ITO (TDS) (International Taxation), Noida V. M/s. Supertech Realtors Pvt. Ltd., Noida

ITA 3136/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3433 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 31-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGAINST DATED TH MARCH PASSED
• Keywords: Additional evidence; Reasonable cause
• Section: 273B; 201(1); 154

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A: NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.:- 3136/DEL /2016 ASSESSMENT YEAR: 2013-14 ITO (TDS) (INTERNATIONAL TAXATION) ROOM NO. 207, AAYAKAR BHAWAN, PLOT NO. A-2D, SECTOR-24, NOIDA 201301 VS. SUPERTECH REALTORS PVT. LTD. B-28/29, SECTOR-58, NOIDA 201301 PAN AAOCS2336J (APPELLANT) (RESPONDENT) O R D E R PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE DEPARTME NT AGAINST THE ORDER DATED 16 TH MARCH, 2016 PASSED BY THE LD. CIT (A) -2, NOIDA FO R ASSESSMENT YEAR 2013-14. DEPARTMENT BY: SHRI ARUN KUMAR YADAV, SR. DR ASSESSEE BY : NONE DATE OF HEARING 27 /11 /2017 DAT E OF PRONOUNCEMENT 21/02/2018 ITA NO. 3136//DEL/2016 ITO VS. SUPERTECH REALTORS P VT. LTD. 2 2. THE BRIEF FACTS OF THE CASE ARE THAT ORDER U/ S 201(1)/201(1A) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) WAS PASSED ON 7.1.2014 FOR SHORT DEDUCTION OF TAX AT SOURCE WHICH WAS FURTHER RECTIFIED VIDE ORDER DATED 12.2.2014 U/S 154 OF THE ACT COMPU TING THE DEFAULT AMOUNTING TO RS.1,72,06,748/-. SUBSEQUENTLY, THE AO SENT REFERENCE TO THE ADIT INTERNATIONAL TAXATION FOR IMPOSITION OF P ENALTY U/S 271C(1)(A) OF THE ACT FOR THE FAILURE OF THE ASSESSEE TO DEDUC T TAX AT SOURCE AND THEREAFTER, AFTER THE ISSUANCE OF SHOW CAUSE NOTICE IMPOSED THE IMPUGNED PENALTY. ON APPEAL, THE LD. CIT (A) PARTLY DELETED THE PENALTY AND NOW THE DEPARTMENT IS IN APPEAL CHALLENGING THE DELETION OF PENALTY IN RESPECT OF SHORT DEDUCTION OF TAX IN RESPECT OF GIORGIO ARMANI SPA, ITALY ON THE GROUND THAT ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULES, 1962 WAS ADMITTED BY THE LD. CIT (A) WITHOUT GIVING OPPORTUNITY TO THE AO. 3. NONE WAS PRESENT FOR THE ASSESSEE WHEN THE APPEAL WAS CALLED OUT FOR HEARING AND NEITHER WAS ANY APPLICATION FOR ADJ OURNMENT RECEIVED. HOWEVER, LOOKING INTO THE FACTS OF THE CASE, WE DEE M IT EXPEDIENT TO PROCEED EX PARTE QUA THE ASSESSEE. 4. THE LD. SR. DR SUBMITTED THAT THE ASSESSEE HAD DEDUCTED TAX AT SOURCE @ 10% FROM THE PAYMENTS MADE TO GIORGIO ARMA NI SPA, ITALY ITA NO. 3136//DEL/2016 ITO VS. SUPERTECH REALTORS P VT. LTD. 3 AND ASSESSEE WAS REQUIRED TO FURNISH DETAILS OF ALL THE FOREIGN REMITTANCE. FROM THE RESPONSE OF THE ASSESSEE, THE AO NOTED THA T THERE WERE SIX ENTITIES TO WHICH PAYMENTS WERE MADE ON DIFFERENT D ATES WHOSE PAN WERE NOT AVAILABLE WITH THE ASSESSEE. IT WAS FURTHE R SUBMITTED THAT THE AO HELD THAT IN VIEW OF THE PROVISIONS OF SECTION 2 06AA, IN ABSENCE OF PAN, THE TAX SHOULD HAVE BEEN DEDUCTED @ 20% INSTEA D OF 10% WHILE MAKING PAYMENTS TO THE FOREIGN VENDORS. IT WAS FURT HER SUBMITTED THAT THE ASSESSEE COMPANY SUBSEQUENTLY FILED APPLICATION MENTIONING THAT OUT OF THE SIX CASES, PAN WAS AVAILABLE IN ONE CASE AND , THEREFORE, THE AO REVISED THE DEFAULT COMPUTED U/S 201(1) OF THE ACT TO RS. 1,72,06,748/- ON WHICH THE PENALTY WAS ALSO IMPOSED. LD. SR. DR F URTHER SUBMITTED THAT DURING THE COURSE OF FIRST APPELLATE PROCEEDIN GS THE ASSESSEE SUBMITTED CORRESPONDENCE BETWEEN GIORGIO ARMANI SPA , ITALY AND THE ASSESSEE COMPANY WHERE THE ASSESSEE COMPANY HAD ASK ED THEM TO FURNISH PAN FAILING WHICH THE TAX WOULD BE DEDUCTED AT 20% AND IN RESPONSE GIORGIO ARMANI HAD WRITTEN THE LETTER TO T HE ASSESSEE COMPANY STATING THAT THEY WERE IN THE PROCESS OF GETTING PA N FROM INDIAN TAX AUTHORITIES WHICH WOULD BE PROVIDED IN DUE COURSE O F TIME. THE LD. SR. DR ALSO SUBMITTED THAT, SUBSEQUENTLY, THE ASSESSEE FURNISHED COPY OF PAN OF GIORGIO ARMANI SPA, ITALY AND BASED ON THIS EVIDENCES, THE LD. CIT (A) PARTLY DELETED THE PENALTY I.E. IN RESPECT OF DEDUCTION ON TAX AT A ITA NO. 3136//DEL/2016 ITO VS. SUPERTECH REALTORS P VT. LTD. 4 LOWER RATE IN THE CASE OF GIORGIO ARMANI SPA, ITALY . IT WAS SUBMITTED THAT THE LD. CIT (A) DID NOT PROVIDE ANY OPPORTUNITY TO THE AO, WHICH WAS MANDATORY IN TERMS OF RULE 46A, BEFORE ADMITTING TH E ADDITIONAL EVIDENCE ALLOWING THE CLAIM OF THE ASSESSEE. 5. WE HAVE HEARD THE LD. SR. DR AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT THE LD. CIT (A) HAS GIVE N BENEFIT OF SECTION 273B OF THE ACT BY HOLDING THAT THERE WAS A REASONA BLE CAUSE FOR NON IMPOSITION OF PENALTY. THE LD. CIT (A) HAS NOTED TH AT THE ASSESSEE WAS GUIDED BY THE ASSURANCES GIVEN BY THE FOREIGN VENDO R REGARDING APPLICATION FOR ALLOTMENT OF PAN AND, THEREFORE, TO DEDUCT AT SOURCE AT A LOWER RATE OF 10% INSTEAD OF 20%. THE LD. CIT (A) H AS ALSO NOTED THAT THIS PLEA WAS ALSO TAKEN BEFORE ADDITIONAL DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) DURING THE COURSE OF PENAL PROCEEDINGS. THE LD. CIT(A) HAS ALSO NOTED THAT THE LD. AR HAS SUBMITTE D CORRESPONDENCE WITH ONE OF THE ENTITY GIORGIO ARMANI IN WHICH THE ASSESSEE WAS ADVISED BY THIS PARTY NOT TO DEDUCT TAX AT A HIGHER RATE AS THEY WOULD BE FURNISHING PAN IN DUE COURSE OF TIME. THE LD. CIT ( A) HAS ALSO NOTED THAT THIS MATTER WAS BROUGHT TO THE NOTICE OF THE A UDITOR OF THE ASSESSEE. THEREAFTER, BASED ON THE CORRESPONDENCE AND THE ADV ICE OF THE AUDITOR, THE ASSESSEE DEDUCTED TAX @ 10%. THE LD. CIT (A) HAS AGREED WITH ITA NO. 3136//DEL/2016 ITO VS. SUPERTECH REALTORS P VT. LTD. 5 THE CONTENTION OF THE ASSESSEE THAT THIS DEDUCTION AT 10% WAS MADE UNDER GENUINE AND BONA FIDE BELIEF. 5.1 ON THE FACTS OF THE CASE, IT IS OUR CONSIDER ED OPINION THAT THE ACTION OF THE LD. CIT (A) IN DIRECTING THE DELETION OF PENALTY IMPOSED IN RESPECT OF DEDUCTION OF TAX IN THE CASE OF GIORGIO ARMANI SPA, ITALY CANNOT BE FAULTED WITH. IT IS A SETTLED LAW THAT PE NALTY U/S 271C IS NOT AUTOMATIC AND IN EVERY CASE OF LEVY OF PENALTY IT I S TO BE SEEN WHETHER THERE WAS A REASONABLE CAUSE DUE WHICH A PARTICULAR ASSESSEE REQUIRED TO DEDUCT AT SOURCE HAD FAILED TO DEDUCT THE TAX IN FULL. IN THE CASE OF THE MAKING PAYMENT TO GIORGIO ARMANI SPA, ITALY WITHOUT DEDUCTION OF TAX AT SOURCE AT THE HIGHER RATE PRESCRIBED IN THE ACT, TH E ASSESSEE WAS ACTING IN THE BELIEF THAT GIORGI ARMANI WOULD BE FURNISHIN G ITS PAN IN DUE COURSE OF TIME AND, THEREFORE, THERE WAS NO NEED TO DEDUCT TAX AT THE HIGHER RATE OF 20%.TO PROVE ITS BONA FIDE ASSESSEE HAS SUBMITTED CORRESPONDENCES WITH THE CA AS WELL AS WITH GIORGIO ARMANI SPA, ITALY. THE HONBLE APEX COURT IN THE CASE OF CIT VS. BANK OF NOVA SCOTIA HAS HELD THAT FOR LEVY OF PENALTY U/S 271C, IT WAS NECE SSARY TO ESTABLISH THAT THERE WAS CONTUMACIOUS CONDUCT ON THE PART OF THE A SSESSEE. SUCH CONDUCT IS NOT BORNE OUT FROM THE RECORDS IN THE PR ESENT CASE. LD. CIT(A) HAS CONFIRMED THE PENALTY IMPOSED U/S 271C OF THE A CT IN THE CASE OF ITA NO. 3136//DEL/2016 ITO VS. SUPERTECH REALTORS P VT. LTD. 6 OTHER DEDUCTEES WHERE THE ASSESSEE COULD NOT SUBMI T ANY CORRESPONDENCE SO AS TO ESTABLISH THAT IT WAS PREVE NTED FROM DEDUCTING TAX AT 20%.AS FAR AS THE CONTENTION OF THE DEPARTME NT THAT THE AO WAS NOT GIVEN AN OPPORTUNITY WHILE ADMITTING THE CORRES PONDENCE AND PAN CARD BY THE LD. CIT(A), IT IS OUR CONSIDERED OPINIO N THAT PAN DOES NOT CONSTITUTE ADDITIONAL EVIDENCE AS THE SAME IS ISSUE D BY THE AUTHORITY APPOINTED BY THE INCOME TAX DEPARTMENT ITSELF AND, THEREFORE, THE PLEA OF THE DEPARTMENT THAT OPPORTUNITY SHOULD HAVE BEEN GI VEN TO THE AO WHILE ADMITTING COPY OF THE PAN DOES NOT HOLD GROUND . TH EREFORE, ON OVERALL FACTS AND CIRCUMSTANCES OF THE CASE WE FIND NO REAS ON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT (A) AND WE DISMISS THE GROUNDS RAISED BY THE ASSESSEE. 6. IN THE RESULT APPEAL OF THE DEPARTMENT STA NDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.2.2018. . SD/- SD/- (B.P. JAIN) (S UDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21.2.2018 VEENA COPY FORWARDED TO 1. APPLICANT ITA NO. 3136//DEL/2016 ITO VS. SUPERTECH REALTORS P VT. LTD. 7 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI