M/s. Ghaziabad Development Authority, Ghaziabad V. Addl. CIT(TDS), Ghaziabad

ITA 2713/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6855 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2004-2005
• Appeal Filed On: 12-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Period of limitation; Reasonable cause; Time period of passing order; TDS; Set aside
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI G.S. PANNU, VICE PRESIDENT & AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO.2713/DEL/2016 ASSESSMENT YEAR 2004-05 GHAZIABAD DEVELOPMENT AUTHORITY, VIKAS PATH, HAPUR ROAD, GHAZIABAD. V. ADDL. CIT(TDS), GHAZIABAD. TAN/PAN: MRTG00108D (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI KAPIL GOEL, ADV. RESPONDENT BY: SHRI VIPUL KASHYAP, SR.D.R. DATE OF HEARING: 31 10 2019 DATE OF PRONOUNCEMENT: 27 01 2020 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 15.02.2016 PASSED BY COMMISSIONER OF INCOME TAX (APPEALS), MUZAFFARNAGAR IN RELATION TO PENALTY PROCEEDINGS U/S.271C WHEREBY LD . CIT(A) HAS UPHELD THE PENALTY OF RS.6,03,857/-. 2. THE FACTS IN BRIEF ARE THAT AN INTEREST OF RS.57 ,87,227/- ON ENHANCED COMPENSATION AGAINST LAND ACQUISITION I N GOVINDPURAM SCHEME, GHAZIABAD WAS PAID THROUGH COUR T TO VARIOUS PERSONS DURING THE FINANCIAL YEAR 2003-04. THE ASSESSING OFFICER OBSERVED THAT NO TDS HAS BEEN DED UCTED ON THE INTEREST PAYMENT U/S.194A BY THE SECRETARY, GHA ZIABAD I.T.A. NO.2713/DEL/2016 2 DEVELOPMENT AUTHORITY, GHAZIABAD WHO WAS THE PERSON RESPONSIBLE TO DEDUCT TAX AT SOURCE. IN THE ORIGINA L ORDER U/S. 201(1) AND 201(1A), THE ASSESSEE WAS FOUND TO BE IN DEFAULT AND THE SAID ORDER WAS CONFIRMED BY THE TRIBUNAL AL SO. HOWEVER, BEFORE THE TRIBUNAL ASSESSEE HAS RAISED CHARGEABILITY OF COMPENSATION AMONG MANY ASSESSMENT YEARS, WHICH WAS NOT RAISED EARLIER. ACCORDINGLY, THE MATT ER WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER ON TH E ISSUE OF CHARGEABILITY OF COMPENSATION AMONG MANY ASSESSMENT YEARS. HOWEVER, IN THE SET ASIDE PROCEEDINGS AS PER THE AS SESSING OFFICER NONE APPEARED ON BEHALF OF THE ASSESSEE AND ASSESSEE HAVING FAILED TO FURNISH EVIDENCE THAT THE COMPENSA TION PERTAINS TO DIFFERENT ASSESSMENT YEARS. HE HELD THA T INTEREST ON ENHANCEMENT COMPENSATION PAID BY THE ASSESSEE RE LATES TO FINANCIAL YEAR, I.E., ASSESSMENT YEAR 2004-05. ACCO RDINGLY, HE RAISE THE DEMAND OF RS.10,74,795/- WHICH INCLUDED A MOUNT OF TDS AT THE INTEREST U/S.201(1A), THEREAFTER PENA LTY PROCEEDINGS U/S.271C WAS INITIATED. LD. ASSESSING O FFICER THEREAFTER IN HIS IMPUGNED PENALTY ORDER HAS LEVIED THE PENALTY OF RS.6,03,857/- U/S.271C. 3. LD. CIT (A) HAS CONFIRMED THE PENALTY ON THE GROUND THAT IN VIEW OF THE ASSESSING OFFICER IN THE PROCEEDINGS U/S.201(1) AND 201(1A) HAS BEEN UPHELD BY THE TRIBUNAL AND THE RELIANCE PLACED BY THE ASSESSEE ON THE CBDT CIRCULAR DATED 21.09.1994 WAS REJECTED AND HE HELD THAT THERE WAS A CLEAR CUT DEFAULT AND THEREFORE THE ASSESSEE WAS LIABLE F OR PENALTY U/S.271C. ON THE ISSUE OF PENALTY BARRED BY LIMITAT ION IN I.T.A. NO.2713/DEL/2016 3 TERMS OF SECTION 275, THE RELEVANT OBSERVATION AND THE FINDING OF THE LD. CIT (A) READS AS UNDER: IN THE LIGHT OF THE ABOVE FACTS, IT IS CLEAR THAT IT WAS PRINCIPAL OFFICER, GHAZIABAD DEVELOPMENT AUTHORITY WHO WAS TH E PAYER IN RESPECT OF COMPENSATION TO THE LAND OWNERS AND H AS FAILED TO DEDUCT TDS ON THE SAID PAYMENTS U/S.194A OF THE ACT. THE VIEW OF THE ASSESSING OFFICER HAS BEEN UPHELD BY TH E HONBLE ITAT, NEW DELHI IN THE APPELLANTS CASE. THE RELIAN CE OF THE APPELLANT ON THE CIRCULAR OF THE CBDT DOES NOT HELP ITS CASE. THE APPELLANT IS ASSESSEE IN DEFAULT ON THIS ACCOUN T AND IS THEREFORE LIABLE FOR PENALTY U/S. 271C OF THE ACT. THE SUBMISSION OF THE APPELLANT THAT THE ORDER PASSED B Y THE ADDL. CIT(TDS) U/S 271-C HAS BECOME BARRED BY LIMITATION AS PROVIDED U/S 275 IS NOT CORRECT INTERPRETATION OF L AW. IN THIS CASE ORDER U/S 271-C HAS BEEN PASSED ON 24.8.2011. PROCEEDINGS FOR LEVY OF PENALTY U/S 271-C HAVE BEEN INITIATED BY THE ADDL.CIT(TDS) ON 8.1.2010 AND THE SAME WERE KEPT IN ABEYANCE ON THE REQUEST OF THE APPELLANT TILL THE D ISPOSAL OF THE APPEAL BY THE LD. CIT(APPEALS), GHAZIABAD. THE ORDER OF THE LD. CIT(APPEALS) WAS RECEIVED ON 10.2.2011. FUR THER OPPORTUNITY WAS GIVEN BY THE AO TO THE APPELLANT VI DE NOTICE DATED 10.8.2011 AND THE ORDER U/S.271C OF THE ACT H AS BEEN PASSED ON 24.8.2011 I.E. WITHIN SIX MONTHS FROM THE RECEIPT OF THE ORDER OF THE LD. CIT(APPEALS) BY THE AO. THEREF ORE, THE ARGUMENT OF THE APPELLANT THAT THE PENALTY ORDER HA S BECOME BARRED BY LIMITATION IS NOT BASED ON CORRECT INTERP RETATION OF LAW AS PROVIDED U/S 275 OF THE ACT. FURTHER THE APPELLANT HAS SUBMITTED THAT PENALTY IN THIS CASE IS NOT LIVABLE AND RELIED UPON THE DECISION OF HON BLE APEX I.T.A. NO.2713/DEL/2016 4 COURT IN THE CASE OF CIT VS. BANK OF NOVA SCOTIA DA TED 7.1.2016 ON THE GROUND THAT IT IS NECESSARY TO ESTA BLISH THAT THERE WAS CONTUMACIOUS CONDUCT ON THE PART OF APPEL LANT TO LEVY PENALTY U/S. 271C OF THE ACT. THE FACTS OF THE ABOVE REFERRED CASE HAVE BEEN GONE THROUGH. IN THIS CASE THE APPELLANT HAS RELIED UPON THE CIRCULAR NO.275/109/9 2-IT(B) DATED 21-9-1994 OF CBDT FOR NON DEDUCTION OF TDS ON COMPENSATION PAYMENT. THE RELIANCE OF THE APPELLANT ON THE SAID CIRCULAR HAS BEEN FOUND NOT IN ACCORDANCE WITH THE PROVISIONS OF INCOME TAX ACT BY THE LD. CIT(APPEALS ), GHAZIABAD AND BY THE HONBLE ITAT, DELHI. IN THIS C ASE THE APPELLANT COULD NOT ESTABLISH THAT FAILURE FOR NON DEDUCTION OF TDS WAS DUE TO A REASONABLE CAUSE. IN THE PRESENT C ASE THE APPELLANT IS A DEVELOPMENT AUTHORITY HAVING LEGAL A SSISTANCE OF VARIOUS EXPERTS AT ITS DISPOSAL. IT CANNOT BE SA ID THAT IT WRONGLY RELIED UPON CIRCULAR NO.275/109/92-IT(B) DA TED 21-9- 1994 OF THE CBDT FOR NON DEDUCTION OF TDS ON - COMP ENSATION U/S SEC.L94A OF THE ACT. IN THE CIRCUMSTANCES IN TH IS CASE IT CANNOT BE SAID THAT THE FAILURE ON THE PART OF THE APPELLANT FOR NON DEDUCTION OF TDS WAS WITH A REASONABLE CAUSE. ACCORDINGLY PENALTY LEVIED BY THE A.O. U/S. 271C IS HEREBY CONFIRMED. GROUNDS OF APPEALS ARE DISMISSED. 4. BEFORE US, LD. COUNSEL BESIDES CHALLENGING THE VALIDITY OF PENALTY ON THE GROUND THAT IT HAS BEEN PASSED BEYON D THE LIMITATION PERIOD AS PER SECTION 275, HE SUBMITTED THAT THERE WAS A REASONABLE CAUSE WITHIN THE TERMS OF SECTION 273B, BECAUSE AS PER THE CBDT CIRCULAR, ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE ON THE INTEREST PAID ON ENH ANCED COMPENSATION, AS THE LIABILITY OF DEDUCTION OF TAX AT SOURCE I.T.A. NO.2713/DEL/2016 5 WAS OF ADM (LA). THIS HAS BEEN DEMONSTRATED BY FILI NG OF PROOF THAT PAYMENT WAS NOT MADE IN THE NAME OF LAND OWNER BUT WAS PAID IN THE NAME OF SPECIAL JUDGE, GHAZIABA D. FURTHER CONSIDERING THESE FACTS, ITO HAS PASSED THE ORDER U/S. 271C OF THE ACT AND LATER ON CIT-TDS DROPPED T HE PENALTY PROCEEDINGS. HOWEVER ASSESSING OFFICER ON C HANGE OF INCUMBENT HAS PASSED SECOND ORDER WITHOUT VERIFYING THE FACT THAT DEMAND HAS BEEN CANCELLED BY EARLIER ASSESSING OFFICER AND PENALTY HAS BEEN DROPPED IN ASSESSMENT YEAR 200 3-04. LASTLY, HE SUBMITTED THAT ASSESSEE IS A STATE GOVER NMENT AUTHORITY AND PAYMENTS MADE IN THE NAME OF SPECIAL JUDGE, GHAZIABAD AND NOT TO MADE TO ANY PERSON DIRECTLY ON WHICH IS TDS IS DEDUCTIBLE. IN SUPPORT, HE RELYING UPON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. BAN K OF NOVA SCOTIA, REPORTED IN 380 ITR 550. 5. ON THE OTHER HAND, LD. DR AFTER REFERRING TO THE VARIOUS OBSERVATION OF THE LD. CIT(A) SUBMITTED THAT ONCE I T HAS BEEN ESTABLISHED THAT THERE WAS CLEAR CUT DEFAULT BY THE ASSESSEE AND HAS NOT DEDUCTED TDS, THEN PENALTY U/S.271C HAS RIGHTLY BEEN LEVIED AND WHEN THERE 1S A STATUTORY OBLIGATIO N, THERE CANNOT BE ANY REASONABLE CAUSE. 6. AFTER CONSIDERING THE RIVAL SUBMISSION AND ON PERUSAL OF THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDE RS, WE FIND THAT ON THE ISSUE OF REASONABLE CAUSE U/S.273B, ASS ESSEE DOES HAS A PRIMA FACIE CASE, BECAUSE AS PER THE CBD T CIRCULAR NO. 275 DATED 21.09.1994, IT HAS BEEN CLAR IFIED THAT I.T.A. NO.2713/DEL/2016 6 RESPONSIBILITY FOR MAKING DEDUCTION TAX AT SOURCE U /S.194A SHOULD BE THAT OF COLLECTOR (LAND ACQUISITION) OR A NY AUTHORITY EMPOWERED UNDER THE LAND ACQUISITION ACT, 1894 WHO ACQUIRES THE LAND FOR THE PUBLIC PURPOSE. WHEN CONC ERNED PARTIES WHOSE LAND HAS BEEN ACQUIRED, GO TO THE COU RT OF LAW SEEKING HIGHER COMPENSATION WITH INTEREST AND IF TH E COURT ALLOWS THE CLAIM THEN THE CONCERNED AUTHORITY WHICH HAD ACQUIRED THE LAND, SHALL, WHILE PAYING THE COMPENSA TION DEDUCT TAX AT SOURCE ON THE AMOUNT OF INTEREST BEAR ING PART OF THE COMPENSATION AND DEPOSIT THE REMAINING AMOUNT W ITH THE COURT OF LAW WITH DISBURSEMENT TO THE SUCCESSFUL LI TIGANT. HENCE THE SAME AUTHORITY WAS REQUIRED TO ISSUE TDS CERTIFICATE TO THE CONCERNED PARTIES. AS PER THE DO CUMENTS SUBMITTED BY THE ASSESSEE BEFORE THE AUTHORITIES BE LOW, THE ASSESSEE HAS FILED THE PROOF THAT THE PAYMENT WAS N OT MADE IN THE NAME OF LAND OWNER BUT WAS MADE IN THE NAME OF SPECIAL JUDGE, GHAZIABAD. APART FROM THAT, ASSESSEE HAVE BEING A STATE GOVERNMENT AUTHORITY HAD MADE THE PAY MENTS IN THE NAME OF SPECIAL JUDGE, GHAZIABAD AND NOT TO ANY PERSON DIRECTLY ON WHICH TDS WAS TO BE DEDUCTED. UN DER THESE CIRCUMSTANCES IT CANNOT BE HELD THAT NON DEDU CTION OF TDS WAS INTENTIONAL AND THERE WAS NO REASONABLE CAU SE. ONCE THERE IS A BONAFIDE DISPUTE AS TO WHO IS LIABL E TO DEDUCT TDS, THEN IT CANNOT BE HELD THAT THERE IS A CONTUMA CIOUS CONDUCT ON THE PART OF THE ASSESSEE, IN VIEW OF THE PRINCIPLE LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. BANK OF NOVA SCOTIA (SUPRA) WHEREIN IT HAS BEEN HELD I.T.A. NO.2713/DEL/2016 7 THAT IN ABSENCE OF ANY FINDING THAT THE ASSESSEE HA D DELIBERATELY AVOID THE TDS PROVISION AND THERE IS N O CONTUMACIOUS CONDUCT ON THE PART OF THE ASSESSEE TH EN NO PENALTY COULD BE LEVIED. ACCORDINGLY, THE PENALTY L EVIED BY THE LD. ASSESSING OFFICER IS DELETED ON THE GROUND THAT THERE WAS BONA FIDE AND REASONABLE CAUSE IN NOT DEDUCTING THE TDS. THUS, THIS GROUND OF THE ASSESSEE IS ALLOWED. 7. THE OTHER GROUND RAISED BY THE ASSESSEE HAS BECOME PURELY ACADEMIC AND THE SAME IS TREATED AS INFRUCTU OUS. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JANUARY, 2020. SD/- SD/- [G.S. PANNU] [AMIT SHUKLA] VICE PRESIDENT JUDICIAL MEMBER DATED: 27 TH JANUARY, 2020 PKK: