ITO (TDS), Patiala V. Sh. Ravi Jindal, Mandi Gobindgarh

ITA 339/CHANDI/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9900 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 08-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGHDR
• Assessee Lawyers: N K SAHI
• Keywords: Non-deduction of tax; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NOS. 339 & 340/CHD/2016 A.YS: 2011-12 & 2012-13 THE ITO (TDS), VS SHRI RAVI JINDAL, PATIALA. PROP. M/S RAVI STEEL CORP., SHASTRI MARKET, MANDI GOBINDGARH. TAN/PAN: ABDPJ1007A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH,D R RESPONDENT BY : SHRI N.K.SAHI DATE OF HEARING : 20.06.2016 DATE OF PRONOUNCEMENT : 21.06.2016 O R D E R BOTH THE APPEALS BY REVENUE HAVE BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) PATIALA, DAT ED 28.01.2016 FOR ASSESSMENT YEAR 2011-12 AND 2012-13 CHALLENGING THE CANCELLATION OF PENALTY UNDER SECTI ON 271CA OF THE INCOME TAX ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE IS INDIVIDUAL AND IS RUNNING THE BUSINESS OF PURCHASE AND SALE OF OLD IRON SCRAP. THOUGH ON PURCHASE OF THIS SCRAP, TAX WAS BEING COLLECTED BY THE PARTIES FROM WHOM THE ASSESSEE DEDUCTOR HAD MADE PURCHASES, YET THE ASSESSEE DEDUCTOR ON THE SALE OF THE SCSRAP, HA D 2 NOT COLLECTED TAX ON FURTHER SALES I.E. NEITHER HE COLLECTED TAX NOR DEPOSITED THE SAME INTO GOVERNMEN T ACCOUNT AS REQUIRED UNDER SECTION 206C(1) OF THE INCOME TAX ACT. THE ASSESSING OFFICER ON ACCOUNT O F NON DEDUCTION OF TCS, LEVIED THE PENALTY VIDE SEPAR ATE ORDERS. 3. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT HE IS NOT REQUIRED TO DEDUCT TCS BECAUSE ASSES SEE DEAL IN SCRAP, AS SUCH, EXPLANATION (B) OF SECTION 206C OF THE ACT WILL NOT APPLY IN HIS CASE AND FURTHER, THE COMPLETE DETAILS OF SALES OF SCRAP MADE TO VARIOUS TRADERS ALONGWITH COPIES OF INCOME TAX RETURN EVIDENCING THE PAYMENT OF DUE TAXES ON THEIR INCOME BY RESPECTIVE PURCHASERS, THEREFORE, IS NOT A FIT CASE OF LEVY OF PENALTY. 4. THE LD. CIT(APPEALS) DID NOT ACCEPT CONTENTION O F THE ASSESSEE WITH REGARD TO THE FACT THAT ABOVE PROVISIONS ARE NOT APPLICABLE, THEREFORE, LD. CIT(APPEALS) FOUND THAT ASSESSEE DEALS IN SCRAP UND ER SECTION 206 OF THE INCOME TAX ACT. HOWEVER, FINDIN G REASONABLE CAUSE IN FAVOUR OF THE ASSESSEE, CANCELL ED THE PENALTY. 5. AFTER HEARING RIVAL CONTENTIONS, I AM OF THE VIE W THE ISSUE IS IDENTICAL AS HAVE BEEN CONSIDERED BY I TAT SMC BENCH IN THE CASE OF ITO (TDS) VS OM PARKASH GUPTA (HUF) IN ITA 341 & 342/CHD/2016, IN WHICH ON 3 IDENTICAL ISSUE, DEPARTMENTAL APPEALS HAVE BEEN DISMISSED VIDE ORDER DATED 20.06.2016. THE FINDING S IN PARAS 5, 6 AND 7 OF THE ORDER ARE REPRODUCED AS UND ER : 5. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM NOT INCLINED TO INTERFERE WITH THE ORDER OF THE LD. CIT(APPEALS) IN CANCELING THE PENALTY. THE LD. CIT(APPEALS) HAS RECORDED SPECIFIC FINDING OF FACT THAT ASSESSEE FURNISHED COMPLETE DETAILS OF SALES OF SCRAP MADE TO VARIOUS TRADERS ALONGWITH COPIES OF THEIR INCOME TAX RETURNS OF RELEVANT ASSESSMENT YEAR PROVING THAT PAYMENT OF DUE TAXES HAVE BEEN MADE BY THE RESPECTIVE PURCHASERS. IT WAS ALSO RECORDED THAT NO DEMAND ON ACCOUNT OF NON- DEDUCTION OF TAX AT SOURCE HAS BEEN RAISED BY THE ASSESSING OFFICER AND ONLY INTEREST HAS BEEN CHARGED. IT IS, THEREFORE, CLEARLY ESTABLISHED THAT REVENUE DEPARTMENT HAS NOT TREATED THE ASSESSEE AS ASSESSEE IN DEFAULT AS FAR AS TCS IS CONCERNED. THE LD. CIT(APPEALS) WAS, THEREFORE, JUSTIFIED IN FOLLOWING DECISION OF BANGLORE BENCH IN THE CASE OF WIPRO GE MEDICAL SYSTEMS LTD. IN WHICH THE TRIBUNAL HAS CONSIDERED REASONABLE CAUSE FOR NOT LEVYING THE PENALTY WHEN SUFFICIENT COMPLIANCE WAS MADE BECAUSE OF THE TAX DEMAND HAD ALREADY BEEN PAID. SINCE TAXES HAVE ALREADY BEEN PAID BY THE BUYERS AND THERE WAS NO TAX DEMAND REMAINED. THEREFORE, LD. CIT(APPEALS) CORRECTLY HELD THAT THERE WAS REASONABLE CAUSE FOR FAILURE TO COMPLY WITH PROVISIONS OF LAW. FURTHER, THE ASSESSEE SINCE BEGINNING HAS BEEN CLAIMING THAT ASSESSEE IS NOT COVERED BY THE DEFINITION OF SCRAP IN TERMS OF SECTION 206C OF THE ACT. THE EXPLANATION OF THE 4 ASSESSEE WAS SUPPORTED BY ORDER OF ITAT AHMEDABAD BENCH IN THE CASE OF NAVINE FLOURINE INTERNATIONAL LTD. V ACIT (SUPRA). EVEN THOUGH THE LD. CIT(APPEALS) DID NOT ACCEPT THIS CONTENTION OF THE ASSESSEE ON MERIT BUT THE FACTS DISCUSSED ABOVE CLEARLY CONSTITUTE THAT THERE WAS A REASONABLE CAUSE FOR FAILURE TO COMPLY WITH PROVISIONS OF LAW. SINCE, THERE IS NO DEMAND ARISES AGAINST THE ASSESSEE AND ALL TAXES HAVE BEEN PAID AND NO LOSS TO REVENUE HAVE BEEN CAUSED, THEREFORE, IT IS NOT A FIT CASE FOR LEVY OF PENALTY AGAINST THE ASSESSEE. HON'BLE DELHI HIGH COURT IN THE CASE OF WOODWARD GOVERNOR INDIA P.LTD.VS CIT 253 ITR 745 HELD AS UNDER: LEVY OF PENALTY UNDER SECTION 271C OF THE INCOME- TAX ACT, 1961, FOR FAILURE TO DEDUCT TAX AT SOURCE, IS NOT AUTOMATIC. IN ORDER TO BRING IN APPLICATION OF SECTION 271C, IN THE BACKDROP OF THE OVERRIDING NON OBSTANTE CLAUSE IN SECTION 273B, ABSENCE OF REASONABLE CAUSE, EXISTENCE OF WHICH HAS TO BE ESTABLISHED, IS A SINE QUA NON. BEFORE LEVYING PENALTY, THE CONCERNED OFFICER IS REQUIRED TO FIND O UT THAT EVEN IF THERE WAS ANY FAILURE TO DEDUCT TAX AT SOURCE, THE SAME WAS WITHOUT REASONABLE CAUSE. THE INITIAL BURDEN IS ON THE ASSESSEE TO SHOW THAT THERE EXISTS REASONABLE CAUSE WHICH WAS THE REASON FOR THE FAILURE. THERE- AFTER, THE OFFICER HAS TO CONS IDER WHETHER THE EXPLANATION OFFERED BY THE ASSESSEE OR OTHER PERSON AS REGARDS THE REASON FOR FAILURE, WAS ON ACCOUNT OF REASONABLE CAUSE. 6. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE ABOVE DISCUSSION AND FINDINGS RECORDED BY LD. CIT(APPEALS), I DO NOT FIND ANY MERIT IN THE APPEALS OF THE REVENUE. BOTH APPEALS OF THE REVENUE ARE, ACCORDINGLY, DISMISSED. 5 7. IN THE RESULT, BOTH APPEALS OF THE REVENUE ARE DISMISSED. 6. THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE B Y ABOVE ORDER, THEREFORE, FOLLOWING THE ABOVE ORDER, I DISMISS THE DEPARTMENTAL APPEALS. 7. IN THE RESULT, BOTH DEPARTMENTAL APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED: 21 ST JUNE, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD