The Panchsheel Mercantile Co. Op. Bank Ltd., Surat V. The Jt.CIT.,TDS Range, Surat

ITA 3055/AHD/2011

• Counselvise Citation: 305520514 RSA 2011
• Duration Of Justice: 3 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-04-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 05-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: M J SHAH
• Keywords: Reasonable cause
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI PRAMOD KUMAR, A.M. AND SHRI S.S. GODAR A, J.M.) ITA NOS.3055, 3056, 3057 & 3058/AHD/2011 A.YS. 2003-04, 2004-05, 2005-06 & 2006-07 RESPECTIV ELY THE PANCHSHEEL MERCANTILE CO-OPERATIVE VS. JOINT C.I.T., BANK LIMITED , TDS RANGE, SURAT SILVER PLAZA COMPLEX, BELGIUM TOWER, RING ROAD, SURAT (PAN: AAACT 8950 B) (APPELLANT) (RESPONDENT) ASSESSEE/APPELLANT BY : SHRI M.J. SHAH, ADVOCATE REVENUE/RESPONDENT BY : SHRI P.L. KUREEL, SR. D.R. DATE OF HEARING : 20.04.2015 DATE OF PRONOUNCEMENT : 24. 04.2015 PER S.S. GODARA, JUDICIAL MEMBER: THESE ASSESSEES APPEALS FOR A.YS. 2003-04, 2004-05, 2005-06 & 2006-07 ARISE FROM FOUR DIFFERENT ORDERS, ALL DATED 27.09.2011, P ASSED BY THE CIT(A)-I, SURAT UPHOLDING PENALTIES OF RS.27,689/-, RS.28,520/-, RS.37,465/- AND RS.39,621/- RESPECTIVELY FOR NON- DEDUCTION OF TDS ON MICR CHARGES PAID TO THE STATE BANK OF INDIA, IN PROCEEDINGS UNDER SECTION 271C OF THE INCOME TAX ACT, 1961 (HEREAFTER THE ACT). BOTH PARTIES INFORM US AT THE OUTSET THAT FACTS IN VOLVED IN ALL FOUR CASES ARE IDENTICAL. THEREFORE, WE TREAT ITA NO.3055/AHD/201 1 AS THE LEAD CASE. 2. THE ASSESSEE IS A CO-OPERATIVE BANK. IT IS A DE DUCTOR FOR TDS PURPOSES. THE ASSESSEE HAD PAID MICR CHARGES TO THE STATE BANK OF INDIA IN THE RELEVANT PREVIOUS YEAR. THE ITO (TDS)-I NOTICED THAT THE ASSESSEE NOT TO HA VE DEDUCTED TDS ON THE AFORESAID MICR CHARGES. HE REFERRED THE CASE TO THE JOINT CO MMISSIONER OF INCOME TAX FOR INITIATION OF PENALTY AND OTHER CORRESPONDING PROCE EDINGS. 3. THE CASE REVEALS THAT THE JOINT COMMISSIONER OF INCOME TAX ISSUED NOTICE TO THE ASSESSEE ON 08.09.2006 PROPOSING TO LEVY SECTION 27 1C PENALTY FOR NON-DEDUCTION OF TDS. THE ASSESSEE DOES NOT APPEAR TO HAVE FILED AN Y REPLY. THE JOINT COMMISSIONER OF INCOME TAX HELD IN THE PENALTY ORDER DATED 06.10.20 10 THAT THE ASSESSEE HAD NOT EXPLAINED REASONABLE CAUSE FOR DROPPING THE PENALTY PROCEEDINGS. THUS, HE LEVIED THE IMPUGNED PENALTY OF RS.27,689/- IN THE PRESENT CASE . 4. THE ASSESSEE PREFERRED AN APPEAL. IT FILED WRIT TEN SUBMISSION PLEADING DENIAL OF FAIR OPPORTUNITY OF HEARING IN THE PENALTY PROCEEDI NGS. IT WOULD FURTHER QUOTE ITS GENUINE BELIEF FOR NOT SUBJECTING THE AFORESAID MIC R CHARGES TO TDS PROVISIONS THAT THE SAME DID NOT COME UNDER THE PURVIEW OF TECHNICAL SE RVICES DEFINED IN SECTION 194J OF THE ACT. THE ASSESSEE WOULD CLAIM TO HAVE COMPLIED TDS PROVISIONS IN QUESTION FOR A.Y. 2007-08. IT WAS AVERRED THAT THE RECEIPT OF THE MI CR CHARGES I.E. THE STATE BANK OF INDIA MUST HAVE PAID TAX ON THE IMPUGNED PAYMENTS. THE C IT(A) REJECTED ALL OF THE ASSESSEES SUBMISSIONS AND AFFIRMED THE IMPUGNED PENALTY. THEREFORE, THE ASSESSEE IS IN APPEAL. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE CASE FILE. THE ASSESSEE REITERATES ITS SUBMISSION MADE IN THE LOWER APPELLA TE PROCEEDING HEREINABOVE. THE REVENUE SUPPORTS THE CIT(A)S ORDER. WE DEAL WITH THE ASSESSEES TECHNICAL OBJECTION FIRST THAT THE JOINT COMMISSIONER OF INCOME TAX HAD DENIED IT FAIR OPPORTUNITY OF HEARING. IT IS EVIDENT THAT THE PENALTY ORDER WAS PASSED ON 06.10.2006. THE ASSESSEES RELEVANT EXPLANATION WAS RECEIVED ON 09.10.2006. THEREFORE, WE CONSTRUE THAT THE SAME WAS FILED POST FACTO PENALTY ORDER. THERE IS NO MATERIAL ON RECORD TO REBUT THE FACTUAL POSITION THAT NECESSARY PENALTY NOTICE STOO D ISSUED ON 23.09.2006. THE ASSESSEE HAD SUFFICIENT TIME TO RESPOND. THEREFORE, ITS T ECHNICAL ARGUMENT FAILS. 6. NOW WE COME TO THE ASSESSEES CONTENTIONS ON MER ITS. IT HAD MADE PAYMENTS OF MICR CHARGES TO STATE BANK OF INDIA WITHOUT DEDUCTI NG ANY TDS. IT HAS COME ON RECORD THAT IT HAS STARTED DEDUCTING TDS ON THE SAID PAYME NTS W.E.F A.Y. 2007-08. THE AUTHORITIES BELOW NOWHERE SPECIFICALLY REJECT ITS P LEA THAT THE RECIPIENT HEREIN I.E. THE STATE BANK OF INDIA HAS DECLARED THE IMPUGNED PAYME NTS AS ITS INCOME. NOR DOES THE CIT(A) DEAL WITH ITS GROUND OF GENUINE BELIEF REGAR DING NON-APPLICABILITY OF SECTION 194J IN CASE OF THESE MICR PAYMENTS. WE MAKE IT CLEAR T HAT NOW IT IS A SETTLED LAW THAT SECTION 194J APPLIES IN SUCH KIND OF PAYMENTS. A C O-ORDINATE BENCH OF TRIBUNAL IN ITA NOS.2924, 2925, 2926 & 2927/AHD/2011 IN THE CASE OF THE JAMMU KASHMIR BANK LIMITED, SURAT VS. JOINT COMMISSIONER OF INCOME TAX , SURAT IN DECIDING A BATCH OF SIMILAR ISSUES HOLDS THAT SUCH A GENUINE BELIEF FORMS A REA SONABLE CAUSE FOR DELETING IDENTICAL PENALTIES IMPOSED U/S 271C OF THE ACT. THE CO-ORDI NATE BENCH ALSO TAKES NOTICE OF THE FACT THAT THE PAYEES CONCERN HAD ALREADY DECLARED T HE VERY SUMS AS INCOME. THE REVENUE FAILS TO QUOTE ANY CASE LAW TO THE CONTRARY . IN THESE CIRCUMSTANCES, WE FOLLOW CO-ORDINATE BENCHS DECISION AND TREAT THE ASSESSEE S EXPLANATION TENDERED IN THE LOWER APPELLATE PROCEEDINGS AS A REASONABLE CAUSE FOR ACC EPTING ITS GROUNDS CHALLENGING THE IMPUGNED PENALTY OF RS.27,689/- UNDER SECTION 271C OF THE ACT FOR NON-DEDUCTION OF TDS. THE ASSESSEES GROUNDS ON MERITS SUCCEED. ITA NO.3055/AHD/2011 IS ALLOWED. 7. SAME ORDER TO FOLLOW IN ITA NOS.3056 TO 3058 ALL OF THE ASSESSEES APPEALS 8. IN THE RESULT, ALL THE ASSESSEES APPEALS ITA NO S.3055 TO 3058/AHD/2011 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH APRIL, 2015. SD/- SD/- (PRAMOD KUMAR) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL |MEMBER AHMEDABAD; DATED 24 TH APRIL, 2015 PBN/* COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. CONCERNED CIT 4. CIT(A) 5. D.R., ITAT, AHMEDABAD 6. GUARD FILE BY ORDER, DY./ASSTT. REGISTRAR ITAT, AHMEDABAD