Gujarat Alkalies and Chemicals Ltd., Baroda V. The Addl. CIT, TDS Range, Baroda

ITA 2847/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8112 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 21-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Keywords: Opportunity of being heard; Bonafide belief; Non-deduction of tax; Reasonable cause; Bonafide mistake
• Section: 273B; 194C; 201(1); 27

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD LOZJH EGKOHJ IZLKN] U;KF;D LNL; ,OA VEJTHR FLAG] YS [KK LNL; LOZJH EGKOHJ IZLKN] U;KF;D LNL; ,OA VEJTHR FLAG] YS [KK LNL; LOZJH EGKOHJ IZLKN] U;KF;D LNL; ,OA VEJTHR FLAG] YS [KK LNL; LOZJH EGKOHJ IZLKN] U;KF;D LNL; ,OA VEJTHR FLAG] YS [KK LNL; DS LE{KA DS LE{KA DS LE{KA DS LE{KA (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ) ./ I.T.A. NOS. 2846 & 2847/AHD/2014 ( / ASSESSMENT YEARS : 2008-09 & 2009-10) GUJARAT ALKALIES AND CHEMICALS LTD. NEAR IPCL COMPLEX, P O PETROCHEMICALS, AT RANOLI DIST. BARODA - 391346 / VS. THE ADDITIONAL COMM. OF INCOME TAX TDS RANGE, BARODA. ./ ./ PAN/GIR NO. : AAACG 8896 M ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SUNIL TALATI, A.R. / RESPONDENT BY : SHRI V. K. SINGH, SR. D.R. / DATE OF HEARING 02/11/2017 !'# / DATE OF PRONOUNCEMENT 16/11/2017 $% / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER : THESE ARE TWO APPEALS BY THE ASSESSEE AGAINST TH E SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX(APPEALS)-VI, BARO DA, DATED 08/07/2017 FOR THE ASSESSMENT YEARS (AYS) 2008-09 & 2009-10, ON THE FOLLOWING GROUNDS: I. THE ORDER PASSED BY THE HONORABLE COMMISSIONER OF I NCOME TAX (APPEALS)-VI, BARODA IS BAD IN LAW, CONTRARY TO LEG AL PRONOUNCEMENTS AND SAME BE QUASHED. ITA NOS.2846 & 2847/AHD/2014 GUJARAT ALKALIES AND CHEMICALS LTD. VS. ACIT ASST.YEAR 2008-09 & 2009-10 - 2 - II. THE CIT(A)-VI, BARODA HAS ERRED IN CONFIRMING THE P ENALTY OF RS.7,64,519/-(A.Y.2008-09) & RS.7,61,398/- (A.Y.200 9-10) LEVIED BY THE AO ON THE TAX NOT DEDUCTED ON THE AMOUNT OF WASHING ALLOWANCE REIMBURSED TO EMPLOYEES. IT IS SUBMITTED THAT THE CIT(A)-VI, BARODA HAS FAILED TO APPRECIATE THE FACT S SUBMITTED BEFORE HIM, THAT THE EXPENSES INCURRED ARE IN THE N ATURE OF REIMBURSEMENT OF EXPENSES AND HENCE THE SAME ARE NO T TREATED AS PERQUISITE FOR THE PURPOSE OF DEDUCTION OF TAX A T SOURCE. HENCE NO TAX WAS RIGHTLY DEDUCTIBLE FROM SUCH REIMBURSEME NT OF EXPENSES. YOUR APPELLANT THEREFORE SUBMITS THAT THE AO BE DIRECTED TO DELETE THE PENALTY LEVIED BY THE AO. II.A WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTE D THAT THERE IS A BONAFIDE AND REASONABLE CAUSE FOR NOT DEDUCTING T HE TAX, AND HENCE THE PENALTY LEVIED BY AO IS UNJUST A ND UNCALLED FOR AS PER PROVISIONS OF SECTION 273B OF T HE ACT. III. THE CIT(A)-VI, BARODA HAS ERRED IN CONFIRMIN G THE PENALTY OF RS.13,81,597/-(A.Y. 2008-09) & RS.13,32,610/-(A .Y. 2009-10) LEVIED BY THE AO ON THE TAX NOT DEDUCTED ON THE AMO UNT OF MEDICAL ALLOWANCE REIMBURSED TO EMPLOYEES. THE CIT( A)-VI HAS FAILED TO APPRECIATE THE FACTS SUBMITTED BEFORE HIM , THAT THE EXPENSES INCURRED ARE IN THE NATURE OF REIMBURSEMEN T OF EXPENSES AND HENCE THE SAME ARE NOT TREATED AS PERQ UISITE FOR THE PURPOSE OF DEDUCTION OF TAX AT SOURCE. HENCE NO TAX WAS RIGHTLY DEDUCTIBLE FROM SUCH REIMBURSEMENT OF EXPENSES. YOU R APPELLANT THEREFORE SUBMITS THAT THE AO BE DIRECTED TO DELETE THE PENALTY LEVIED BY THE AO. III.A WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITT ED THAT THERE IS A BONAFIDE AND REASONABLE CAUSE FOR NOT DEDUCTING T HE TAX, AND HENCE THE PENALTY LEVIED BY AO IS UNJUST A ND UNCALLED FOR AS PER PROVISIONS OF SECTION 273B OF T HE ACT. IV. THE CIT(A)-VI, BARODA HAS ERRED IN CONFIRMING THE P ENALTY OF RS.90,705/- LEVIED BY THE AO BEING SO CALLED SHORT DEDUCTION OF TAX ON PAYMENT OF RS.4,45,000/- MADE TO EUREKA CHEM ICALS PVT. LTD. TOWARDS WAREHOUSING CHARGES. YOUR APPELLANT SU BMITS THAT THE TAX WAS RIGHTLY DEDUCTED AS PER PROVISIONS OF S ECTION 194C OF THE ACT INSTEAD OF 194I OF THE ACT AS HELD BY THE A O. IT IS ITA NOS.2846 & 2847/AHD/2014 GUJARAT ALKALIES AND CHEMICALS LTD. VS. ACIT ASST.YEAR 2008-09 & 2009-10 - 3 - THEREFORE SUBMITTED THAT PROVISIONS OF SECTION 271C ARE NOT APPLICABLE. PROVISIONS OF SECTION 271C ARE APPLICAB LE ONLY IN CASE OF NON DEDUCTION/PAYMENT OF TAX. SINCE YOUR AP PELLANT HAD DEDUCTED AND PAID THE TAX, PROVISIONS OF SECTION 27 1C ARE NOT APPLICABLE AND HENCE PENALTY LEVIED BY AO IS UNJUST AND UNCALLED FOR. V. THE CIT(A)-VI HAS ERRED IN CONFIRMING THE PENALTY O F RS.19,37,430/- LEVIED BY THE AO BEING TAX DEDUCTIBL E AS PER PROVISIONS OF SECTION 194I OF THE ACT, ON THE GROUN D THAT HON'BLE CIT(A) HAS CONFIRMED THE ORDER PASSED BY AO U/S.201(1)/201(1A) OF THE ACT . IT IS SUBMITTED THA T YOUR APPELLANT WAS UNDER BONAFIDE BELIEF THAT NO TAX IS DEDUCTIBLE FROM THE PAYMENT MADE TO SUZLON GUJARAT PARK LTD. ACCORDINGL Y YOUR APPELLANT SUBMITS THAT NO PENALTY IS LEVIABLE AS PE R PROVISIONS OF SECTION 273B OF THE ACT. IT BE HELD SO NOW AND PENA LTY LEVIED BY AO BE DELETED. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- IN THIS CASE, A SURVEY WAS CONDUCTED IN THE CASE OF THE ASSESSEE ON 16.07.2009, IN WHICH, IT WAS FOUND THAT THE ASSESSE E HAD EITHER SHORT DEDUCTED OR NOT DEDUCTED TAX ON CERTAIN PAYMENTS MA DE ON ACCOUNT OF MEDICAL ALLOWANCE PAID TO ITS EMPLOYEES, WAREHOUSE RENT PAID TO M/S. UREKA CHEMICAL PVT. LTD. AND RENT PAID TO M/S. SUZL ON GUJARAT PART LTD. AN ORDER U/S.201(1)/201(1A) WAS PASSED ON 26.04.201 0. THE ASSESSEE APPEALED AGAINST THE SAID ORDER BEFORE CIT(A), BARO DA, WHO CONFIRMED ALL THE ADDITIONS EXCEPT (I) THE PAYMENT OF MEDICAL ALLOWANCE IN EXCESS OF RS.15,000/- (II) WASHING ALLOWANCE, WHICH WERE DIRE CTED TO BE VERIFIED. PENALTY PROCEEDINGS U/S.271C WERE ALSO INITIATED AF TER AFFORDING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, THE ADDL.CI T, TDS RANGE, BARODA LEVIED PENALTY OF RS. 41,74,251/- U/S.271C O F THE ACT. ITA NOS.2846 & 2847/AHD/2014 GUJARAT ALKALIES AND CHEMICALS LTD. VS. ACIT ASST.YEAR 2008-09 & 2009-10 - 4 - 3. AGAINST THE SAID ORDER, ASSESSEE PREFERRED AN AP PEAL AGAINST THE LEVY OF PENALTY BEFORE THE LD.CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE. 4. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. SO FAR WASHING ALLOWANCE IS CONCERNED FOR ASST. YEAR 2 008-09, IT WAS RS.7,64,519/- AND FOR ASST. YEAR 2009-10, IT WAS RS .7,61,398/- IN CIT ORDER DATED 21.12.2011 AT PATE NO.15 & 16 OF PAPER BOOK, ALLOWED THE SAME AS NON-DEDUCTIBLE SUBJECT TO VERIFICATION. BUT CIT HAS CONFIRMED THE PENALTY ONLY ON THE GROUND THAT LD. AO WHILE GI VING EFFECT TO CIT(A) ORDER THAT ASSESSEE DOES NOT FULFILL THE NORMS FOR ISO 9002 AND THEREFORE DID NOT DELETE THE DEMAND U/S.201(1). IT WAS ARGUED BY THE AO THAT THIS IS INCORRECT VIEW TAKEN BY THE AO. COPY OF CERTIFICATE REGARDING QUALITY MANUAL OF ISO 9002 IS COMPLIED WITH BY THE ASSESSEE COMPANY AS PER PAPER BOOK PAGE 49 TO 52. MOREOVER AS CLEARLY MENTI ONED BY THE ASSESSEE THAT WASHING ALLOWANCE WAS PAID TO ITS EMPLOYEES TO MEET EXPENSES FOR PERFORMING DUTIES OF AN OFFICE. IN THIS SAID CERTIF ICATE, IT IS MENTIONED THAT ALL EMPLOYEES ARE SAFEGUARDED AGAINST STATUTORY AND REGULATORY REQUIREMENTS. THE ORGANIZATION HAS DEVISED ITS OWN PERSONNEL POLICIES. SERVICE RULES AND STANDING ORDERS, WHICH REGULATE T HE WORKING OF EMPLOYEES AND IS APPROPRIATE TO CREATE AN AMBIENT W ORK ATMOSPHERE. SINCE THIS WAS THE REQUIREMENT AS PER THE CERTIFICA TE ISO 9002, THEREFORE, WE DELETE THE PENALTY. ITA NOS.2846 & 2847/AHD/2014 GUJARAT ALKALIES AND CHEMICALS LTD. VS. ACIT ASST.YEAR 2008-09 & 2009-10 - 5 - 5. SO FAR MEDICAL ALLOWANCE IS CONCERNED. SAME WERE DEDUCTIBLE U/S.192 IN ASST. YEAR 2008-09 OF RS.13,81,597/- AND IN ASST. YEAR 2009- 10 OF RS.13,32,610/-. SAME HAS BEEN DELETED BY OUR COORDINATE BENCH AND HONBLE GUJARAT HIGH COURT BY HOLDING AS BELOW: WE DRAW SUPPORT FROM THE ABOVE EXTRACTED OBSERVATI ONS AND CONCLUDE THAT THE ASSESSEE HAS ACTED FAIRLY AND HONESTLY IN COMPUTING ITS TDS LIABILITY QUA SALARY AND OTHER ALLOWANCES PAID TO I TS EMPLOYEES U/S.192 OF THE ACT. NOR IT IS THE REVENUES CASE THAT IT HA S NOT ACTED IN THE ABOVE STATED BONAFIDE MANNER OR THAT QUANTUM OF MEDICAL A LLOWANCE QUESTION APPEARS TO BE PAYMENT OF SALARY IN GARB THEREOF. TH E CASE FILE DOES NOT REVEAL THAT THESE VERY SUMS STAND ASSESSED IN INDIV IDUAL EMPLOYEES HANDS. THE REVENUE FAILS IN CONTROVERTING ALL OF TH E ABOVE STATED FINDINGS. WE ACCORDINGLY REVERSE LOWER AUTHORITIES ACTION AND ACCEPT ASSESSEES FIRST SUBSTANTIVE GROUND CHALLENGING SEC TION 201(1) AND (1A) DEMAND IN QUESTION. THIS FIRST SUBSTANTIVE GROUND R ELATING TO MEDICAL REIMBURSEMENT ISSUE SUCCEEDS. ITA 461/AHD/2012 IS P ARTLY ACCEPTED. SECTION 17(2) OF THE ACT REFERS TO TERM PERQUISIT E AS TO INCLUDE RANGE OF BENEFITS TO BE PAID BY THE EMPLOYER TO THE EMPLO YEES. PROVISO TO SAID SUB-SECTION, HOWEVER, PROVIDES THAT NOTHING IN THIS CLAUSE SHALL APPLY TO IN CLAUSE (V) WHERE ANY SUM PAID BY THE EMPLOYER IN RESPECT OF NAY EXPENDITURE ACTUALLY INCURRED BY THE EMPLOYEE ON HI S MEDICAL TREATMENT OR THE TREATMENT OF ANY MEMBER OF HIS FAMILY, SO, H OWEVER THAT SUCH SUM DOES NOT EXCEED RS.15,000/- IN THE PREVIOUS YEAR. T HUS, REIMBURSEMENT OF MEDICAL EXPENDITURE ACTUALLY INCURRED BY THE EMP LOYEE ON HIMSELF OR HIS FAMILY OR UP TO A CEILING OF RS.15,000/- WOULD NOT BE INCLUDED IN THE TERM PERQUISITE. THIS IS PRECISELY WHAT ARE THE F ACTS IN THE PRESENT CASE. THE REVENUE DOES NOT CONTEND THAT THE CEILING OF RS.15,000/- WAS BREACHED. PRIME OBJECTION OF THE REVENUE APPEARS TO BE THE FIXED REIMBURSEMENT COMMENSURATE WITH THE LEVEL OF THE EM PLOYEE IRRESPECTIVE OF THE DEMAND FOR MEDICAL REIMBURSEMEN T. THE COMPANY, HOWEVER, WHEN ENSURED THAT SUCH REIMBURSEMENT WAS N OT IN EXCESS OF ACTUAL EXPENDITURE INCURRED BY THE EMPLOYEES, THIS OBJECTION OF THE REVENUE ALSO CANNOT SURVIVE. ITA NOS.2846 & 2847/AHD/2014 GUJARAT ALKALIES AND CHEMICALS LTD. VS. ACIT ASST.YEAR 2008-09 & 2009-10 - 6 - 5.2 THEREFORE, RESPECTFULLY FOLLOWING THE CO-ORDINA TE BENCHS ORDER AND JUDGMENT OF THE HONBLE HIGH COURT, WE DELETE T HE PENALTY. 6. SO FAR LEASE RENT PAID TO EUREKA CHEMICALS PVT. LTD. IS CONCERNED. ASSESSEE COMPANY DEDUCTED THE TDS U/S.196(C) AS IT IS IN PURSUANCE OF A WORK CONTRACT AS CAN BE SEEN IN THE ORDER OF THE CI T APPEAL CONFIRMING PENALTY ON PAGE 15 & 16 PARA 8.3. IN THIS CASE, LD. AR STATED THAT THE ASSESSEE HAS BONAFIDELY DEDUCTED THE TAX U/S.194(C) INSTEAD OF 194(I) THEN IT WAS A BONAFIDE MISTAKE AND PENALTY CANNOT B E LEVIED AS PER THE DECISION OF THE ITAT PUNE, BENCH [2017] 81 TAXMANN. COM 8 (PUNE-TRIB.) AND JUDGMENT OF DELHI HIGH COURT IN THE MATTER OF C IT VS. CADBURY INDIA LTD., WHEREIN, IT HAS BEEN HELD: ITAT PUNE, BENCH [2017] 81 TAXMANN.COM 8 (PUNE-TRI B.) I. SECTION 194J, READ WITH SECTION 271C, OF THE IN COME TAX ACT, 1961 DEDUCTION OF TAX AT SOURCE FEES FOR PROFES SIONAL OR TECHNICAL SERVICES (DATA FACILITIES) ASSESSMENT Y EARS 2008-09 TO 2010-11 WHETHER WHERE ASSESSEE WAS ACCESSING S TANDARD DATA SERVER FACILITY OF GERMAN COMPANY, PAYMENTS MA DE TO GERMAN CO. DID NOT PARTAKE OF NATURE OF PROFESSIONA L/TECHNICAL SERVICES AND PROVISIONS OF SECTION 194J WERE NOT AP PLICABLE HELD, YES [PARA 21][IN FAVOUR OF ASSESSEE] II. SECTION 194J, READ WITH SECTIONS 194C AND 271 C, OF THE INCOME- TAX ACT, 1961 DEDUCTION OF TAX AT SOURCE FEE FO R PROFESSIONAL OR TECHNICAL SERVICES (PENALTY FOR NON-DEDUCTION OF TDS) ASSESSMENT YEARS 2008-09 TO 2010-11 WHETHER WHERE ASSESSEE HAD NOT ESTABLISHED ITS CASE OF TDS NOT APPLICABLE ON WHICH SHORT-DEDUCTION WAS MADE BY IT, IT WAS EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 271C HELD, YES- WHETHER IN CASE OF PAYMENTS ON WHICH ASSESSEE HAD DEDUCTED TAX AT SOURCE UNDER SEC TION 194C MERELY BECAUSE DEBATE WAS WHETHER PROVISIONS OF SEC TION 194J ITA NOS.2846 & 2847/AHD/2014 GUJARAT ALKALIES AND CHEMICALS LTD. VS. ACIT ASST.YEAR 2008-09 & 2009-10 - 7 - WERE ATTRACTED OR NOT, IT DID NOT MAKE ASSESSEE EXI GIBLE TO LEVY OF PENALTY UNDER SECTION 271C HELD, YES WHETHER WH ERE ASSESSEE CLAIMED THAT THERE WAS SOME RECONCILIATION PENDING IN CASE OF TOW TRANSPORTERS AND ON RECONCILIATION OF A MOUNTS, TDS WAS PAID IN SUCCEEDING YEAR, ASSESSEE HAD REASONABL E CAUSE FOR NON-DEDUCTION OF TAX ON SUCH PAYMENTS AND SINCE AFT ER RECONCILIATION ASSESSEE ADMITTEDLY HAD PAID TDS IN SUCCEEDING YEAR, THERE WAS NO MERIT IN LEVY OF PENALTY UNDER S ECTION 271C ON SUCH PAYMENTS HELD, YES [PARTLY IN FAVOUR OF ASSE SSEE] JUDGMENT OF DELHI HIGH COURT IN THE MATTER OF CIT V. CADBURY INDIA LTD. SECTION 271 C, READ WITH SECTION 273B, OF THE INCOME-TAX ACT, 1961 - PENALTY - FOR FAILURE TO DEDUCT TAX AT SOURCE - ASS ESSMENT YEARS 2002- 03 TO 2004-05 - SURVEY AT PREMISES OF ASSESSEE REVE ALED THAT ASSESSEE WAS DEDUCTING TAX AT SOURCE UNDER SECTION 194C ON P AYMENTS MADE TO CLEARING AND FORWARDING AGENTS (CFAS) AND ON PAYMEN T OF RENT FOR USAGE OF SPACE IN WAREHOUSE AND IT WAS NOT DEDUCTIN G TDS ON PAYMENTS MADE TO OUTSIDE AGENCIES SUPPLYING MANPO WER - ASSESSING OFFICER HELD THAT ON PAYMENT OF RENT AND CFAS, RE MUNERATION, TDS WAS TO BE DEDUCTED UNDER SECTIONS 194-1 AND 194J AN D NOT UNDER SECTION 194C AND PAYMENT MADE TO OUTSIDE AGENCIES S UPPLYING MANPOWER WAS LIABLE FOR TDS AT RATE OF 2 PER CENT - HE HELD ASSESSEE- IN-DEFAULT AND LEVIED PENALTY UNDER SECTION 271C - ASSESSEE CONTENDED THAT DEDUCTIONS WERE MADE IN CONSOLIDATED FORM UNDE R SECTION 194C ON PROFESSIONAL ADVICE OF CHARTERED ACCOUNTANT AND DUE TO BONA FIDE BELIEF THEREON - WHETHER IT WAS NEITHER CASE OF MAL A FIDE INTENTION NOR THAT OF NEGLIGENT INTENTION OR WANT OF BONA FIDE, B UT A CASE OF MISCONCEIVED BELIEF OF APPLICABILITY OF ONE PROVISI ON OF LAW THAN OTHER AND, THEREFORE, IT COULD NOT BE SAID JUDICIOUSLY TH AT ASSESSEE HAD FAILED TO COMPLY WITH PROVISIONS OF SECTIONS 194-1 AND 194 J WITHOUT REASONABLE CAUSE - HELD, YES WHETHER, THEREFORE, NO PENALTY COULD BE LEVIED UPON ASSESSEE UNDER SECTION 271 C - HELD, YE S 6.2 RESPECTFULLY FOLLOWING THE ORDER OF THE PUNE BE NCH AND JUDGMENT OF THE HONBLE DELHI HIGH COURT, WE DELETE THE PENALTY. ITA NOS.2846 & 2847/AHD/2014 GUJARAT ALKALIES AND CHEMICALS LTD. VS. ACIT ASST.YEAR 2008-09 & 2009-10 - 8 - 7. SO FAR AS RENT TO SUZLON GUJARAT PARK LTD IS CON CERNED, THE RENT WAS PAID NOT FOR GO-DOWN BUT USE OF PIECE OF LAND AS CL EARLY STATED BY CIT APPEAL IN PAGE 16 & 17 OF IMPUGNED ORDER PARA 9.1. THE ASSESSEE BONAFIDELY BELIEVES THAT TDS HAS TO BE DEDUCTED U/S 194(1) FOR LEASE OR TENANCY CHARGE PAID FOR USE OF BUILDING AND NOT FOR USING LAND. THAT WAS THE POSITION TILL A.Y. 2007-08 AS THE DEFINITION OF RENT WAS AMENDED W.E.F. 13.07.2006. THEREFORE, ASSESSEE COMPANY BONA FIDELY DID NOT DEDUCT THE TAX AS PER EARLIER PRACTICE. EVEN THE AU DITORS IN THE TAX AUDIT REPORT AGREED WITH THIS VIEW AND HAS NOT QUALIFIED THE DEFAULT OF THE ASSESSEE, AS CAN BE SEEN IN TAX AUDIT REPORT FILED ON PAGE 53 OF THE PAPER BOOK. THUS IT WAS A BONAFIDE MISTAKE ON BONAFIDE BE LIEF. THE ASSESSEE SUBMITS THAT, THE BONAFIDE BELIEF MEANS 'REASONABLE CAUSE AS APPLIED TO HUMAN ACTION IS THAT WHICH WOULD CONSTRAIN A PER SON OF AVERAGE INTELLIGENCE AND ORDINARY PRUDENCE. IT CAN BE DESCR IBED AS PROBABLE CAUSE. IT MEANS AN HONEST BELIEF FOUNDED UPON REASO NABLE GROUNDS, OF EXISTENCE OF A STATE OF CIRCUMSTANCE, WHICH ASSU MING THEM TO BE TRUE, WOULD REASONABLY LEAD ANY ORDINARILY PRUDENT AND CAUTIOUS MAN, PLACED IN THE POSITION OF THE PERSON CONCERNED , TO COME TO THE CONCLUSION THAT THE SAME WAS THE RIGHT THING TO DO . THE CAUSE SHOWN HAS TO BE CONSIDERED AND ONLY IF IT IS FOUND TO BE FRIVOLOUS WITHOUT SUBSTANCE OR FOUNDATION, THE PRESCRIBED CONSEQUENCE S FOLLOW.' 7.2 THIS WAS BASED ON HONBLE SUPREME COURT DECISIO N, IN CASE OF PRICE WATERHOUSE COOPERS LTD., AND SAME IN PAPER BO OK AT PAGE 63 TO 67. ITA NOS.2846 & 2847/AHD/2014 GUJARAT ALKALIES AND CHEMICALS LTD. VS. ACIT ASST.YEAR 2008-09 & 2009-10 - 9 - 7.3 IN VIEW OF THE ABOVE SAID SUPREME COURT JUDGMEN T IN CASE OF PRICE WATERHOUSE COOPERS PVT. LTD., WE DELETE THE PENALTY AGAINST THE ASSESSEE. 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 16 / 11 /201 7 SD/- SD/- VEJTHR FLAG VEJTHR FLAG VEJTHR FLAG VEJTHR FLAG &' $ ( $ ) ()* $ ) ( AMARJIT SINGH ) ( MAHAVIR PR ASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 16/11/2017 PRITI YADAV, SR. PS !'#$ %$' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. , -. / / CONCERNED CIT 4. / () / THE CIT(A)-VI, BARODA 5. 012 **-. , -.# , '&$,$ / DR, ITAT, AHMEDABAD 6. 245 6 / GUARD FILE. & ' / BY ORDER, 0 * //TRUE COPY// (/' )* ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 02/11/2017 (DICTATION-PAD 8 P AGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13/11/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER