THE ITO (TDS), WARD - 3(1), Vijayawada V. The Excutive Officer, Penuganchiprolu

ITA 257/VIZ/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1081 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 20-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K SETHI
• Keywords: Diversion of income; Bonafide belief; Additional evidence; Reasonable cause
• Section: 273B; 133A; 194C; 10B; 201(1)

Judgement Text

ITA NO.257 TO 259/VIZAG/2014 THE EXECUTIVE OFFICER, SRI TIRUPATAMMA AMMAVARI DEV ASTHANAM PENUGANCHIPROLU 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NOS.257 TO 259/VIZAG/2014 ( / ASSESSMENT YEARS: 2005-06 TO 2007-08) THE ITO (TDS), WARD - 3(1), VIJAYAWADA VS. THE EXECUTIVE OFFICER SRI TIRUPATAMMA AMMAVARI DEVASTHANAM, PENUGANCHIPROLU [PAN: AAFTS1179K ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI M.K. SETHI, DR / RESPONDENT BY : SHRI G.V.N. HARI, AR / DATE OF HEARING : 17.06.2016 / DATE OF PRONOUNCEMENT : 23.06.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THESE APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), VIJAYAWADA DATED 10.2.2014 FOR THE ASSESSME NT YEARS 2005-06, 2006-07 & 2007-08. ITA NO.257 TO 259/VIZAG/2014 THE EXECUTIVE OFFICER, SRI TIRUPATAMMA AMMAVARI DEV ASTHANAM PENUGANCHIPROLU 2 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS A RELIGI OUS ENDOWMENT TEMPLE. THERE WAS A SURVEY OPERATION U/S 133A OF T HE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT'). DURING THE COURSE OF SURVEY, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSES SEE HAS NOT FILED E- TDS, QUARTERLY RETURNS/STATEMENT U/S 200(3) OF THE ACT, IN FORM NOS.24Q & 26Q. SUBSEQUENTLY, A PROPOSAL WAS SUBMITTED BY T HE A.O. TO THE ADDL. COMMISSIONER OF INCOME TAX REQUESTING FOR INI TIATION OF PENALTY PROCEEDINGS U/S 272A(2)(K) OF THE ACT. THE ADDL. C OMMISSIONER OF INCOME TAX HAD INITIATED THE PENALTY PROCEEDINGS U/ S 272(2)(K) OF THE ACT, LEVIED THE PENALTY FOR THE ASSESSMENT YEARS 20 05-06 TO 2007-08. 3. ON BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 4. BEFORE LD. CIT(A), THE ASSESSEE HAS MADE A DETAI LED SUBMISSION AND EXPLAINED REASONS FOR NON-FILING OF TDS RETURNS . THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, DELETED THE PENALTY LEVIED BY ADDL. COMMISSIONER OF INCOME TAX. ON BEI NG AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 5. THE LD. D.R. HAS STRONGLY SUPPORTED THE PENALTY ORDER PASSED BY THE A.O. ITA NO.257 TO 259/VIZAG/2014 THE EXECUTIVE OFFICER, SRI TIRUPATAMMA AMMAVARI DEV ASTHANAM PENUGANCHIPROLU 3 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE HAS STRONGLY RELIED ON THE ORDERS PASSED BY THE LD. CIT(A). THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT EARLIER ASSESSEE WA S OF THE OPINION THAT NO TDS RETURNS HAS TO BE FILED, THEREFORE, THERE WA S DELAY IN FILING THE RETURNS. ONCE IT CAME TO THE NOTICE OF THE ASSESSE E THAT HE HAS TO FILE TDS QUARTERLY RETURNS, ASSESSEE IS DEDUCTING THE TD S AND FILING THE RETURNS REGULARLY WITHIN TIME AND SUBMITTED THAT TH ERE IS A REASONABLE CAUSE FOR THE ASSESSEE IN NOT FILING THE TDS STATEM ENTS IN TIME AND ALSO ON BONAFIDE BELIEF. THEREFORE, NO PENALTY CAN BE L EVIED FOR NON-FILING OF QUARTERLY TDS STATEMENTS. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ASSESSEE IS A RELIGIOUS ENDOWMENT TEMPLE. THERE IS A SURVEY TAKEN IN THE PREMISES OF ASSESSEE. IN THE COURSE OF SURVEY, IT IS FOUND THAT THE ASSESSEE WAS NOT FILING E-TDS QUARTERLY RETURNS/STA TEMENTS U/S 203(3) OF THE ACT IN FORM NOS.24Q & 26Q AND THEREFORE PENALTY U/S 272A(2)(K) OF THE ACT WAS LEVIED. ON APPEAL BEFORE THE CIT(A), T HE ASSESSEE HAS SUBMITTED THAT ASSESSEE BEING A RELIGIOUS TEMPLE AN D IT WAS A BONAFIDE BELIEF THAT IT WAS NOT UNDER ANY OBLIGATION TO DEDU CT TDS AT SOURCE AND CONSEQUENTLY TO FILE ANY TDS QUARTERLY STATEMENTS. THE LD. CIT(A) AFTER ITA NO.257 TO 259/VIZAG/2014 THE EXECUTIVE OFFICER, SRI TIRUPATAMMA AMMAVARI DEV ASTHANAM PENUGANCHIPROLU 4 CONSIDERING THE DETAILED EXPLANATION FILED BY THE A SSESSEE, HE HAS DELETED THE PENALTY LEVIED BY THE A.O. THE RELEVAN T PORTION OF THE ORDER IS EXTRACTED AS UNDER: I HAVE SEEN THE SUBMISSIONS MADE BY THE APPELLANT, GONE THROUGH THE ORDERS MADE UNDER SECTION 272A(2)(K) BESIDES PERUSING ALL OTHER MATERIAL AVAILABLE ON RECORD INCLUDING THE ADDITIONAL GROUNDS RAISED AND ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT AND THE AO'S COMMENTS ON ADMISSION OF ADDITIONAL OF EVIDENCE. THE LEARNED AR HAS EXPLAINED THAT THERE IS REASONABLE C AUSE FOR NON FILING OF TDS RETURNS. IT IS EXPLAINED THAT THE APPELLANT WAS UND ER THE BONA FIDE IMPRESSION THAT IT WAS NOT UNDER ANY OBLIGATION TO DEDUCT TAX AND CONS EQUENTLY TO FILE ANY TDS QUARTERLY STATEMENTS. THE FACTS AND LEGAL POSITION RELIED UPON BY THE APPELLANT THAT LEAD TO SUCH BELIEF IS SUBMITTED AS UNDER: 1. IT IS HUMBLY AND RESPECTFULLY SUBMITTED THAT, THE ASSESSEE BONA FIDE BELIEVED THAT IT WAS NOT UNDER ANY OBLIGATION TO DE DUCT TAX AT SOURCE AND CONSEQUENTLY TO FILE ANY TDS QUARTERLY STATEMENTS. THE FACTS AND LEGAL POSITION RELIED UPON BY THE ASSESSEE THAT LEAD TO S UCH BELIEF OF THE ASSESSEE ARE AS FOLLOWS: (A) THE ASSESSEE-TEMPLE IS A RELIGIOUS ENDOWMENT WITH P RESIDING DEITIES SRI TIRUPATHAMMA AMMAVARU AND SRI GOPAIAH SWAMYV ARU. THE HONOURABLE SUPREME COURT IN THE CASE OF JOGENDRA NA TH NASKAR VS. CIT (1969) 74 ITR 33 (SC) AND ALSO IN THE CASE OF O FFICIAL TRUSTEE OF WEST BENGAL VS. CIT (1974) 93 ITR 348 (SC) HELD A H INDU IDOL TO BE A JURISTIC PERSON CAPABLE OF HOLDING A PROPERTY AND O F BEING TAXED THROUGH ITS SHEBATIS (HERE STATUTORILY APPOINTED EX ECUTIVE OFFICER), WHO ARE ENTRUSTED WITH THE POSSESSION AND MANAGEMENT OF ITS PROPERTY. THE HONOURABLE MADRAS HIGH COURT IN THE CASE OF THIAGESAR DHARMA VANIKAM VS. CIT (1963) 50 ITR 798 @ 807 (MAD.) AND IN THE CASE OF THANTI TRUST VS. WTO (1989) 178 ITR 1@27 (MAD.) HAD A TRUST NOT TO BE A JURISTIC OR CORPORATE OR LEGAL PE RSON. THERE IS NO TRUST DEED ESTABLISHING THE ASSESSEE-TEMPLE. THE DOCUMEN T DATED 14.7.1947 IS NOT A TRUST DEED BUT IS ONLY A PROCEED ING OF BOARD OF COMMISSIONER FOR HINDU RELIGIOUS ENDOWMENTS, MADRAS APPROVING THE PROPERTY REGISTER OF THE DEVASTHANAM VIDE PROCEEDIN GS IN B.O. NO.2084 DATED 14.7.1947. THUS THE ASSESSEE-TEMPLE NOT BEING A TRUST AND IS AN ARTIFICIAL JURIDICAL PERSON AS CONTEMPL ATED U/S 2(31) OF THE IT ACT, 1961 IS NOT REQUIRED TO DEDUCT ANY TDS U/S 194C OF THE IT ACT, ITA NO.257 TO 259/VIZAG/2014 THE EXECUTIVE OFFICER, SRI TIRUPATAMMA AMMAVARI DEV ASTHANAM PENUGANCHIPROLU 5 1961 AS IT DOES NOT IMPOSE ANY OBLIGATION ON AN AR TIFICIAL JURIDICAL PERSON TO EFFECT TDS FROM PAYMENTS MADE (B) THE TEMPLE ADMINISTRATION AND MANAGEMENT VESTS IN G OVERNMENT OF AP, WHO APPOINTED AN EXECUTIVE OFFICER (EO) U/S 29 OF THE AP CHARITABLE AND HINDU RELIGIOUS INSTITUTIONS AND END OWMENTS ACT, 1987 (ACT NO.30 OF 1987). THE EO APPOINTED IS A GOVERNM ENT SERVANT. THE FINANCIAL POWERS ARE TOTALLY VESTED IN THE EO UNDER THE SAID ACT AND NOT WITH ANY TRUST BOARD. THE FUNDS OF THE TEMPLE ARE EARMARKED FOR SPECIFIC STATUTORY PURPOSES UNDER THE SAID ACT NO.3 0/87 AND CANNOT BE SPENT/APPROPRIATED FOR ANY OTHER PURPOSES. SINCE 1 939, THE TEMPLE IS UNDER ADMINISTRATION OF ONE OR THE OTHER STATE GOVE RNMENTS. THUS THE STATUTORY FINANCIAL POWERS WHICH INTER-ALIA INCLUDE S PAYMENTS TO BE MADE FOR SPECIFIC PURPOSES OF THE TEMPLE ARE MADE B Y EO ONLY, WHO IS A GOVERNMENT SERVANT AND HIS ACTIONS IN MAKING THE SAID PAYMENTS ARE ACTIONS OF THE STATE. AS SUCH THE PAYMENTS MADE BY EO ARE TO BE CONSIDERED AS PAYMENTS BY STATE GOVERNMENT, THE EO ACTING AS DRAWING AND DISBURSING OFFICER. SUCH A DRAWING AND DISBURSING OFFICER MAKING PAYMENT IS DEFINED AS A PERSON RES PONSIBLE FOR PAYING IN SECTION 204(IV) ONLY W.E.F. 1.7.2012. T HUS BEFORE 1.7.2012 SUCH PAYMENT NOT BEING BY A PERSON RESPONSIBLE FOR PAYING AS DEFINED U/S 204 AND SINCE TDS IS TO BE MADE ONLY BY PERSON RESPONSIBLE FOR PAYING AS CONTEMPLATED U/S 194C OR 194J, THERE WAS NO OBLIGATION ON THE EMPLOYEE IS BEING PROVED BY FI LING ADDITIONAL EVIDENCE IN THE FORM OF CERTIFICATE FROM EO ALONG W ITH A SAMPLE PAY BILL OF HIS SALARY U/R 46A R.W.S. 250(4) OF THE IT ACT, 1961 VIDE A SEPARATE PETITION, WHICH MAY PLEASE BE CONSIDERED FAVOURABLY . FOR THE PROPOSITION THAT EO IS A GOVERNMENT SERVANT OF STATE OF AP, RELIANCE IS PLACED ON STATE OF ASSAM VS. KANAK CHANDRA DUTTA [1967] 0 AIR (SC) 884 AND N. RAVINDRA MURTHY AND OTH ERS V. SHRI VEERABHADRA SWAMY TEMPLY, BONTHUPALLY, MEDAK DISTRI CT AND OTHERS 2008 (3) ALT 287 (FB). FOR THE PROPOSITION IS SOLE LY VESTED WITH FINANCIAL POWERS TO OPERATE BANK ACCOUNTS AND MANAG E FINANCES, RELIANCE IS PLACED ON K. SHANKAR REDDY VS. REGIONAL JOINT COMMISSIONER, HYDERABAD [2010] 3 ALT 702. FOR THE PROPOSITION THAT ACTIONS OF EO ARE STATE ACTIONS, RELIANCE IS PLACED ON NARENDRA KUMAR MAHESWARI V. UNION OF INDIA, AIR 1989 SC 2138; SRILE KHA V. STATE OF U.P. (1991) 1 SCC 212 (PARAS. 20, 21, 24); DWARAKAD AS V. BD. OF TRUSTEEES AIR 1989 SC 1642 (PARAS, 25, 27); VIRGINIA V. RIVES (1880) 100 VS. 313 (318); AND EX PARTE VIRGINIA (1880) 10 0 VS 339 (347). (C) IT IS HUMBLY SUBMITTED THAT, AS EXPLAINED SUPRA SINC E PAYMENT BY EO OF TEMPLE IS PAYMENT BY GOVERNMENT, SUCH PAYMENT IS NOT LIABLE FOR DEDUCTION OF ANY TDS EITHER U/S 194C OR 194J FOR TH E REASON THAT A GOVERNMENT IS NOT CONSIDERED TO BE PERSON AS DEFI NED U/S 2(31) OF THE IT ACT, 1961 FOR MAKING ANY TDS. RELIANCE IS P LACED ON CIT VS. ITA NO.257 TO 259/VIZAG/2014 THE EXECUTIVE OFFICER, SRI TIRUPATAMMA AMMAVARI DEV ASTHANAM PENUGANCHIPROLU 6 DREDGING CORPORATION OF INDIA (1988) 174 ITR 682(AP) , WHEREIN IT WAS HELD THAT; IT IS NATURAL AND QUITE LOGICAL TO GIVE THE SAME MEA NING TO THE EXPRESSION PERSON THROUGHOUT THE ACT. LEARNED ST ANDING COUNSEL HIMSELF ADMITS THAT FOR THE PURPOSE OF TAXATION, TH E STATE OR THE GOVERNMENT IS NOT A PERSON. IT FOLLOWS THAT WHEREVE R THE EXPRESSION PERSON OCCURS, UNLESS IT IS SHOWN THAT THE CONTEX T OTHERWISE REQUIRES, THE STATE OR THE GOVERNMENT IS EXCLUDED BY THE MEAN ING OF THE EXPRESSION PERSON. (D) IT IS HUMBLY SUBMITTED THAT SO FAR AS LEGAL EXPENSE ARE CONCERNED ONLY PROFESSIONAL FEE PAID TO ADVOCATES, IF IT EXCEEDS R S.20,000/- REQUIRES DEDUCTION OF TAX AT SOURCE. HOWEVER, IN THE CASE O F THE ASSESSEE- TEMPLE, THE PROFESSIONAL FEE PAID TO ANY OF THE ADV OCATES DURING A FINANCIAL YEAR DID NOT EXCEED RS.20,000/-. HOWEVER , EXPENSES LIKE COURT FEE AND OTHER COURT EXPENSES ARE NOT COVERED U/S 194J. THE TDS SURVEY TEAM AT THE TIME OF SURVEY AND ALSO DURING T HE COURSE OF ASSESSMENT VERIFIED ONLY BOOK ENTRIES AND LEDGER AC COUNTS AND DID NOT VERIFY ANY SUPPORTING BILL/VOUCHERS/RECEIPTS IN THI S REGARD. THE SAME ARE BEING FILED HEREWITH AS ADDITIONAL EVIDENCE U/R 46A AND SECTION 250(4) OF THE IT ACT, 1961, WHICH MAY PLEASE BE CON SIDERED IN FAVOUR OF THE ASSESSEE. A SEPARATE SHEET BIFURCATING THE LEGAL EXPENSES ON THE ABOVE LINES, YEAR WISE IS ENCLOSED HEREWITH FOR YOUR HONOURS KIND PERUSAL. IN CASE OF LEGAL EXPENSES INCURRED ON BEHA LF OF EMPLOYEE TO DEFEND CRIMINAL CASE AGAINST HIM THAT HAS ARISEN IN THE COURSE OF DISCHARGE OF ITS DUTIES AS EMPLOYEE OF TEMPLE, THE SAME HAS ALSO BEEN APPROVED BY THE COMMISSIONE3R ENDOWMENTS OF THE GOV ERNMENT OF AP. THE SAID APPROVAL BY THE COMMISSIONER IS ALSO BEING SUBMITTED AS ADDITIONAL EVIDENCE U/R 46A R.W.S. 250(4), WHICH MA Y PLEASE BE CONSIDERED FAVOURABLY. (E) IN CASE OF GARLANDS PURCHASED NO TDS IS REQUIRED TO BE DEDUCTED U/S 194C AS THE SAME IS A SAFE CONTRACT AND IS NOT A WO RKS CONTRACT. RELIANCE IS PLACED ON CBDT VIDE ITS CIRCULAR NO.13/ 2006 DATED 13.12.2006 DISTINGUISHES BETWEEN A SAFE CONTRACT AN D CONTRACT FOR WORK AND LABOUR AND STATES SECTION 194C AS INAPPLIC ABLE TO THE FORMAL CATEGORY OF CONTRACTS. IN THIS CONNECTION RELIANCE IS PLACED ON THE DECISION OF HONOURABLE DELHI BENCH OF ITAT IN THE C ASE OF ITO VS. KUBER KHAINI (P) LTD. (2011) 47 SOT 473 (DELHI TRI B). (F) REGARDING REMUNERATION TO BARBERS, IT IS HUMBLY SUB MITTED THAT THE BARBERS IN THE TEMPLE, WHO WILL BE CONDUCTING TONSU RING OF HEADS OF THE DEVOTEES COMING TO THE TEMPLE. AN AGREEMENT WA S REACHED BETWEEN THEM AND THE ENDOWMENTS DEPARTMENTS OF GOVE RNMENT OF AP REPRESENTED BY COMMISSIONER OF ENDOWMENTS, CONCERNI NG ALL TEMPLES THAT THE BARBERS WILL BE PAID 40% OF THE TONSURING CHARGES COLLECTED FROM THE DEVOTEES BY ISSUE OF TICKETS BY THE TEMPLE . IT IS HUMBLY ITA NO.257 TO 259/VIZAG/2014 THE EXECUTIVE OFFICER, SRI TIRUPATAMMA AMMAVARI DEV ASTHANAM PENUGANCHIPROLU 7 SUBMITTED THAT THESE BARBERS ARE PAID 40% REMUNERAT ION DUE TO PRIOR AGREEMENT WITH THEM ENTERED INTO BY THE GOVERNMENT OF AP AS EVIDENT BY CIRCULAR NO.B3/39867/2007 DATED 11.10.2007 ISUED BY THE COMMISSIONER OF ENDOWMENTS. SINCE, SUCH PAYMENT TO BARBERS IS MADE ON ACCOUNT O F PRIOR AGREEMENT/CIRCULAR ISSUED BY THE GOVERNMENT, IT IS HUMBLY SUBMITTED THAT SUCH PAYMENT IS TO BE CONSIDERED AS DIVERSION OF INCOME BY OVERRIDING TITLE. IT IS SUBMITTED THAT AN OBLIGATIO N TO APPLY THE INCOME IN A PARTICULAR WAY BEFORE IT IS RECEIVED BY THE AS SESSEE OR BEFORE IT HAS ACCRUED OR ARISEN TO THE ASSESSEE, RESULTS IN THE D IVERSION OF INCOME. RELIANCE IS PLACED ON RAJA BEJOY SINGH V. CIT(1933) 1 ITR 135 (PC); PC MULLICK V. CIT (1938) 6 ITR 206 (PC); CIT VS. SI TALDAS TIRATHDAS (1961) 41 ITR 367 (SC); CIT V. IMPERIAL CHEMICAL IND USTRIES (1969) 74 ITR 17 (SC) CIT V. TRAVANCORE SUGARS AND CHEMICALS LIMITED (1973) 90 ITR 307 (KER); MOTILAL CHHADAMI JAIN V. CIT (199 1) 190 ITR 1, 10- 11 (SC) AND CIT V. MADRAS RACE CLUB (1996) 219 ITR 39, 50 (MAD). (G) FURTHER, TO THE NON-APPLICABILITY OF SECTION 194C T O THE ASSEEE-TEMPLE FOR THE REASONS STATED SUPRA, IT IS SUBMITTED THAT SECURITY AMOUNT PAID REPRESENTS PAYMENT TOWARDS HIRING OF SYSTEM AND NOT HIRING OF PERSONNEL AS SUCH AND NOT FOR ANY LABOUR WORK. THE RESPONSIBILITY OF PROVIDING SECURITY SYSTEM VESTS WITH THE ORGANIZATI ON AND ANY BREACH IN SECURITY WILL BE REPORTED TO THE NEXT HIGHER UP/ SUPERIOR OF THE THIRD PARTY ORGANIZATION, WHICH OWNS RESPONSIBILITY FOR S UCH SECURITY LAPSES. THE PAYMENT HAS ALSO BEEN MADE TO THE ORGANIZATION AND NOT TO ANY INDIVIDUAL. IN THE ABOVE CIRCUMSTANCES, IT IS BONA FIDE BELIEVED THAT THERE IS NO TDS REQUIRED TO BE MADE FOR HIRING SUCH SECURITY SYSTEM. (H) FURTHER, TO THE NON-APPLICABILITY OF SECTION 194C T O THE ASSESSEE-TEMPLE FOR THE REASONS STATED SUPRA, IT IS SUBMITTED THAT VEHICLE HIRE CHARGES REPRESENTS ALLOWANCE PAID TO CHAIRMAN, WHICH HAS BE EN FIXED THROUGH THE GO ISSUED BY THE GOVERNMENT. THE CHAIRMAN IS A LLOWED ALLOWANCE FOR TRAVELLING IN HIRED VEHICLES AND IS PAID THIS F IXED SUM NOTWITHSTANDING WHATEVER AMOUNT HE INCURS. IN THIS CONNECTION, MEMO ISSUED BY GOVERNMENT OF AP LIKE MEMO NO.32328/ENDOWMENTS/2/08-2 DATED 2.3.2009 ARE RELEV ANT WHERE ALLOWANCE IN THE FORM OF VEHICLE ALLOWANCE OR CONVE YANCE ALLOWANCE WERE GIVEN TO THE CHAIRMAN AT A FIXED SUM SPECIFIED IN THE SAID GOVERNMENT MEMO. THUS VEHICLE HIRE CHARGES DOES NO T REPRESENT HIRE CHARGES PAID ON RENTING OF VEHICLES PER SE. IN THE ABOVE CIRCUMSTANCES, IT IS BONAFIDE BELIEVED THAT NO TDS IS REQUIRED IN PAYMENT OF THESE ALLOWANCES TO THE CHAIRMAN, WHO IS NOT AN EMPLOYEE OF THE DEVASTHANAM. (I) FURTHER, TO THE NON-APPLICABILITY OF SECTION 194C T O THE ASSESSEE-TEMPLE FOR THE REASONS STATED SUPRA, IT IS SUBMITTED THAT THE ACTIVITY OF ADVERTISING BASICALLY INVOLVES COMMERCIALITY. THE APPELLANT BEING A ITA NO.257 TO 259/VIZAG/2014 THE EXECUTIVE OFFICER, SRI TIRUPATAMMA AMMAVARI DEV ASTHANAM PENUGANCHIPROLU 8 HINDU RELIGIOUS ENDOWMENT THE CONCEPT OF COMMERCIAL ITY IS ANATHEMA. THEREFORE THE PAPER PUBLICATIONS WERE GIVEN ONLY FO R THE PURPOSE OF GIVING INFORMATION TO PUBLIC. AS SUCH THERE IS NO ADVERTISING IN PAYMENTS MADE TO PRINT MEDIA FOR PURCHASE OF SPACE, A CONTRACT OF SALE OF ADVERTISING SPACE BY THE NEWSPAPER INVOLVED . IN THE ABOVE CIRCUMSTANCES, IT IS BONA FIDE BELIEVED THAT NO TDS IS REQUIRED IN PAYMENTS TOWARDS ADVERTISING. (J) THE ASSESSEE PAID THE TDS AMOUNT ALONG WITH INTERES T FROM OUT OF ITS OWN POCKET WITHOUT MAKING ANY DEDUCTION FROM THE PA YEES CONCERNED WHILE MAKING IMPUGNED PAYMENTS TO THEM. U/S 200(3) THE QUARTERLY STATEMENTS ARE REQUIRED TO BE FILED WHEN ASSESSEE M AKES DEDUCTION OF TDS AMOUNT AS CONTEMPLATED UNDER SUBSECTION (1) AND (2) OF SECTION 200. THE SAID DEDUCTION CAN ARISE ONLY WHEN ASSESS EE DEDUCTS SUCH AMOUNT FROM THE PAYMENTS MADE/TO BE MADE TO THE PAY EES CONCERNED. WHEN NO SUCH DEDUCTION HAS BEEN MADE TH E QUESTION OF REPORTING SUCH DEDUCTION IN THE QUARTERLY RETURNS W ILL NOT ARISE. THUS THE ASSESSEE UNDER THE ABOVE BONA FIDE BELIEF DID N OT FILE THE QUARTERLY RETURNS CONTEMPLATED U/S 200(3). IN SO FAR AS ASSES SMENT YEAR 2005- 06 ARE CONCERNED THE PROVISIONS OF SECTION 200(3) C AME INTO STATUE BOOK ONLY W.E.F. FROM 1.4.2005, IN WHICH CASE, COMP LIANCE BY FILING QUARTERLY STATEMENTS CANNOT ARISE FOR THE FINANCIAL YEAR 2004-05 RELEVANT TO THE ASSESSMENT YEAR 2005-06. 2. IN VIEW OF ABOVE LEGAL AND FACTUAL CIRCUMSTANCES, TH E ASSESSEE BONA FIDE BELIEVED THAT IT IS NOT LIABLE EITHER TO EFFECT TDS AGAINST ITS IMPUNGED PAYMENTS OR TO FILE QUARTERLY STATEMENTS. IT IS HUM BLY SUBMITTED CONSTITUTES AT LEAST REASONABLE CAUSE FOR NON DEDUC TION OF TDS OR NON FILING OF QUARTERLY STATEMENTS AS CONTEMPLATED U/S 273B. THE HONORABLE SUPREME COURT IN THE CASE OF CIT VS. ELI LILLY & CO . (INDIA) P. LTD. (2009) 312 ITR 225 (SC) WAS PLEASED TO HOLD THAT WHERE THE ASSESSEE WAS UNDER A GENUINE AND BONAFIDE BELIEF THAT IT WAS NOT UNDER ANY OBLIGATION TO DEDUCT TAX AT SOUIRCE FROM THE HOME SALARY PAID BY THE FOREIGN COMPANY, PENALTY U/S 271C WAS NOT LEVIABLE AS REASONABLE CAU SE WAS SHOWN FOR NOT DEDUCTING TAX AT SOURCE AND THE BURDEN THAT WAS CAS T UPON THE ASSESSEE TOPROVE SUCH GOOD AND SUFFICIENT REASON WAS DISCHAR GED BY IT. IT IS HUMBLY SUBMITTED THAT FOR THE ABOVE GENUINE AND BON A FIDE REASONS ASSESSEE DID NOT MADE TDS NOR FILED QUARTERLY RETUR NS ON ITS IMPUGNED PAYMENTS. THUS REASONABLE AND GENUINE CAUSE EXISTS IN THE CASE OF THE ASSESSEE-TEMPLE ALSO. THE SAID REASONABLE CAUSE IS EQUALLY APPLICABLE FOR WAIVER OF PENALTY LEVIED EVEN UNDER SECTION 272A(2) (K), WHICH IS ALSO MENTIONED NI SECTION 273B FOR PLEADING REASONABLE C AUSE BY AN ASSESSEE AGAINST LEVY OF ANY PENALTY THERE UNDER. 3. THE ASSESSEE-TEMPLE IS BEING ADMINISTERED AND MANAG ED BY THE STATE GOVERNMENT OF AP THROUGH THE AGENCY OF EO APPOINTED U/S 29 OF ACT 30/87, WHO IS HAVING ALL THE FINANCIAL POWERS INCLU DING DRAWING AND DISBURSEMENTS OF THE PAYMENTS TO THE RESPECTIVE PAY EES. THUS THE TEMPLE ITA NO.257 TO 259/VIZAG/2014 THE EXECUTIVE OFFICER, SRI TIRUPATAMMA AMMAVARI DEV ASTHANAM PENUGANCHIPROLU 9 WHICH IS ARTIFICIAL JURIDICAL PERSON CANNOT RESIS T OR QUESTION THE METHOD AND MANNER OF FINANCIAL TRANSACTIONS UNDER TAKEN BY THE EO SO LONG AS THEY ARE AUTHORIZED UNDER THE AP CHARITABLE AND HIN DU RELIGIOUS INSTITUTIONS AND ENDOWMENTS ACT, 1987 (ACT NO.30 OF 1987). THE AUDIT IS BEING CONDUCTED PERIODICALLY BY THE LOCAL FUND AUDI TORS, WHO ARE ALSO AUDITORS OF THE GOVERNMENT OF AP AND ITS EMPLOYEES. IN NONE OF THE AUDITS BY LF AUDITORS, THE QUESTION OF TDS DID NOT ARISE. EVEN THE 10B AUDIT CERTIFICATE FILED FROM A CHARTERED ACCOUNTANT YEAR AFTER YEAR ALONG WITH THE RETURN OF INCOME DOES NOT REQUIRE REPORTIN G ON NON-COMPLIANCE OF TDS PROVISIONS IF ANY BY THE CHARTERED ACCOUNTANT. THERE WERE INSTRUCTIONS FROM THE SIDE OF DEPARTMENT OF ENDOWME NTS OF THE GOVERNMENT OF AP. THUS THE ASSESSEE ADMINISTERED A ND MANAGED BY THE GOVERNMENT OF AP AND WHICH IS HAVING TOTAL FINANCIA L CONTROL OVER THE ASSESSEE-TEMPLE, FOR NO FAULT OF IT, HAS BEEN PENAL IZED. THE COMPLIANCE IF ANY WITH TDS PROVISIONS BY THE ASSESSEE IN THE ABOV E CIRCUMSTANCES CANNOT ARISE. THEREFORE, THE ABOVE CIRCUMSTANCES C LEARLY ESTABLISHES BONAFIDES OF THE ASSESSEE-TEMPLE IN ITS INABILITY T O COMPLY WITH TDS PROVISIONS AND THEREFORE CANNOT BE PENALIZED FOR NO FAULT OF IT. ASSESSEE PAID THE TDS AMOUNT ON ASSESSMENT ALONG WI TH INTEREST THEREON IN ORDER TO PROVE ITS BONAFIDES AND NOT TO HAVE ANY LITIGATION WITH THE DEPARTMENT OUT OF ITS OWN POCKET: 4. NOTWITHSTANDING, THE ABOVE, AND LEGAL POSITION WHEN AN ASSESSMENT OF TDS HAS BEEN MADE ON THE ASSESSEE BY THE LEARNED IT O U/S 201(1) ALSO RESULTING IN LEVY OF INTEREST U/S 201(1A), THE ASSE SSEE HAS PAID THE SAID AMOUNTS WITHOUT ANY DEMUR, WHICH CLEARLY ESTABLISHE S THE FACT THAT IT WAS UNDER THE BONA FIDE BELIEF THAT NO TDS AMOUNTS ARE REQUIRED TO BE DEDUCTED ON ITS IMPUGNED PAYMENTS AND CONSEQUENTLY NO TDS STATEMENTS ARE TO BE FILED QUARTERLY. WHEN THE LEARNED ITO MA DE THE ASSESSMENT THE ASSESSEE PAID THE TDS AMOUNT OUT OF ITS OWN POCKET AS IT DID NOT DEDUCT ANY AMOUNT TOWARDS TDS WHILE MAKING IMPUGNED PAYMEN TS TO THE PAYEES, WHO WERE PAID THE FULL AMOUNT WITHOUT ANY S UCH DEDUCTION. THEREAFTER, THE ASSESSEE ON BEING SUFFICIENTLY BECA ME AWARE OF ITS TDS OBLIGATIONS IMPOSED BY THE LEARNED ITO, STARTED DED UCTING THE TAX AMOUNT WHILE MAKING PAYMENTS TO THE PAYEES AND REMITTED TH E SAME TO THE GOVERNMENT AND IS ALSO FILLING REGULARLY QUARTERLY STATEMENTS AND ANNUAL RETURNS. THIS FURTHER CONDUCT OF THE ASSESSEE-TEMP LE IT IS HUMBLY SUBMITTED FURTHER FORTIFIES ITS BONAFIDE CONDUCT I N THIS REGARD. 5. AFTER CAREFUL CONSIDERATION OF THE SUBMISSIONS MADE ABOVE, I AM OF THE OPINION THAT THE REASONS PUT FORTH FOR NON-DEDUCTIO N OF TDS AND NON-FILING OF TDS RETURNS APPEAR TO BE GENUINE AND HENCE THE A PPELLANTS CASE WOULD NOT ATTRACT THE IMPUGNED PENALTY UNDER SECTION 272A (2)(K) SINCE THE DEFAULT WAS UNINTENTIONAL AND RESULTED DUE TO A BON A FIDE BELIEF THAT IT WAS NOT UNDER ANY OBLIGATION TO DEDUCT TAX AT SOURCE. FURTHER, THE APPELLANT HAS ALSO PAID THE TDS DEMAND RAISED BY THE AO U/S 2 01(1) WITH INTEREST THEREON AND NOT EVEN CHALLENGED THE SAME IN APPEAL. THIS CLEARLY PROVES ITA NO.257 TO 259/VIZAG/2014 THE EXECUTIVE OFFICER, SRI TIRUPATAMMA AMMAVARI DEV ASTHANAM PENUGANCHIPROLU 10 THAT THE DEFAULT WAS UNINTENTIONAL AND THE APPELLAN T HAS ACTED IN AN HONEST AND GENUINE BELIEF IN A PARTICULAR MANNER. IT IS WELL-SETTLED LAW THAT AN ORDER IMPOSING PENALTY IS A RESULT OF QUASI -CRIMINAL PROCEEDINGS AND PENALTY SHOULD NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT, CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DI SREGARD OF ITS OBLIGATION. NO PENALTY SHOULD BE IMPOSED IF THE AP PELLANT WAS ACTING IN HONEST AND GENUINE BELIEF IN A PARTICULAR MANNER. AS HELD BY THE SUPREME COURT IN HINDUSTAN STEEL LIMITED V STATE OF ORISSA, REPORTED IN (1972) 83 ITR 26, PENALTY SHOULD NOT BE IMPOSED MERELY BECAUS E IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERSON A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORI TY TO BE EXERCISED JUDICIALLY AND ON CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPET ENT TO IMPOSE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE THE PENALTY , WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WH EN THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LI ABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. IN THE CIRCUMSTANCES, I A M OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN LEVYING PENALTY U/S 272A(2) (K) FOR ALL THE SIX ASSESSMENT YEARS UNDER APPEAL. WITH REGARD TO A.Y. 2005-06, THE APPELLANT HAS FURT HER CONTENDED THAT THE PROVISIONS OF SEC. 272A(2)(K) ARE INAPPLIC ABLE FOR THIS YEAR SINCE THE PROVISIONS OF SEC 200(3) CAME INTO EFFECT FROM 1.4.2005 ONLY. I FOUND MERIT IN THE ARGUMENT OF THE APPELLANT AS THE PROVI SIONS OF SECT 200(3) CAME INTO EFFECT ONLY FROM 1.4.2005. HENCE, THIS G ROUND IS ALLOWED AND THE AO IS DIRECTED TO DELETE THE DEMAND RAISED. 8. WE HAVE CAREFULLY CONSIDERED THE ORDER PASSED BY THE LD. CIT(A). LD. CIT(A) AFTER CONSIDERING THE DETAILED EXPLANATI ON GIVEN BY THE ASSESSEE, SHE IS OF THE OPINION THAT THE DEFAULT CO MMITTED BY THE ASSESSEE IS NOT WILLFUL AND DUE TO BONA FIDE BELIEF THAT IT IS NOT UNDER ANY OBLIGATION TO DEDUCT THE TDS AND HENCE DELETED THE PENALTY LEVIED BY THE A.O. WE FIND THAT THE LD. CIT(A) HAS ACCEPTED TH E EXPLANATION GIVEN BY THE ASSESSEE AND DELETED THE PENALTY LEVIED BY T HE A.O. TAKING INTO CONSIDERATION OF THE ASSESSEE BEING A RELIGIOUS TEM PLE AND ALSO FACTS AND ITA NO.257 TO 259/VIZAG/2014 THE EXECUTIVE OFFICER, SRI TIRUPATAMMA AMMAVARI DEV ASTHANAM PENUGANCHIPROLU 11 CIRCUMSTANCES OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). 9. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 23 RD JUN16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 23.06.2016 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO (TDS), WARD-3(1), VIJAYA WADA 2. / THE RESPONDENT THE EXECUTIVE OFFICER, SRI TIRU PATAMMA AMMAVARI DEVASTHANAM, PENUGANCHIPROLU, KRISHNA DISTRICT. 3. ) / THE CIT (TDS), HYDERABAD 4. ) ( ) / THE CIT(A),VIJAYAWADA 5. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM