Innoventive Industries Ltd., Pune V. Additional Commissioner of Income-tax,

ITA 269/PUN/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7180 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 24-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR VIVEK AGGARWAL
• Keywords: Non-deduction of tax; Reasonable cause
• Section: 273B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.269 & 270/PUN/2016 / ASSESSMENT YEARS : 2009-10 & 2010-11 INNOVENTIVE INDUSTRIES LTD., (ERSTWHILE ARIHANT DOMESTIC APPLIANCES LTD.), GAT NO.1261, SANASWADI, TAL. SHIRUR, DIST. PUNE 412 208 PAN : AABCA4586B . /APPELLANT VS. ADDL.CIT (TDS), PUNE . / RESPONDENT ASSESSEE BY : NONE REVENUE BY : DR. VIVEK AGGARWAL, CIT-DR / DATE OF HEARING : 16.11.2017 / DATE OF PRONOUNCEMENT: 24.11.2017 / ORDER PER BENCH : THERE ARE 2 APPEALS OF THE ASSESSEE UNDER CONSIDERATION FOR THE ASSESSMENT YEARS 2009-10 AND 2010-11. THESE APPEALS ARE FILED AGAINST THE SEPARATE ORDERS OF CIT(A)-10, PUNE COMMONLY DATED 18-12-2015 IN CONNECTION WITH THE PENALTY U/S.271C OF TH E ACT RELATING TO PENALTY FOR FAILURE TO DEDUCT TAX AT SOURCE READ WITH SECTION 273B RELATING TO PENALTY NOT TO BE IMPOSED IN CERTAIN CASES . 2. BACKGROUND FACTS OF THESE APPEALS INCLUDE THAT THERE W AS TDS SURVEY ACTION U/S.133A OF THE ACT ON THE ASSESSEE ON 0 3-03-2009. ASSESSEE IS FOUND MAKING PAYMENT OF INTEREST AND OTHER P AYMENTS ON ITA NOS.269 & 270/PUN/2016 INNOVENTIVE INDUSTRIES LTD., 2 ACCOUNT OF PROCESSING FEE ETC., WITHOUT MAKING TDS AS PER THE TDS PROVISIONS U/S.194A OF THE ACT. SOON AFTER THE SAID DISC OVERY OF TDS DEFAULT BY THE ASSESSEE, THE REQUISITE TDS WAS PAID ON 5 TH , 6 TH AND 8 TH OF MARCH, 2010 AND 21 ST OF MARCH 2010. OTHERWISE, THE PAYMENTS INVOLVED INCLUDE ESTABLISHED COMPANIES SUCH AS: (1) RELIANCE C APITAL LTD. (2) INDIA BULLS FINANCIAL SERVICES LTD. (3) BAJAJ AUTO FINAN CE LTD. (4) RELIGARE FINVEST LTD. AND (5) GE CAPITAL SERVICES. IT IS A LSO MENTIONED THAT THE SAID ASSESSEES ARE ASSESSED TO TAX REGULARLY. AFTER GRANTING THE REASONABLE OPPORTUNITY TO THE ASSESS EE, THE AO REJECTED THE EXPLANATION OFFERED BY THE ASSESSEE AND PR OCEEDED TO LEVY THE PENALTY U/S.271C OF THE ACT AMOUNTING TO RS.2,90,917/- FOR A.Y. 2009-10 AND RS.7,23,484/- FOR A.Y. 2010-11. 3. DURING THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) ALSO G AVE REASONABLE OPPORTUNITY TO THE ASSESSEE. ASSESSEE SUBM ITTED THAT THE ASSESSEE IS ASSESSED TO TAX FOR MANY YEARS AND THE PR ESENT FAILURE TO MAKE THE TDS ON THESE CHARGES/FEES CONSTITUTES A ONE- TIME EVENT AND AN INADVERTENT MISTAKE. FURTHER, AS PER ASSESSEE, T HE PARTIES WHO RECEIVED THE PAYMENTS ARE WELL ESTABLISHED PAYEES AN D THEY ARE REGULARLY ASSESSED TO TAX. ASSESSEE PROVIDED THE REQUIS ITE PAN NUMBERS OF THE PARTIES IN THE WRITTEN SUBMISSIONS, WHICH IS EXTRACTED ON PAGES 3 AND 4 OF THE CIT(A)S ORDER. ASSESSEE ALSO M ENTIONED THAT, DURING THE A.Y. 2009-10, HE HAS ALREADY PAID THE TDS AMOU NTING TO RS.2.63 CRORES. RS.2.48 CRORES IS THE TDS PAID FOR A.Y. 2010- 11. THE INADVERTENT MISTAKE WAS DEMONSTRATED BY THE FACT THA T ASSESSEE IMMEDIATELY COMPLIED WITH THE REQUISITE TDS PROVISIONS, SOON AFTER THE SURVEY WAS OVER. ASSESSEE ALSO INVOKED THE PROVIS IONS OF SECTION 273B OF THE ACT AND REQUESTED FOR CONSIDERING THE ASSE SSEES CONDUCT AS A REASONABLE CAUSE IN WHICH CASE, IF ACCEPTED, THE P ROVISIONS OF ITA NOS.269 & 270/PUN/2016 INNOVENTIVE INDUSTRIES LTD., 3 SECTION 271C OF THE ACT STANDS OVERRIDDEN. THUS, THE CI T(A) CONSIDERED THE SAID REQUEST AND DID NOT FIND THE ASSES SEES EXPLANATION CONSTITUTES REASONABLE CAUSE. ACCORDINGLY, HE CONFIRMED THE PENALTY LEVIED BY THE AO. AGGRIEVED WITH THE ORDER OF THE CIT(A) THE ASSESSEE IN APPEAL BEFORE US IN BOTH THE ASSESSMENT YEARS. 4. IN THE PRESENT APPEALS BEFORE US, THE ISSUES RAISED IN BOTH THE APPEALS ARE IDENTICAL, I.E. CONFIRMING OF THE PENALTY U/S.271C OF THE ACT. IN THE GROUNDS, IT IS ARGUED THAT THE ASSESSEE DE FAULTED IN COMPLYING WITH THE TDS PROVISION AND MADE IT UP, BY THE TIME, THE ORDERS U/S.201(1) AND 201(A) WERE PASSED ON 31-03-2010. IN THAT CASE, THE SAME CONSTITUTES A REASONABLE CAUSE AND THER EFORE PROVISION SHOULD BE DELETED. FOR THE SAKE OF REFERENCE, WE PROCEED TO EXTRACT THE GROUNDS FOR A.Y. 2009-10 AS UNDER : 1) A. IN CONFIRMING THE PENALTY OF RS.2,90,917/- U /S.271C OF THE INCOME TAX ACT, 1961. B. IN NOT APPRECIATING THAT THERE WAS NO FAILURE TO DEDUCT THE WHOLE OR ANY PART OF THE TAX ON THE DATE OF PASSING OF TH E ORDER U/S.201. 5. IN THE LIGHT OF THE ABOVE BACKGROUND FACTS OF THE CASE , DURING THE HEARING BEFORE US, THERE WAS NONE TO REPRESENT THE CASE OF THE ASSESSEE DESPITE SERVICE ON NOTICE 16-10-2017. THE ACKN OWLEDGMENT IS PLACED ON RECORD. HOWEVER, ON CONSIDERING THE SIMPLEN ESS OF THE ISSUE AND SPEAKING ORDER OF THE LOWER AUTHORITIES, WE FIND IT RELEVANT TO ADJUDICATE THESE APPEALS WITH THE ASSISTANCE OF LD. DR FOR THE REVENUE AND THE MATERIAL AVAILABLE ON RECORD. 6. DR. VIVEK AGGARWAL, LD. DR FOR THE REVENUE EXPLAINED THE ABOVE SAID FACTS OF THE CASE AND DEMONSTRATED THAT THE TDS ITA NOS.269 & 270/PUN/2016 INNOVENTIVE INDUSTRIES LTD., 4 PAYMENTS, IF ANY, MADE BY THE ASSESSEE IS THE RESULTANT O F SURVEY ACTION BY THE DEPARTMENT. REFERRING TO THE REASONABLENE SS, LD. DR RELIED HEAVILY ON THE ORDERS OF THE AO AND THE CIT(A). 7. WE HEARD THE LD. DR FOR THE REVENUE AND PERUSED THE ORDERS OF THE REVENUE FOR BOTH THE ASSESSMENT YEARS AND THE MA TERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE ON FACTS THAT THE SURV EY ACTION U/S.133A ON THE ASSESSEE ON 03-03-2009 RESULTED IN UND ERLYING THE NON-COMPLIANCE OF ASSESSEE TO THE TDS PROVISION, BRINGING THE REQUISITE TDS TO TAX. FURTHER, IT IS A FACT THAT THE PAYE R AS WELL AS PAYEES ARE ASSESSED TO TAX REGULARLY. PAN DETAILS ARE ON RECORD. NAMES OF THE PAYEES MENTIONED ABOVE INDICATE THE UNDISPU TED NATURE OF THE ABOVE FACT. WE ALSO APPRECIATE THE PROMPT ACTION BY THE ASSESSEE IN MAKING THE REQUISITE TDS SOON AFTER SEARCH P ARTY BROUGHT OUT THE DEFAULT, IF ANY, TO THE NOTICE OF THE ASSESSEE. TH E SAME IS DONE IMMEDIATELY WITHIN THE VERY FIRST WEEK OF THE SAID DIS COVERY. FURTHER, IT IS A FACT THAT ENTIRE TDS WAS DEDUCTED AND P AID BY THE ASSESSEE BY THE TIME THE AOS ORDERS U/S.201(1) AND 201 (1A) WERE PASSED ON 31-03-2010. IT IS ALSO A FACT THAT ASSESSEE IS REGULAR IN FILING THE RETURNS AND PAYMENT OF TAXES. THE DETAILS ARE D ISCUSSED IN THE PRECEDING PARAGRAPHS RELATING TO BACKGROUND FACTS O F THE CASE. ASSESSEE, WHO COMPLIED WITH TDS PROVISION AND PAID TDS AMOUNTS IN CRORES AND WAS CAUGHT AS A DEFAULTER IN SMALL AMOUNTS, C ANNOT BE BELIEVED TO BE AN ASSESSEE IN DEFAULT WITH MALAFIDE. IN OUR VIEW, IT CANNOT BE OUT OF MALAFIDE INTENTION. 8. CONSIDERING THE ABOVE UNDISPUTED FACTS, WE ARE OF THE OPINION THAT NO MALAFIDE CAN BE ATTRIBUTED TO THE ASSESSEE IN BO TH THE YEARS WHICH WOULD ATTRACT LEVY OF PENALTY U/S.271C OF THE ACT. F URTHER, THE ITA NOS.269 & 270/PUN/2016 INNOVENTIVE INDUSTRIES LTD., 5 REASONS GIVEN BY THE ASSESSEE REVOLVES AROUND THE BO NAFIDE AND INADVERTENCE ARE EVIDENT FROM THE FACTS DISCUSSED ABOV E. CONSIDERING THE SAME, WE ARE OF THE VIEW THAT THE SAID RE ASONS GIVEN BY THE ASSESSEE CONSTITUTE A REASONABLE CAUSE AND S UBSTANTIAL ENOUGH TO NOT TO INVOKE THE PROVISIONS OF SECTION 271C O F THE ACT. ACCORDINGLY, WE FIND IT RELEVANT TO DELETE THE PENALTY LEVIED BY THE AO AND THEREFORE WE REVERSE THE FINDING OF THE CIT(A) FOR BOTH THE ASSESSMENT YEARS. ACCORDINGLY, THE GROUNDS RAISED BY T HE ASSESSEE FOR BOTH THE YEARS ARE ALLOWED. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF NOVEMBER, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 24 TH NOVEMBER, 2017. / COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE THE APPELLANT THE RESPONDENT THE CIT(A) - 10 , PUNE CIT - 10 , PUNE , , B BENCH PUNE; / GUARD FILE.