ITO, New Delhi V. M/s Land Acquisition Collector (South West), New Delhi

ITA 3729/DEL/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0089 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-06-2015
• Assessment Year: misc
• Appeal Filed On: 03-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV DUDEJA
• Assessee Lawyers: SANDEEP KUMAR LDC; JITENDER UDC
• Keywords: Bonafide belief
• Section: 201(1); 154

Judgement Text

ITA NO S . 3729 & 3730/ DEL/ 2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D , NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A.NO S . 3729 & 3730 /DEL/201 1 A.Y RS . : 200 5 - 0 6 & 200 6 - 0 7 INCOME TAX OFFICER, WARD 50(3), ROOM NO. 504, 5 TH FLOOR, AAYAKAR BHAVAN, LAXMI NAGAR, DELHI 92 VS. LAND ACQUISITION COLLECTOR (SOUTH WEST), CNCTD, OLD TERMINAL TAX BUILDING, KAPASHERA, DELHI (PAN: DELA00657G) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI GAURAV DUDEJA, SR. DR ASSESSEE BY : SH. SANDEEP KUMAR, LDC & SH. JITENDER, UDC DATE OF HEARING : 29 - 0 6 - 201 5 DATE OF ORDER : 29 - 0 6 - 201 5 ORDER PER H.S. SIDHU : J M THE REVENUE HAS FILED THE SE APPEALS AGAINST THE COMMON IMPUGNED ORDER DATED 05 . 5 .201 1 PASSED BY THE LD. COMMIS SIONER OF INCOME TAX (APPEALS) - XXX, NEW DELHI. SINCE THE ISSUE INVOLVED IN BOTH THE APPEALS ARE COMMON, HENCE, WE ARE DISPOSING OF THE APPEALS BY THIS CONSOLIDATED ORDER FOR THE SAKE OF BREVITY, BY DEALING WITH THE ITA NO. 3729 /DEL/201 1 (A.Y. 200 5 - 0 6 ). 2. THE GROUNDS RAISED IN ITA NO. 3729 & 3730 /DEL/201 1 (A.Y. 200 5 - 0 6 & 2006 - 07) READ AS UNDER: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) HAS ERRED IN : - ITA NO S . 3729 & 3730/ DEL/ 2011 2 1) DELETING TH E PENALTY IMPOSED U/S. 271C OF RS. 17,58,561/ - FOR FY 2004 - 05 AND RS. 3,54,146/ - FOR FY 2005 - 06 ON THE GROUND THAT THE ASSESSEE WAS NOT AWARE OF THE PROVISION OF I.T. ACT AND THE INTENTION OF THE ASSESSEE IS NOT MALAFIDE. 2) IGNORING THE DETAILED FINDIN GS RECORDED BY THE ADDL. CIT IN THE PENALTY ORDER AND CONSIDERING THE SUBMISSION OF THE ASSESSEE DURING THE APPELLATE PROCEEDINGS U/R 46A AND DECIDED THE ISSUE IN FAVOR OF THE ASSESSEE. 3) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OF THE GROU NDS OF APPEAL AT THE TIME OF HEARING. 3 . THE BRIEF FACTS OF THE CASE ARE THE ORDER U/S. 201(1)/201(1A) OF THE INCOME TAX ACT, 1961 WAS PASSED ON 30.3.2009 WHICH WAS SUBSEQUENTLY RECTIFIED U/S. 154 OF THE ACT ON 29.5.2009. DURING THE COURSE OF VERIFICA TION PROCEEDINGS, IT HAS BEEN NOTICED THAT THE ASSESSEE HAD DEDUCTED TAX ON EXPENSES LIABLE FOR TDS BUT FAILED TO DEPOSIT THE TAX SO DEDUCTED DURING THE RELEVANT FINANCIAL YEARS WITHIN THE PRESCRIBED TIME LIMIT PRESCRIBED UNDER RULE 30 OF THE INCOME TAX RULES, 1962. THEREAFTER, A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE ON 5.11.2009 TO EXPLAIN AS TO WHY PENALTY U/S. 271(1)( C ) OF THE INCOME TAX ACT, 1961 SHOULD NOT IMPOSED FOR THE ABOVE DEFAULT AND THE DATE OF COMPLIANCE WAS FIXED FOR 13.11.2009. NO C OMPLIANCE WAS MADE ON THE DATE FIXED. ANOTHER OPPORTUNITY WAS PROVIDED VIDE NOTICE DATED 7.4.2010. VIDE LETTER DATED 13.5.2010 THE ASSESSEE FILED ITS EXPLANATION. AFTER CONSIDERING THE EXPLANATION. AO NOTICED THAT THERE WAS A SHORT DEDUCTION OF TDS. T HERE IS SHORT DEDUCTION OF TDS U/S. 194A OF THE ITA NO S . 3729 & 3730/ DEL/ 2011 3 ACT AND IN SOME CASES PAYMENT OF INTEREST ON ENHANCED COMPENSATION PAID ON ACCOUNT OF LAND ACQUISITION. HE IS OF THE VIEW THAT ASSESSEE HAS COMMITTED THE DEFAULT OF RS. 17,58,561/ - U/S. 201(1) OF THE ACT AN D OF RS. 9,62,407/ - BEING INTEREST U/S. 201(1A) OF THE ACT, FOR WHICH PENALTY U/S. 271C OF THE ACT IS LIABLE TO BE IMPOSED. SINCE THE ASSESSEE HAS FAILED TO AVAIL THE OPPORTUNITY PROVIDED TO EXPLAIN THE REASON AS TO WHY PENALTY SHOULD NOT BE IMPOSED, IT BECOMES AMPLY CLEAR THAT THE ASSESSEE HAS COMMITTED A DEFAULT. ACCORDINGLY, A PENALTY OF RS. 27,20,969/ - WAS IMPOSED U/S. 271C OF THE ACT VIDE ORDER DATED 21.5.2010. 4. AGGRIEVED WITH THE AFORESAID PENALTY ORDER, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 21 . 5 .201 0 DELETED THE PENALTY IN DISPUTE BY ALLOWING THE APPEAL FILED BY THE ASSESSEE. 5. N OW AGGRIEVED WITH THE IMPUGNED ORDER, REVENUE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 6 . AT THE TIME OF HEARING, LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTION RAISED BY THE REVENUE IN THE GROUNDS OF APPEAL. 7 . ON THE CONTRARY, EMPLOYEE OF THE ASSESSEE RELIED UPON THE ORDER OF THE LD. CIT(A). 8. W E HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES. WE FIND THAT IT WAS MENTIONED IN THE IMPUGNED ORDER THAT THE ASSESSEE HAS NO PROFESSIONAL STAFF NOR ANY CHARTERED ACCOUNTANT AND ADVOCATE REPRESENTI NG THE CASE OF THE DEPARTMENT. THE LDC SH. HARI CHAND WHO WAS DEALING WITH THE TDS MATTERS HAS REPRESENTED BEFORE THE LD. CIT(A), BUT HE COULD NOT EXPLAIN ED ANYTHING ON LEGAL DISPUTES IN ITA NO S . 3729 & 3730/ DEL/ 2011 4 THE ORDER OF THE AO. DUE TO LACK OF KNOWLEDGE OF INCOME TAX, THE STAFF EMPLOYEE DEDUCTED TDS @10% ON INTEREST PAID ON ENHANCED COMPENSATION. THE SHORT FALL WAS DETECTED BY THE SURVEY TEAM OF THE I.T. DEPARTMENT. THE ASSESSEE HAS TIMELY DEPOSITED THE TAX DEDUCTED IN THE GOVT. DEPARTMENT. IT SHOWS THAT THE ASSESSEE HA S NO MALAFIDE INTENTION. MOREOVER, WHEN IT COMES TO THE KNOWLEDGE OF THE A SSESSEE , THE A SSESSEE STARTED RECOVERY OF BALANCE SURCHARGE FROM THE LANDLORD AT THE TIME OF FURTHER ENHANCED COMPENSATION PAID TO SAID LANDLORD SUBSEQUENTLY AND REMITTED THE SAME INTO GOVERNMENT ACCOUNT. 8.1 WE NOTE THAT THE LD. CIT(A) IN HIS IMPUGNED ORDER HAS NOTED THAT THE A SSESSEE RELIED ON THE CASE OF HON'BLE ITAT CHANDIGARH BENCH IN THE CASE OF PSEB VS. IT O 121 TAXMAN (MAGAZINE) 367 IN WHICH IT WAS HELD AS UNDER: - THE C OMMISSIONER (APPEALS) WHILE CANCELLING PENALTY UNDER SECTION 271C, HAD HELD THAT THE ASSESSEE BONAFIDELY BELIEVED THAT IT WAS NOT LIABLE TO DEDUCT SURCHARGE FROM THE INTEREST PAID ON BONDS. IT HAD FURTHER BEEN HELD THAT THE ASSESSEE COULD HAVE DERIVED NO BENEFIT BY NOT DEDUCTING SURCHARGE AT SOURCE AS THE AMOUNT WAS TO BE DEDUCTED AND PAID OUT OF INTEREST PAID TO THIRD PARTY. THE COMMISSIONER (APPEALS) HAVING REGARD TO MATERIAL AVAILABLE ON RECORD HAD ACCEPTED THE PLEA OF THE ASSESSEE. THE REVENUE HAD NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE BELIEF OF THE ASSESSEE WAS NOT BONA FIDE ONE OR THAT FAILURE TO DEDUCT SURCHARGE WAS ATTRIBUTABLE TO GROSS AND WILLFUL NEGLECT ON THE PART OF THE ASSESSEE. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IT WAS N OT POSSIBLE TO HOLD THAT THE COMMISSIONER (APPEALS) COMMITTED ANY ERROR IN CANCELLING THE PENALTIES LEVIED ON ITA NO S . 3729 & 3730/ DEL/ 2011 5 THE ASSESSEE U/S. 271C. A REASONABLE BELIEF THAT ONE IS NOT OBLIGED TO DEDUCT TAX OR SURCHARGE AT SOURCE CAN BE TREATED AS GOOD AND SUFFICIENT CAU SE FOR NOT DEDUCTING TAX! SURCHARGE AT SOURCE. THERE WAS NOTHING ON RECORD TO SHOW THAT BELIEF, IN THE INSTANCE CASE, WAS NOT BONAFIDELY HELD OR THAT IT WAS MALAFIDE. ACCORDINGLY, IT WAS TO BE HELD THAT THE COMMISSIONER (APPEALS] WAS FULLY JUSTIFIED IN CAN CELLING PENALTY LEVIED ON THE ASSESSEE.' 8. 2 IN VIEW OF THE ABOVE ARGUMENTS AND THE PRECEDENT RELIED , WE FIND THAT THE LD. CIT(A) WAS RIGHT IN OBSERVING THAT THE DEFAULT COMMITTED BY THE A SSESSEE IS NOT MALAFIDE BUT THE SAME IS DUE TO BONAFIDE BELIEF OF A SSESSEE THAT IT WAS LIABLE TO DEDUCT TDS @ 10% ON THE INTEREST PAID ON ENHANCED COMPENSATION AND WAS NOT AWARE OF LOADING SURCHARGE ON TAX RATE OF 10%. WE FIND THAT THE TH E OTHER PLEA WAS TAKEN BY THE A SSESSEE THAT THE PENALTY IS NOT AMOUNT OF INTEREST ON SHORT FALL IN TAX. THE PENALTY IS LEVIABLE ON THE PRINCIPAL AMOUNT NOT ON THE INTEREST. THE PLEA TAKEN BY THE ASSESSEE IS CORRECT. HENCE, THE LD. CIT(A) HAS RIGHTLY DELETED THE PENALTY IN DIS PUTE. 8 . 3 KEEPING IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A), ACCORDINGLY, WE UPHOLD ACTION OF THE LD. CIT(A) OF DELETING THE PENALTY OF RS. 17,58,561 / - AND DECIDE THE ISSUE IN DISPUTE AGAINST THE REVENUE BY DISMISSING THE APPEAL FILED BY THE REVENUE. ITA NO. 3730 /DEL/201 1 (AY. 200 6 - 0 7 ) 9. SINCE THE FACTS OF THIS APPEAL ARE SIMILAR AND IDENTICAL TO THAT OF ITA NO. 3729 /DEL/201 1 (AY 200 5 - 0 6 ) , AS AFORESAID. THEREFORE, IN THE PRESENT APPEAL BEARING NO. 3730 /DEL/201 1 AY 200 6 - 0 7 ) ALSO WE FOLLOW THE SAME DECISION OF CONFIRMING THE ACTION OF THE LD. CIT(A) OF ITA NO S . 3729 & 3730/ DEL/ 2011 6 DELETING THE PENALTY MADE U/S. 271(1)(C) , BEING SIMILAR AND IDENTICAL FACTS. ACCORDINGLY, IN THIS CAS E ALSO THE ACTION OF THE LD. CIT(A) OF DELETING THE PENALTY OF RS. 3 , 54 , 146 / - IS UPHELD AND ISSUE IN DISPUTE IS DECIDED AGAINST THE REVENUE BY DISMISSING THE APPEAL FILED BY THE REVENUE. 10 . IN THE RESULT, BOTH THE A PPEAL S FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE O PEN C OURT ON 29 / 0 6 /20 1 5 . SD/ - SD/ - [ S.V. MEHROTRA ] [ H.S. SIDHU ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 29/ 0 6 /201 5 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO S . 3729 & 3730/ DEL/ 2011 7