURU-560 009. PAN BLRS 36558 E VS. THE ADDL. COMMISSIONER OF INCOME-TAX, TDS RANGE - 3 BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI MURALIDHARA H, C.A RESPONDENT BY : SHRI MANJEET SINGH, ADDL. CIT DATE OF HEARING : 23-06-2020 DATE OF PRONOUNCEMENT : 30-06-2020 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAIN ST ORDER DATED 09/09/2019 PASSED BY LD. CIT (A)-10, BANGALORE FOR ASSESSMENT YEAR 2012-13, ON FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL S) IN UPHOLDING PENALTY LEVIED BY THE LEARNED ASSESSING OFFICER UND ER SECTION 271C, IN SO FAR IT IS AGAINST THE APPELLANT IS OPPOSED TO LA W, WEIGHT OF EVIDENCE, FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GRO SSLY ERRED IN UPHOLDING THE LEVY OF PENALTY U/S 271C OF THE ACT R S.6,62,454/- UNDER PAGE 2 OF 10 ITA NO.2378/BANG/2019 A. Y : 2012 13 THE FACTS AND CIRCUMSTANCES OF THE CASE AND THEREBY APPELLATE ORDER SUSTAINING PENALTY IS LIABLE TO BE SET ASIDE. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GRO SSLY ERRED IN UPHOLDING THE LEVY OF PENALTY U/S 271C OF THE ACT W ITHOUT APPRECIATING THE FACT THAT THE APPELLANT HAD COMPLIED WITH ALL T HE PROVISIONS OF TDS ON SALARIES UNDER THE FACTS AND CIRCUMSTANCES OF TH E CASE AND THEREBY APPELLATE ORDER SUSTAINING PENALTY IS LIABLE TO BE SET ASIDE. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GRO SSLY ERRED IN UPHOLDING PENALTY U/S 271C OF THE ACT WITHOUT APPRE CIATING THE FACT THAT THE INTERPRETATION OF PROVISIONS OF SEC. 10(5) WAS DEBATABLE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND THEREBY APPELLATE ORDER SUSTAINING PENALTY IS LIABLE TO BE SET ASIDE. 5. WITHOUT PREJUDICE TO THE ABOVE, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN UPHOLDING PENALTY U/ S 271C OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE APPELLANT DI D NOT HAVE MALA FIDE INTENTION IN NOT DEDUCTING TAX AT SOURCE ON LTC POR TION OF SALARIES UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND T HEREBY APPELLATE ORDER SUSTAINING PENALTY IS LIABLE TO BE SET ASIDE. 6. WITHOUT PREJUDICE TO THE ABOVE, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN UPHOLDING PENALTY U/ S 271C OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE APPELLANT WA S UNDER BONA FIDE BELIEF THAT THERE IS NO TAX LIABILITY ON LTC PORTIO N PAID TO EMPLOYEES SINCE THE SAME WAS EXEMPTED FROM TAX U/S 10(5) OF T HE ACT (WHICH DEALS WITH INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND THEREBY APP ELLATE ORDER SUSTAINING PENALTY IS LIABLE TO BE SET ASIDE. 7. WITHOUT PREJUDICE TO THE ABOVE, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN UPHOLDING PENALTY U/ S 271C OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE APPELLANT WA S UNDER BONA FIDE BELIEF THAT THERE IS NO TAX LIABILITY ON LTC INASMU CH AS THE APPELLANT WAS ONLY REIMBURSING THE LTC CLAIM AND NO TDS WAS A TTRACTED ON THE SAME UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND THEREBY APPELLATE ORDER SUSTAINING PENALTY IS LIABLE TO BE SET ASIDE. 8. WITHOUT PREJUDICE TO THE ABOVE, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN UPHOLDING PENALTY U/ S 271C OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE APPELLANT WA S UNDER BONA FIDE BELIEF THAT THERE IS NO TAX LIABILITY ON LTC INASMU CH AS THE SAME METHODOLOGY WAS BEING FOLLOWED BY THE APPELLANT FOR MORE THAN 2 DECADES UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE AND THEREBY APPELLATE ORDER SUSTAINING PENALTY IS LIABLE TO BE SET ASIDE. 9. WITHOUT PREJUDICE TO THE ABOVE, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN UPHOLDING PENALTY U/ S 271C OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE APPELLANT WA S UNDER BONA FIDE BELIEF THAT THERE IS NO TAX LIABILITY ON LTC INASMU CH AS THE APPELLANT WAS BEING GUIDED BY INDIAN BANK ASSOCIATION AND THE APPELLANT HAD ALL ALONG BEEN FOLLOWED THE SAME PRINCIPLE WITHOUT ANY CHANGE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND THEREBY APPELLATE ORDER SUSTAINING PENALTY IS LIABLE TO BE SET ASIDE. PAGE 3 OF 10 ITA NO.2378/BANG/2019 A. Y : 2012 13 10. WITHOUT PREJUDICE TO THE ABOVE, THE COMMISSIONE R OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN UPHOLDING PENALTY U/ S 271C OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE APPELLANT HA D REASONABLE CAUSE FOR NOT DEDUCTING IMPUGNED TAX AT SOURCE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND THEREBY APPELLATE ORD ER SUSTAINING PENALTY IS LIABLE TO BE SET ASIDE 11. WITHOUT PREJUDICE TO THE ABOVE, THE COMMISSIONE R OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN UPHOLDING PENALTY U/ S 271C OF THE ACT AND FURTHER ERRED IN NOT CONSIDERING THE APPELLANT' S CLAIM THAT THE APPELLANT WAS ELIGIBLE TO BE SHELTERED U/S 273B OF THE ACT FOR HAVING REASONABLE CAUSE FOR NOT DEDUCTING IMPUGNED TAX AT SOURCE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND THEREBY APP ELLATE ORDER SUSTAINING PENALTY IS LIABLE TO BE SET ASIDE. 12. FOR THESE AND SUCH OTHER GROUNDS AS MAYBE RAISE D BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDING S, APPELLANT HEREBY HUMBLY PRAYS BEFORE THIS HON'BLE TRIBUNAL TO ALLOW THE APPEAL OF THE APPELLANT IN THE INTEREST OF EQUITY AND ADVANCEMENT OF SUBSTANTIAL CAUSE OF JUSTICE IN THE EYES OF LAW. BRIEF FACTS OF THE CASE ARE AS UNDER: 2. ASSESSEE IS A BANKING INSTITUTION AND THE SURVEY UNDER SECTION 130A OF THE ACT WAS CONDUCTED ON 26/12/2013 , TO VERIFY COMPLIANCE OF TDS. DURING THE COURSE OF SURVEY, LD. AO NOTICED THAT, ASSESSEE PAID REIMBURSEMENT OF LEAVE TRAVEL C ONCESSION TO ITS EMPLOYEES, EVEN IN CASES WHERE FOREIGN DESTINAT ION WAS INCLUDED IN THE ITINERARY OF SUCH EMPLOYEES. LD.AO NOTED THAT, SUCH REIMBURSEMENTS WAS MADE WITHOUT DEDUCTING TDS, AND AMOUNT PAID ON FOREIGN TRAVEL WAS TREATED AS EXEMPT UNDER SECTION 10(5) OF THE ACT. AS EMPLOYEES WERE ALLOWED EXEMPTION UNDER SECTION 10(5) READ WITH RULE FOR TRAVEL OUTSI DE INDIA, ASSESSEE WAS TREATED AS AN ASSESSEE IN DEFAULT, FOR NOT MAKING TDS FROM SUCH PAYMENTS, MADE FOR FOREIGN TRAVEL AND ORDER UNDER SECTION 201(1) WAS PASSED RAISING DEMAND OF RS.6,62,454/-. ADDITION MADE BY LD.AO UNDER SECTION 201(1) OF PAGE 4 OF 10 ITA NO.2378/BANG/2019 A. Y : 2012 13 THE ACT WAS CONFIRMED BY THIS TRIBUNAL , CONSEQUENT TO WHICH, PENALTY UNDER SECTION 271C WAS PASSED BY LD.AO. 3. AGGRIEVED BY PENALTY LEVIED, ASSESSEE PREFERRED APPEAL BEFORE THE LD.CIT (A). 4. LD.CIT (A) UPHELD PENALTY, BY HOLDING THAT THERE WAS NO REASONABLE CAUSE FOR APPLICABILITY OF PROVISIONS OF SECTION 273B, AND NOT DEDUCTING TAX AT SOURCE FROM THE PAYMENT TO WARDS LTC CONSISTING OF FOREIGN TRAVEL. 5. AGGRIEVED BY ORDER OF LD.CIT(A), ASSESSEE IS IN APPEAL BEFORE US NOW. 6. AT THE OUTSET, LD.AR SUBMITTED THAT, IDENTICAL I SSUE HAS BEEN CONSIDERED BY COORDINATE BENCH OF THIS TRIBUNAL BY ORDER DATED 18/11/2019 IN ASSESSEES OWN CASE FOR ASSESSM ENT YEARS 2011-12 TO 2013-14 ON IDENTICAL ISSUE. IT HAS BEEN SUBMITTED THAT THESE APPEALS ALSO AROSE OUT OF THE SAME SURVE Y OPERATION DATED 26/12/2013 AS IN THE PRESENT CASE. 7. REFERRING TO PARAGRAPH 2 AT PAGE 3 OF THE ORDER IS, LD.AR SUBMITTED THAT ASSESSEE HAD FILED EXPLANATION BY LE TTER DATED 09/11/2017 EXPLAINING REASONS AND REASONABLE CAUSE TO SUPPORT THE SUFFICIENT CAUSE, HOWEVER, LD.AO IS DID NOT CON SIDER THE SAME. 8. LD.AR SUBMITTED THAT ASSESSEE WAS UNDER BONA FID ES BELIEF AND VIEW THAT THERE IS NO LIABILITY FOR ASSESSEE TO DEDUCT TDS ON LTC REIMBURSEMENT WHICH INCLUDED FOREIGN TRAVEL, MA DE TO ITS EMPLOYEES SINCE THE SAME WAS COVERED AND EXEMPTED U NDER SECTION 10 (5) READ WITH RULE 2B OF RULES. IT WAS S UBMITTED BY ASSESSEE IS THAT IT BEING A NATIONALISED BANK AND G OVERNMENT OF INDIA UNDERTAKING HAS BEEN FOLLOWING THE SAME PROCE DURE FOR PAGE 5 OF 10 ITA NO.2378/BANG/2019 A. Y : 2012 13 CALCULATION OF TAXABILITY OF SALARIES PAID TO ITS E MPLOYEES FOR PAST MANY YEARS WITHOUT ANY CHANGE IN METHOD/PRINCIPLES WHICH HAS BEEN ACCEPTED BY THE REVENUE AUTHORITIES ALL ALONG. 9. IT HAS BEEN SUBMITTED THAT, THIS TRIBUNAL DELETED PENALTY, BY RELYING ON DECISION BY COORDINATE BENCH OF THIS TRIBUNAL IN CASE OF SYNDICATE BANK VS ACIT IN ITA NO. 651 TO 656/B/2019 DATED 19/07/2019 10. IT HAS BEEN SUBMITTED THAT, ASSESSEE PAID ENTIR E DEMAND UNDER SECTION 201 (1) AND 201 (1A) OF THE ACT. 11. ON THE CONTRARY, LD.SR.DR PLACED RELIANCE UPON ORDERS PASSED BY AUTHORITIES BELOW. 12. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SI DES IN LIGHT OF RECORDS PLACED BEFORE US. WE HAVE ALSO PER USED DECISION OF ASSESSEES OWN CASE DATED 18/11/2019(SUPRA), REL IED UPON BY LD.AR, WHEREIN IDENTICAL ISSUE HAS BEEN DEALT WITH AND DECIDED AS UNDER: 5. WE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. PRIMA FADE, THE SOLE DISPUTED ISSUE IN RESPECT OF PENALTY LEVIED U/S 271C OF THE ACT FOR NON-DEDUCTION OF TAX AT SOURCE ON LTC. THE ASSESSEE-BANK HAS FAILED TO DEDUCT TDS BUT IN PROCEEDINGS U/S 201 OF THE ACT, THE A.SSESSEE HAS ACCEPTED THE CLAIM AND PAID THE AMOUN TS. THE FACT THAT NON-DEDUCTION OF TDS HAS COME OUT IN THE SURVEY OPE RATIONS U/S 133A OF THE ACT. WE FOUND THAT THE ASSESSEE HAS NOT DEDU CTED TDS AND EXPLAINED REASONABLE CAUSE IN THE PENALTY PROCEEDIN GS AND THE ASSESSEE'S ACTION IS NOT WANTON BUT ON A BONA FIDE BELIEF. WE FOUND THE CO-ORDINATE BENCH OF TRIBUNAL IN THE CASE OF SYNDIC ATE BANK VS. ACIT IN ITA NOS.651 TO 656/BANG/2019 DATED 19/07/2019 HAS D ELETED THE PENALTY U/S 271C OF THE ACT AND HAS OBSERVED AT PAR AS.11 TO 14 WHICH READ AS UNDER: 11. THE LEARNED COUNSEL FOR THE .4SSESSEE SUBMITTED THAT WHEN THE HON H/C HIGH COURT ADMITS AN APPEAL AGAINST THE ORD ER IN QUANTUM PROCEEDINGS, NO PENALTY CAN BE LEVIED ON THE ASSESS EE. IT WAS SUBMITTED THAT WHEN THE HIGH COURT ADMITS SUBSTANTI AL QUESTION OF LAW PAGE 6 OF 10 ITA NO.2378/BANG/2019 A. Y : 2012 13 ON AN ADDITION, IT BECOMES APPARENT THAT THE ADDITI ON IS CERTAINLY DEBATABLE. IN SUCH CIRCUMSTANCES NO PENALTY CAN BE LEVIED U/S 271C. IN THIS REGARD THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HON 'B/C KARNATAKA HIGH COURT I N THE CASE OF ('IT V. ANKITA ELECTRONICS PVT. LTD. 379 ITR 50 (KAR) WHERE IN IT WAS HELD THAT THE ADMISSION OF SUBSTANTIAL QUESTION OF LAW BY THE HIGH COURT LENDS CREDENCE TO THE BONA FIDES OF THE ACSESSEE IN HIS A CTION AND HENCE NO PENALTY CAN HE IMPOSED ON SUCH ADDITIONS/DEFAULTS. HE ALSO PLACED RELIANCE ON A DECISION OF THE HONBLE ITAT JAIPUR BENCH IN THE CASE OF STATE BANK OF INDIA VS. ACIT (2019) 101 TAXMANN. CO IN 61 (JAIPUR- TRIB.) WHEREIN ON IDENTICAL DEFAULT OF NON DEDUCTIO N OF TAX AT SOURCE ON PERQUISITE NOT EXEMPT U/S. 10(5) OF THE ACT AND IMP OSITION OF PENALTY FOR SUCH FAILURE U/S 271C OF THE ACT, THE ITAT JAIP UR DELETED PENALTY IMPOSED U/S,271C OF THE ACT:, OBSERVING AS FOLLOWS: - '10. WE ALSO REFER TO HON'BLE SUPREME COURT DECISIO NS IN CASE OF CIT V. I.T.I LTD. 12009] 183 TAXMAN 219 (SQ AND CIT V. LAR SEN & TOUBRO LTD 120091 181 TAXMAN 71 (SC) WHEREIN IT WAS HELD THAT THE BENEFICIARY OF EXEMPTION UNDER SECTION 10(5) IS AN INDIVIDUAL E MPLOYEE. THERE IS NO CIRCULAR OF CENTRAL BOARD OF DIRECT TAXES (CBDT) RE QUIRING THE EMPLOYER UNDER SECTION 192 TO COLLECT AND EXAMINE THE SUPPOR TING EVIDENCE TO THE DECLARATION TO BE SUBMITTED BY AN EMPLOYEE(S). THEREFORE, IT WAS HELD THAT AN ASSESSEEE- EMPLOYER IS UNDER NO STATU TORY OBLIGATION UNDER THE INCOME-TAX ACT, 1961, AND/OR THE RULES TO COLLECT EVIDENCE TO SHOW THAT ITS EMPLOYEE (S) HAD ACTUALLY UTILIZED TH E AMOUNT(S) PAID TOWARDS LEAVE TRAVEL CONCESSION(S)/CONVEYANCE ALLOW ANCE. 11. WE THUS FIND THAT THERE IS NOTHING SPECIFIC WHI CH HAS BEEN PROVIDED BY CBDT IN ITS CIRCULAR ISSUED UNDER SECTION 192 FO R THE RELEVANT FINANCIAL YEAR. WHAT HAS BEEN REITERATED IS ADHEREN CE TO THE PROVISIONS AS CONTAINED IN SECTION 10(5) READ WITH RULE 2B. SI MILARLY, THE HON'BLE SUPREME COURT HAS ALSO HELD THAT AN ASSESSEE EMPLOY ER IS UNDER NO STATUTORY OBLIGATION UNDER THE INCOME-TAX ACT, 1961 , AND/OR THE RULES TO COLLECT EVIDENCE TO SHOW THAT ITS EMPLOYEES HAD ACTUALLY UTILIZED THE AMOUNT PAID TOWARDS LEAVE TRAVEL CONCESSION. EVEN T HOUGH THE SAME IS NOT REQUIRED AS PER DECISION REFERRED SUPRA, IN THE INSTANT CASE, THE ASSESSEE BANK HAS BEEN DILIGENT, AND HAS COLLECTED AND BROUGHT ON RECORD EVIDENCE TO SHOW THAT ITS EMPLOYEES HAD ACTU AL/V UTILIZED THE AMOUNT PAID TOWARDS LEAVE TRAVEL CONCESSION. 12. AT THE SAME TIME, IN TERMS OF ADHERENCE TO THE PROVISIONS AS CONTAINED IN SECTION 10(5) READ WITH RULE 2B, WE FI ND THAT THE ASSESSEE BANK HAS ALLOWED EXEMPTION TO ALL ITS EMPL OYEES WHO HAVE SUBMITTED LFC CLAIM, THE REVENUE HAS NOT DISPUTED T HE LFC CLAIM IN RESPECT OF THESE EMPLOYEES EXCEPT IN RESPECT OF 12 EMPLOYEES. THESE 12 EMPLOYEES, WHO HAVE TRAVELLED TO FOREIGN COUNTRI ES AS PART OF THEIR TRAVEL ITINERARY WITH DESIGNATED PLACE OF TRAVEL IN INDIA, AND IN RESPECT OF WHICH THEY HAVE SUBMITTED THEIR LFC CLAIM, HAS B EEN DISPUTED BY PAGE 7 OF 10 ITA NO.2378/BANG/2019 A. Y : 2012 13 THE REVENUE AS N ELIGIBLE FOR EXEMPTION UNDER SECTI ON 10(5) IN RESPECT OF AMOUNT REIMBURSED TOWARDS FOREIGN LEG OF THEIR TRAVEL. THE EXPLANATION OF THE ASSESSEE BANK IS THAT WHILE CALC ULATING THE TAX LIABILITY OF ITS EMPLOYEES, THE FIGURE OF LFC WAS A LWAYS EXEMPTED AND THIS RULE WAS BEING FOLLOWED SINCE MANY YEARS. BEIN G IN A NATURE OF THUMB RULE AND TDS EXEMPTION OF LFC WAS THUS ALLOWE D ALMOST MECHANICALLY YEAR AFTER YEAR. TO OUR MIND, IT IS IM PORTANT TO BE CONSISTENT BUT AT THE SAME TIME, ONE NEEDS TO BE MI NDFUL OF WHAT BEEN SUBMITTED BY THE EMPLOYEES TOWARDS THEIR LFC CLAIMS , IT APPEARS THAT THE ASSESSEE BANK HAS LOOKED AT THESE 12 EMPLOYEES CLAIM BROADLY, AS IN OTHER EASES. IN TERMS OF ACTUAL TRAVEL BEING UND ERTAKEN, THE DESIGNATED PLACE BEING IN INDIA AND THE AMOUNT OF C LAIM NOT EXCEEDING THE ECONOMY FARE OF THE NATIONAL CARRIER BY THE SHO RTEST ROUTE TO THE P/ACE OF DESTINATION. HOWEVER, THE REVENUES EASE IS THAT WHAT THE ASSESSEE BANK HAS FAILED TO CONSIDER IS THAT THE TR AVEL PLAN INCLUDES THE FOREIGN LEG OF TRAVEL AND CORRESPONDING TRAVEL EXPENSES WHICH IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 10(5) OF THE A CT. HOWEVER, THE ASSESSEE BANK EXPLANATION TO THIS EFFECT IS THAT SE CTION 10(5) AND RULE 28 DOESN'T PLACE A BAR ON TRAVEL TO A FOREIGN DESTI NATION DURING THE COURSE OF TRAVEL TO A PLACE IN INDIA AND THERE IS N OTHING EXPLICIT PROVIDED THEREIN TO PROHIBIT SUCH TRAVEL IN ORDER T O DENY THE EXEMPTION. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND FACTS O N RECORD, WE ARE OF THE OPINION THAT THE ASSESSEE HANK HAS UNDERTAKEN R EASONABLE STEPS IN TERMS OF VERIFYING THE ASSESSEE'S CLAIM TOWARDS THEIR LFC CLAIMS AND IS AWARE OF EMPLOYEES TRAVELLING TO FOREIGN COU NTRIES AS PART OF THEIR TRAVEL ITINERARY BUT AT THE SAME TIME, THERE IS AN ERROR OF JUDGMENT ON PART OF THE ASSESSEE BANK IN UNDERSTANDING AND A PPLYING THE PROVISIONS OF SECTION 10(5) OF THE ACT. THEREFORE, WE TIRE UNABLE TO ACCEPT THE REVENUES CONTENTION THAT THE ASSESSEE BA NK HAS NOT DEDUCTED THE TAX INTENTIONALLY, FULLY KNOWING THAT THE LFC IS APPLICABLE FOR TRAVEL IN INDIA ONLY AND NO FOREIGN TRAVEL IS A LLOWABLE AS IT IS A CASE OF ERROR OF JUDGMENT AND NO MALAFIDE CAN BE ASSUMED ON PART OF THE HANK. FURTHER, NOTHING HAS BEEN BROUGHT ON RECORD W HICH IN ANY WAYS SUGGEST CONNIVANCE ON PART OF THE ASSESSEE BANK OR FORGED CLAIMS SUBMITTED BY THE EMPLOYEES AND WHICH HAS BEEN DISCO VERED BY THE REVENUE DURING THE COURSE OF ITS EXAMINATION. AS FA IRLY SUBMITTED BY THE ASSESSEE BANK, WHILE CALCULATING THE ESTIMATED TAX LIABILITY OF ITS EMPLOYEES, IT ALWAYS CONSIDER LFC CLAIM AS EXEMPT U NDER SECTION 10(5) AND THE SAME POSITION. BEING FOLLOWED AND ACC EPTED CONSISTENTLY IN THE PAST YEARS, WAS FOLLOWED IN THE CURRENT FINA NCIAL YEAR AS WELL. HOWEVER, FOR THE FIRST TIME, AFTER THE SURVEY BY TH E TAX DEPARTMENTS THIS ISSUE AROSE FOR CONSIDERATION AND AFTER THE JU DGMENT OF THE TRIBUNAL, THE MATTER GOT CLARIFIED AND THE ASSESSEE BANK HAS DULY COMPLIED AND DEPOSITED THE OUTSTANDING DEMAND ALONG WITH INTEREST AND HAS TAKEN CORRECTIVE STEPS IN SUBSEQUENT YEARS AS WELL. 13. IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIRE TY AFFLICTS AND PAGE 8 OF 10 ITA NO.2378/BANG/2019 A. Y : 2012 13 CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THERE WAS REASONABLE CAUSE IN TERMS OF SECTION 2738 OF TH E ACT FOR NOT DEDUCTING TAX BY THE ASSESSEE BANK. IN THE RESULT, THE PENALTY'S LEVIED UNDER SECTION 271C IS HEREBY DIRECTED TO BE DELETED . 13. IT IS NOTED THAT, THIS TRIBUNAL WHILE DECIDING IDENTICAL ISSUE IN CASE OF SYNDICATE BANK VS ACIT (SUPRA) , PLACED RELIANCE ON DECISION OF ITAT JAIPUR BENCH IN CASE OF STATE BANK OF INDIA VS ACIT REPORTED IN (2019) 101 TAXMANN.COM 61 (EMPHASIS SUPPLIED TO PARA 10-13 IN THE ABOVE REPRODUCTION). 14. ON TOTALITY OF PRESENT FACTS, REASONABLE CAUSE EXPRESSED BY ASSESSEE BEFORE AUTHORITIES BELOW AND THE VIEW TAKE N BY ITAT JAIPUR BENCH IN ASSESSEES OWN CASE(SUPRA) , WHICH WAS RELIED ON BY COORDINATE BENCH OF THIS TRIBUNAL IN CASE OF SYNDICATE BANK VS ACIT (SUPRA) ON IDENTICAL ISSUE IS, WE DO NOT FIND ANY REASON T O UPHOLD PENALTY LEVIED BY LD.AO UNDER SECTION 271C O F THE ACT. WE THEREFORE DIRECT LD.AO TO DELETE THE PENALTY. ACCORDINGLY GROUNDS RAISED BY ASSESSEE STANDS ALLOW ED. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2020 SD/- SD/- (B. R. BASKARAN) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL ME MBER BANGALORE, DATED, THE 30 TH JUNE, 2020. /VMS/ PAGE 9 OF 10 ITA NO.2378/BANG/2019 A. Y : 2012 13 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE PAGE 10 OF 10 ITA NO.2378/BANG/2019 A. Y : 2012 13 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -06-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -06-2020 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -06-2020 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -06-2020 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -06-2020 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -06-2020 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -06-2020 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS