District Manager, Kurukshetra V. JCIT, Karnal

ITA 372/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91474 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 20-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Assessee Lawyers: KULWANT RAI CHHABRA
• Keywords: Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH SMC SMC SMC SMC : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA, VICE , VICE , VICE , VICE PRESIDENT PRESIDENT PRESIDENT PRESIDENT ITA NO ITA NO ITA NO ITA NO . .. . 372/DEL/2014 372/DEL/2014 372/DEL/2014 372/DEL/2014 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2008 2008 2008 2008 - -- - 09 0909 09 DISTRICT MANAGER, HAFED, DISTRICT MANAGER, HAFED, DISTRICT MANAGER, HAFED, DISTRICT MANAGER, HAFED, SITE NO.01, SITE NO.01, SITE NO.01, SITE NO.01, OPP. MAIN MARKET, OPP. MAIN MARKET, OPP. MAIN MARKET, OPP. MAIN MARKET, SECTOR SECTOR SECTOR SECTOR- -- -5, 5,5, 5, KURUKSHETRA. KURUKSHETRA. KURUKSHETRA. KURUKSHETRA. PAN : RTKHO1335F. PAN : RTKHO1335F. PAN : RTKHO1335F. PAN : RTKHO1335F. VS. VS. VS. VS. JOINT COMMISSIONER OF JOINT COMMISSIONER OF JOINT COMMISSIONER OF JOINT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, TDS RANGE, TDS RANGE, TDS RANGE, TDS RANGE, KARNAL. KARNAL. KARNAL. KARNAL. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KULWANT RAI CHHABRA, ADVOCATE. RESPONDENT BY : SHRI B.K. GUPTA, CIT - DR. DATE OF HEARING : 10.06.2015 10.06.2015 10.06.2015 10.06.2015 DATE OF PRONOUNCEMENT : 16.07.2015 16.07.2015 16.07.2015 16.07.2015 ORDER ORDER ORDER ORDER THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-0 9 IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A), KARNA L DATED 22 ND AUGUST, 2013. 2. THE GROUNDS OF APPEAL OF THE ASSESSEE ARE AS UNDER:- 1. ORDERS PASSED BY LD.JCIT TDS AND CIT(A) ARE ILLEG AL, ARBITRARY AND BAD IN LAW. 2. ON FACTS AND IN CIRCUMSTANCES OF THE CASE LD. JCIT AND CIT(A) WERE NOT JUSTIFIED IN IMPOSING PENALTY OF RS.1,92,995/- U/S 271C OF THE I.T. ACT ON THE DEFAULT WHICH WAS BONAFIDE AND OF TECHNICAL NATURE. ITA-372/DEL/2014 2 3. ON FACTS AND IN CIRCUMSTANCES OF THE CASE LD.JCIT AN D CIT(A) WERE NOT JUSTIFIED IN IMPOSING PENALTY OF RS.1,92,995/- U/S 271C OF THE I.T. ACT ON THE DEFAULT WHICH WAS DUE TO DEDUCTION OF TDS ON LOWER RATE. 3. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSE SSEE IS A STATE GOVERNMENT UNDERTAKING. PENALTY UNDER SECTI ON 271C OF THE INCOME-TAX ACT, 1961 WAS IMPOSED IN THIS CASE ON TWO CO UNTS, I.E., THE TDS WAS DEDUCTED AT 5.67% WHICH WAS RAISED DURING THE RELEVANT PERIOD ITSELF AT 11.33% WITH EFFECT FROM 01.06.2007. THE ASSESSEE WAS UNDER A BONA FIDE BELIEF THAT THE TDS WAS APPLICABLE AT 5.67% ONLY. THE ASSESSEE HAS PAID THE ENTIRE DIFFERENCE OF TDS ALONG WITH INTEREST THEREON ON 17.03.2010 AND THE TDS AMOUNT HAS BEEN RE FUNDED TO THE DEDUCTEES BY THE DEPARTMENT. HE SUBMITTED THAT THE SE COND ISSUE ON WHICH PENALTY UNDER SECTION 271C WAS LEVIED WAS DUE T O NON- DEDUCTION OF TDS ON FEES PAID TO ONE MISS PROMILA, A R ADIO ANNOUNCER. HE SUBMITTED THAT THE ASSESSEE WAS UNDER A BONA FIDE BELIEF THAT NO TDS WAS APPLICABLE ON FEES PAID TO THE RADIO ANNOUNCE R MISS PROMILA AT `48,152/-. 4. LEARNED DR HAS OPPOSED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. HE SUBMITTED THAT NO REASONABLE CAUSE COULD BE SHOWN BY THE ASSESSEE FOR MAKING LESS TDS OR NO TDS ON CER TAIN PAYMENTS. HE SUBMITTED THAT THERE IS NO REASONABLE CAU SE FOR MAKING NO TDS ON PAYMENT MADE TO MISS PROMILA, A RADIO ANNO UNCER. LIKEWISE, THE ASSESSEE COULD NOT PROVE ITS BONA FIDE FOR MAKING TDS DEDUCTION AT 5.67%, ALTHOUGH THE RATE OF TDS WAS INC REASED TO 11.33% WITH EFFECT FROM 01.06.2007 BY THE LEGISLATURE. LEA RNED DR SUBMITTED THAT THE PAYMENT OF DIFFERENTIAL TDS AMOUNT WITH IN TEREST UP TO DATE DOES NOT ABSOLVE THE ASSESSEE FROM IMPOSITION OF PENALTY. HE RELIED ON THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A). ITA-372/DEL/2014 3 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PERU SED THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A). I FIND THAT THE ASSESSEES CONDUCT AND EXPLANATION REGARDING THE PAYMENT OF `4 8,152/- MADE TO MISS PROMILA, A RADIO ANNOUNCER, SEEMS TO BE BONA FIDE . THE ASSESSEE IS A STATE GOVERNMENT UNDERTAKING. THE ASSESSEE HAS LATER ON MADE THE TDS AMOUNT WITH INTEREST AND DEPOSITED TO THE CRE DIT OF THE CENTRAL GOVERNMENT AND, THIS CLAIM OF THE ASSESSEE COULD NOT BE CONTROVERTED ON BEHALF OF THE REVENUE. LIKEWISE, THE TDS DEDUCTE D AT 5.67% WAS AT THE CORRECT PERCENTAGE WHICH WAS APPLICABLE FOR THE PART OF THE RELEVANT ACCOUNTING YEAR. THE RATE OF TDS WAS INCRE ASED TO 11.33% DURING THE RELEVANT PERIOD ITSELF, I.E., WITH EFFECT FROM 01.06.2007. THE ASSESSEE HAS DEPOSITED THE DIFFERENCE AMOUNT OF TDS AS PER THE AMENDED PROVISIONS AT 11.33% RATE OF DEDUCTION WITH I NTEREST UP TO DATE AND THE SAME WAS DEPOSITED TO THE CREDIT OF THE C ENTRAL GOVERNMENT ON 17.03.2010. THE ENTIRE AMOUNT OF TDS HAS BEEN CLAIMED TO HAVE BEEN REFUNDED BY THE DEPARTMENT TO THE DEDUCTEES AND THIS CLAIM OF THE ASSESSEE COULD NOT BE CONTROVERTED ON BEHALF OF THE REVENUE. THEREFORE, THERE WAS NO REVENUE LOSS TO THE DEPARTMENT. THE ASSESSEE HAS CLAIMED THROUGHOUT THAT THE DEDUCTEES WE RE COOPERATIVE MARKETING SOCIETIES AND THE ASSESSEE WAS UNDER A BONA FIDE BELIEF THAT THE CORRECT RATE OF TDS WAS 5.67% AND, ON BEING AWARE OF THE REVISED RATE OF TDS, THE DIFFERENCE OF TDS AM OUNT WAS MADE GOOD WITH INTEREST AND PAID TO THE CREDIT OF THE CEN TRAL GOVERNMENT. THE CONDUCT AND EXPLANATION OF THE ASSESSEE SEEMS TO BE BONA FIDE AND THERE IS NO MATERIAL BEFORE ME TO JUSTIFY THE IMP OSITION OF PENALTY ON THE ASSESSEE. IT IS WELL-SETTLED THAT PENALTY COULD N OT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. IN THIS REGARD, I DERIVE SUPPORT FROM THE DECISION OF HONBLE SUPREME COURT IN THE CA SE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA [1972] 83 ITR 26. AC CORDINGLY, THE ITA-372/DEL/2014 4 PENALTY IMPOSED UNDER SECTION 271C OF THE ACT IS CANC ELLED AND THE GROUNDS OF APPEAL ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 16 TH JULY, 2015. SD/- (G. (G. (G. (G. C. GUPTA C. GUPTA C. GUPTA C. GUPTA ) )) ) VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. APPELLANT : DISTRICT MANAGER, HAFED, DISTRICT MANAGER, HAFED, DISTRICT MANAGER, HAFED, DISTRICT MANAGER, HAFED, SITE NO.01, OPP. MAIN MARKET, SECTOR SITE NO.01, OPP. MAIN MARKET, SECTOR SITE NO.01, OPP. MAIN MARKET, SECTOR SITE NO.01, OPP. MAIN MARKET, SECTOR- -- -5, 5,5, 5, KURUKSHETRA. KURUKSHETRA. KURUKSHETRA. KURUKSHETRA. 2. RESPONDENT : JOINT COMMISSIONE JOINT COMMISSIONE JOINT COMMISSIONE JOINT COMMISSIONER OF INCOME TAX, R OF INCOME TAX, R OF INCOME TAX, R OF INCOME TAX, TDS RANGE, KARNAL. TDS RANGE, KARNAL. TDS RANGE, KARNAL. TDS RANGE, KARNAL. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR