The Secretary, Hoshiarpur V. The Income Tax Officer, (TDS), Jalandhar

ITA 389/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0656 (ITAT-AMRITSAR)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 16-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A N MISHRAA
• Assessee Lawyers: V K MALHOT RA S; SSH SACHIN MALHOTRA
• Keywords: Question of law; Non-deduction of tax; Reasonable cause; Competent authority
• Section: 194C; 201(1)

Judgement Text

1 ITA NOS. 388 TO 391(ASR)/2015 AYS. 2005-06 TO 2008-09 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. (CAMP AT JALANDHAR) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NOS.388 TO 391(ASR)/2015 ASSESSMENT YEARS:2005-06 TO 2008-09 PAN: AAAJM0424A THE SECRETARY, VS. INCOME TAX OFFICER (TDS)-1, MARKET COMMITTEE HOSHIARPUR. JALANDHAR. HOSHIARPUR. (APPELLANT) (RESPONDENT) APPELLANT BY: S/SH. SACHIN MALHOTRA AND V.K. MALHOT RA, ADVOCATES RESPONDENT BY: SH. A.N. MISHRA,A DR DATE OF HEARING: 22/06/2016 DATE OF PRONOUNCEMENT: 23/06/2016 ORDER PER A.D. JAIN, JM; THESE FOUR APPEALS FILED BY THE ASSESSEE ARE DIRECT ED AGAINST THE COMMON ORDER, DATED 19.05.2015, PASSED BY THE LD. CIT(A)-I , JALANDHAR, FOR THE ASSESSMENT YEARS 2005-06 TO 2008-09, AGAINST THE CO NFIRMATION OF PENALTIES LEVIED UNDER SECTION 271-C OF THE INCOME TAX ACT ( IN SHORT, THE ACT), 1961. 2. SINCE A COMMON ISSUE IS INVOLVED IN ALL THESE AP PEALS, THEY ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. FOR THE SAK E OF CONVENIENCE, THE FACTS ARE BEING TAKEN FROM THE APPEAL FOR THE ASSESSMENT YEAR 2005-06. 2 ITA NOS. 388 TO 391(ASR)/2015 AYS. 2005-06 TO 2008-09 3. THE BRIEF FACTS OF THE CASE ARE THAT AS PER THE AO, THE PERSON RESPONSIBLE IN THIS CASE HAD FAILED TO DEDUCT TAX AT SOURCE WHI CH WAS REQUIRED TO BE DEDUCTED BY HIM UNDER SECTION 194C OF THE ACT WHILE DISBURSING PAYMENTS TO CONTRACTORS. THE ITO, TDS-1, JALANDHAR, PASSED A CO MMON ORDER UNDER SECTIONS 201(1)/201(IA) OF THE ACT FOR THE F.YS. 20 05-06 TO 2008-09 AND CREATED DEMANDS AGAINST THE PERSON RESPONSIBLE AT RS.1,86,9 46/- (TDS U/S 194C OF RS.1,25,225/- + INTEREST U/S 201(IA) OF RS.61,721/- ) FOR THE F.Y. 2005-06, RS.16,745/- (TDS U/S 194C OF RS.12,506/- + INTEREST U/S 201(IA) OF RS.4,239/-) FOR THE F.Y. 2006-07, RS.37,487/- (TDS U/S 194C OF RS.28,969/- + INTEREST U/S 201(IA) OF RS.8,518/-) FOR THE F.Y. 20 07-08 AND RS. 28,768/- (TDS U/S 194C OF RS.24,399/- + INTEREST U/S 201 (IA) OF RS.4,369/-) FOR THE F.Y. 2008-09 WHICH REPRESENTED DEMANDS U/S 201(1) OF THE ACT AND INTEREST U/S 201(IA) OF THE ACT FOR NON DEDUCTION OF TDS AS PER PROVISIONS OF SECTION 194C OF THE ACT FROM PAYMENTS TO CONTRACTORS. ON A REFERENC E RECEIVED BY THE ITO, TDS- I, JALANDHAR, PENALTY PROCEEDINGS U/S 271C OF THE A CT WERE INITIATED AGAINST THE PERSON RESPONSIBLE AND HE WAS ASKED BY THE JCIT (TDS)-1, LUDHIANA, WHO IS A COMPETENT AUTHORITY FOR LEVYING PENALTY IN TH IS CASE FOR FAILURE TO DEDUCT TAX AT SOURCE, TO SHOW CAUSE AS TO WHY PENALTY U/S 271C OF THE ACT SHOULD NOT BE LEVIEDAS HE FAILED DURING F.YS 2005-06 TO 2008-0 9 TO DEDUCT TDS FROM PAYMENTS TO CONTRACTORS AS PER PROVISIONS OF SECTIO N 194C OF THE ACT. IN RESPONSE THERETO, ON BEHALF OF THE PR IT WAS SUBMIT TED THAT WORK WAS BEING DONE BY THE PUNJAB MANDI BOARD AND NOT BY THE MARKE T COMMITTEE ITSELF AND HENCE THE PR WAS NOT REQUIRED TO DEDUCT TAX AT SOUR CE FROM THE PAYMENTS 3 ITA NOS. 388 TO 391(ASR)/2015 AYS. 2005-06 TO 2008-09 MADE TO PUNJAB MANDI BOARD. HOWEVER, THE PR COULD N OT SUBMIT ANY EVIDENCE WITH REGARD TO DEDUCTION OF TDS BEING DEDUCTED EITH ER BY MARKET COMMITTEE OR BY PUNJAB MANDI BOARD. IN THE OPINION OF THE JCIT ( TDS), LUDHIANA, WHO IS COMPETENT AUTHORITY FOR LEVYING PENALTY U/S 271C OF THE ACT, THAT AS THE PAYMENTS TO CONTRACTORS HAD BEEN MADE BY THE MARKET COMMITTEE ALTHOUGH THROUGH OTHER AGENCY, I.E., PUNJAB MANDI BOARD, IT WAS THE PRIMARY RESPONSIBILITY OF THE PR TO DEDUCT TAX AT SOURCE WH ILE DISBURSING PAYMENTS WHICH HE FAILED TO DO SO. IN THE ABSENCE OF ANY PLA USIBLE EXPLANATION, THE JCIT (TDS), LUDHIANA TREATED THE PR AS THE ASSESSEE IN D EFAULT FOR NON DEDUCTION OF TAX AT SOURCE OUT OF PAYMENTS MADE TO CONTRACTORS D URING F.YS. 2005-06 TO 2008-09 AND LEVIED PENALTY U/S 271C OF THE ACT AT R S.1,25,225/-, RS.12,506/-, RS.28,969/- AND RS.24,399/-, WHICH WAS EQUIVALENT T O THE TAX WHICH WAS REQUIRED TO BE DEDUCTED BY PR. 4. WHILE LEVYING THE IMPUGNED PENALTY, THE JT. COMM ISSIONER OF INCOME TAX (TDS), LUDHIANA HAS OBSERVED AS UNDER: ON A REFERENCE MADE BY THE ITO (TDS)-1, JALANDHAR, IT WAS NOTICED THAT IN THIS CASE THE PR HAD FAILED TO DEDUCT TDS, WHICH WA S REQUIRED TO BE DEDUCTED U/S 194C OF THE I.T. ACT, 1961 ON 13.01.20 10 AND CREATED THE DEMAND OF RS. RS.1,86,946/- (TDS U/S 194C OF RS.1,2 5,225/- + INTEREST U/S 201(IA) OF RS.61,721/-) FOR THE F.Y. 2005-06, R S.16,745/- (TDS U/S 194C OF RS.12,506/- + INTEREST U/S 201(IA) OF RS.4, 239/-) FOR THE F.Y. 2006-07, RS.37,487/- (TDS U/S 194C OF RS.28,969/- + INTEREST U/S 201(IA) OF RS.8,518/-) FOR THE F.Y. 2007-08 OF RS. 37,487/- (TDS U/S 194C OF RS.24,399/- + INTEREST U/S 201 (IA) OF RS.4,369/-) FOR THE F.Y. 2008-09. SHOW CAUSE NOTICES DATED 24.11.2011, 19.12.2011 & 1 0.01.2012 WERE ISSUED AND SERVED UPON THE PR FOR 12.12.2011, 30.12 .2011 & 23.01.2012 TO EXPLAIN AS TO WHY PENALTY U/S 271C OF THE INCOME TAX ACT, 1961 MAY NOT BE IMPOSED FOR THE SAID DEFAULT. THE PR FILED A WRITTEN REPLY ON 4 ITA NOS. 388 TO 391(ASR)/2015 AYS. 2005-06 TO 2008-09 21.01.2012 IN WHICH IT HAS BEEN STATED THAT WORK IS GETTING DONE BY PUNJAB MANDI BOARD AND NOT BY MARKET COMMITTEE. TH E ASSESSEE DID NOT SUBMIT ANY EVIDENCE OF TDS HAVING BEEN DEDUCTED EI THER BY PUNJAB MANDI BOARD OR BY THE ASSESSEE HIMSELF. AS THE PAYMENT H AS BEEN MADE BY THE ASSESSEE THROUGH SOME OTHER AGENCY, IT IS THE PRIMA RY RESPONSIBILITY OF THE ASSESSEE TO DEDUCT THE TAX. THUS, THE PERSON RESPON SIBLE HAS COMMITTED THE DEFAULT OF THE NON DEDUCTION OF TDS U/S 194C OF THE ACT FOR WHICH NO PLAUSIBLE EXPLANATION HAS BEEN OFFERED FOR NON COMP LIANCE OF THE LEGAL PROVISIONS OF I.T.ACT, 1961. IN THE LIGHT OF ABOVE, I HOLD THE PERSON RESPONSIB LE IN DEFAULT AND IMPOSED A PENALTY OF RS.1,25,255/-, RS.12,506/-, RS .28969/- AND RS.24,399/- FOR THE F.Y. 2005-06, 2006-07, 2007-08 & 2008-09 RESPECTIVELY U/S 271 OF THE ACT WHICH IS EQUAL TO T HE AMOUNT OF TAX IN DEFAULT. TOTAL AMOUNT OF PENALTIES : RS.1,91,099/- 5. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE PENALTIES LEVIED. 6. CHALLENGING THE IMPUGNED ORDERS, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE LD. CIT(A) HAS FAILED TO APPRECI ATE THE FACTS AND LAW WHILE CONFIRMING THE PENALTIES WRONGLY LEVIED UNDER SECTI ON 271-C OF THE ACT; THAT THE AO, UNDER THE PROVISIONS OF SECTION 194C, TREA TED THE PAYMENT MADE TO PUNJAB MANDI BOARD IN CONSEQUENCE OF A WORK CONTRAC T; THAT SINCE THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE, THE AO TRE ATED THE ASSESSEE AS ASSESSEE IN DEFAULT U/S 201(1) OF THE ACT AND RAISE D THE LIABILITY TO DEPOSIT TAX U/S 201 AND INTEREST U/S 201(1A) OF THE ACT; AND TH AT SINCE THE WORK WAS BEING DONE BY THE MANDI BOARD AND NOT THE MARKET COMMITTE E, THE PR WAS NOT REQUIRED TO MAKE TDS ON THE PAYMENTS MADE TO THE MA NDI BOARD. 5 ITA NOS. 388 TO 391(ASR)/2015 AYS. 2005-06 TO 2008-09 7. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORD ERS OF THE AUTHORITIES BELOW. 8. HAVING HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD, IT IS SEEN THAT THE ASSESSEE MARKET COMM ITTEE, HOSHIARPUR IS GOVERNED BY THE STATE GOVT. OF PUNJAB THROUGH THE P UNJAB MANDI BOARD, CHANDIGARH. THE PUNJAB MANDI BOARD HAS ITS OWN WING THE PUNJAB STATE AGRICULTURAL MARKETING BOARD ENGINEERING WING. THE ENTIRE CONSTRUCTION, REPAIR OR CIVIL WORKS OF THE MARKET COMMITTEE ARE UNDERTAK EN BY THE AFORESAID WING. RULE 3 OF THE SAID RULES OF THE WING IS AS FOLLOWS: POWER AND DUTIES OF OFFICER OF THE ENGINEERING WIN G, SECTIONAL OFFICER (CIVIL) SHALL BE INCHARGE OF ALL WORKS FALLING I N THE JURISDICTIONAL AREA OF A (SECTION OF A SUB-DIVISIONAL OF THE BOARD AS MAY BE ORDERED BY SUPERINTENDING ENGINEER) IRRESPECTIVE OF THE FACT W HETHER SUCH WORK ARE FINANCED BY THE BOAR OR THE COMMITTEE THEMSELVES. RULE 4 IS AS UNDER: EXECUTION OF WORKS: THE ENGINEERING WING SHALL BE RESPONSIBLE FOR EXECUTION OF WORKS WHETHER FINANCED BY THE BOARD OR THE COMMITTEES. 8.1. THE ASSESSEE MADE PAYMENT TO THE PUNJAB MANDI BOARD IN VIEW OF THE ABOVE POSITION AND ADMITTED THE FACT THAT THE ASSES SEE HAD NOT ENGAGED ANY CONTRACTOR FOR ANY WORK LIABLE FOR DEDUCTION OF TAX AT SOURCE. AS PER ORDER OF CIT(A), DATED 28.03.2013, THE ASSESSEE WAS NOT TREA TED AS ASSESSEE IN DEFAULT, SINCE THE PUNJAB MANDI BOARD, TO WHOM THE PAYMENT W AS MADE, HAD FILED ITS INCOME TAX RETURNS. THE ASSESSEE IS A STATUTORY AUT HORITY CONSTITUTED UNDER CENTRAL & PUNJAB STATE GOVT. THE PRINCIPAL OFFICER HAS NO GUILTY INTENTION FOR NON DEDUCTION OF TAX FOR WHICH PENALTY U/S 271C COU LD BE IMPOSED. MOREOVER, 6 ITA NOS. 388 TO 391(ASR)/2015 AYS. 2005-06 TO 2008-09 THE AUTHORITIES BELOW HAVE NOT ESTABLISHED THAT THE RE WAS CONTUMACIOUS CONDUCT ON THE PART OF THE ASSESSEE. 9. THE STAND TAKEN BY THE ASSESSEE IS DULY SUPPORT ED BY THE FOLLOWING CASE LAWS: I) EXECUTIVE OFFICER, JALANDHAR IMPROVEMENT TRUST VS. ITO, 121 DTR 127 (ASR. TRIB.) II) M/S. ASHA BUILDERS LTD. VS. JCIT (TDS), LUDHIA NA, ITA NOS. 51, 52 & 539ASR)/2016, DATED 04.05.2016. III) CIT VS. BANK OF NOVA SCOTIA, CIVIL APPEAL NO .1704 OF 2009, DATED 07.01.2016. IV) GOKULDAS VIRJIBHAI & CO. VS. ITO, 139 ITD 284 (PUNE) V) CIT VS. STATE BANK OF PATIALA, 277 ITR 315 (P& H) VI) CIT VS. STATE BANK OF PATIALA, ITA NO.406 OF 2 015, DATED 08.20.2016 (CHD.). 10. IN EXECUTIVE OFFICER, JALANDHAR IMPROVEMENT TR UST VS. ITO (SUPRA), IT HAS BEEN HELD AS UNDER: ASSESSEE WAS PUBLIC TRUST SET UP UNDER PUNJAB TOWNS IMPROVEMENT ACT, 1922-TDS SURVEY WAS CARRIED OUT ON PREMISES OF ASSE SSEE AND DURING SURVEY, IT WAS NOTED THAT ASSESSEE WAS MAKING PAYME NTS TO PUNJAB WATER SUPPLY AND SEWERAGE BOARD, BUT HAD NOT DEDUCTED TAX SOURCE FROM THESE PAYMENTS- PROCEEDINGS INITIATED ON BASIS THAT ASSES SEE WAS UNDER OBLIGATION, U/S 194C, TO DEDUCT TAX AT SOURCE FROM THOSE PAYMENTS ON WHICH DEMANDS U/S 201(1) AND 201(IA) R.W.S. 194C WE RE RAISED ON ASSESSEE _ AO RESTRICTED DEMAND ONLY TO EXTENT PRIN CIPAL LIABILITY OF RECIPIENT REMAINED UNPAID AND IN RESPECT OF DELAY I N EVENTUAL REALIZATION OF TAX CIT(A) UPHELD ORDER OF AO IN RESTRICTING DEM AND MADE BY AO- HELD, ASSESSEE MADE PAYMENTS TO PUNJAB WATER SUPPLY AND S EWERAGE BOARD 7 ITA NOS. 388 TO 391(ASR)/2015 AYS. 2005-06 TO 2008-09 FOR EXECUTION OF WORK RELATING TO SEWERAGE PIPELINE S AND FOR TREATMENT OF POLLUTED WATER OF CITY. IT WAS POINTED OUT THAT PAY MENTS MADE BY ASSESSEE TO PUNJAB WATER SUPPLY AND SEWERAGE BOARD WERE OUT OF LEGAL OBLIGATIONS RATHER THAN CONTRACTUAL ARRANGEMENTS, AND IT WAS ON LY WHEN PAYMENTS WERE MADE IN PURSUANCE OF CONTRACT THAT PROVISION S OF S. 194C CAME INTO PLAY CONTRACT MIGHT BE ORAL OR WRITTEN, EXPRESS O R IMPLIED BUT THERE MUST BE CONTRACT NEVERTHELESS PAYMENT MADE BY ASSESSEE ON ACCOUNT OF LEGAL OBLIGATION U/S 24(1) OF THE PUNJAB WATER SUPPLY AN D SEWERAGE BOARD ACT, 1976 PROVISIONS OF SECTION 194C DID NOT COME INTO PLAY ON FACTS OF THIS CASE IMPUGNED DEMANDS U/S 201(1) AND 201(1A0 R.W. S. 194C WERE WHOLLY DEVOID OF ANY LEGALLY SUSTAINABLE MERITS AND SAME WERE QUASHED- ASSESSEES APPEAL ALLOWED. 11. IN ASHA BUILDERS LTD. (SUPRA), IT HAS BEEN HE LD AS FOLLOWS: 9. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT IT IS AN UN DISPUTED FACT THAT ORDER U/S 201(1A) WAS PASSED VIDE ORDER DATED 07.03 .2011 AND NO ORDER U/S 201(1) HAS BEEN PASSED AS THE ORDER POINTED OUT BY LEARNED DR WAS PASSED U/S 201(1A) AND NOT U/S 201(1). THE LEARNED DR WAS NOT ABLE TO POINT OUT ANY ORDER PASSED U/S 201(1) OF THE ACT. T HE AMENDED PROVISIONS OF SECTION 201 OF THE ACT ALSO STATES THAT IF THE P ERSON TO WHOM ANY AMOUNT HAS BEEN PAID WITHOUT DEDUCTION OF TAX AND SUCH PER SON HAD TAKEN SUCH INCOME IN THEIR INCOME TAX RETURNS AND HAD PAID TAX ES ON SUCH INCOME THE ASSESSEE CANNOT BE SAID TO BE AN ASSESSEE IN DEFAUL T. THE AUTHORITIES BELOW HAS NOT DISPUTED THIS FACT THAT PAYEES OF INC OMES HAD DECLARED THE PAYMENTS IN THEIR INCOME TAX RETURN AND THAT IS WHY ORDER U/S 201(1) HAS NOT BEEN PASSED AND IF THE ORDER U/S 201(1) HAS NOT BEEN PASSED THE ASSESSEE CANNOT BE SAID TO BE ASSESSEE IN DEFAULT. THE HONBLE CHANDIGARH BENCH OF ITAT, IN ITA NOS. 38 TO 41 FOR ASST. YEARS 2007-08 TO 2010-11 IN ITS ORDER DATED 14.10.2015 UN DER SIMILA R CIRCUMSTANCES HAS DELETED THE PENALTY U/S 271(C) BY HOLDING AS UNDER. 11. IN THE PRESENT CASE, WE FIND THAT THE ASSESSEE HAS NOT BEEN TREATED AS AN ASSESSEE IN DEFAULT' AS PER SECTIO N 201 OF THE ACT AND IS THEREFORE NEITHER LIABLE TO DEDUCT NOR PAY ANY TAX AS PER CHAPTER XVII B. IN SUCH CIRCUMSTANCES, WE FIND THAT THE QUESTION OF LEVY OF PENALTY U/S 271C, DOES NOT ARISE. THIS VIE W HAS BEEN UPHELD BY THE HONBLE ITAT HYDERABAD IN THE CASE O F ACIT VS. M/S GOOD HEALTH PLAN LIMITED IN MA NO. 155/HYD/2013, WH EREIN PENALTY LEVIED U/S 271C WAS DELETED SINCE THE ASSES SEE WAS NOT HELD TO BE AN ASSESSEE IN DEFAULT THE HON'BLE TRIBU NAL WHILE DELETING THE PENALTY HELD AS FOLLOWS: 8 ITA NOS. 388 TO 391(ASR)/2015 AYS. 2005-06 TO 2008-09 22. WHEN THE AO HIMSELF TREATED THE ASSESSEE AS A N ASSESSEE NOT IN DEFAULT IN RESPECT OF THE AMOUNTS OF TDS TO BE D EDUCTED, THEN THERE CANNOT BE ANY SCOPE FOR LEVYING PENALTY U/S 2 7IC OF THE ACT. AS IN THIS CASE THE AMOUNT OF TAX HAS BEEN PAID BY THE RECIPIENT OF THEINCOME. BEING SO, THE PROVISION OF SECTION 271C CANNOT BE APPLIED TO THE ASSESSEE'S CASE AS THESE PROVSIONS CLEARLY STATE THAT IF ANY PERSON TAILS TO DEDUCT WHOLE OR ANY PART OF THE TAX AS REQUIRED UNDER THE PROVISIONS OF CHAPTER XVII B, THEN SUCH PERSON SHALL BE LIABLE TO PAY BY WAY OF PENALTY AN AMOUNT EQUAL TO THE AMOUNT OF TAX WHICH SUCH PERSON FAILED TO DEDUCT OR PAY AS ABOVE SAID. BEING SO, IN THE PRESENT CASE THE ASSESSEE BEING NOT IN DEFAULT IN R ESPECT OF THE AMOUNT OF TAX ITSELF, THERE CANNOT BE ANY LEVY OF P ENALTY U/S 271C, MORE SO, WHERE THERE WAS A REASONABLE CAUSE FOR NOT DEDUCTING THE TDS ON THE PAYMENT MADE BY THE ASSESSEE. CONSIDERIN G THE CUMULATIVE EFFECT OF ALL THE FACTS AND CIRCUMSTANCE S OF THE CASE, WE ARE INCLINED TO CONFIRM DELETION OF PENALTY BY THE CIT/A).' IN VIEW OF THE SAME WE HOLD THAT NO PENALTY U/S 271 (C) COULD BE LEVIED IN THE PRESENT CASE. 10. WE FIND THAT THIS ORDER PERTAINS TO ASST. YEAR 2007-08 TO 2010-11 WHICH IS ALSO BEFORE THE AMENDMENT IN SECTION 201 W HICH HAPPENED TO BE IN 2012 AND THEREFORE, THE CONTENTIONS OF LEARNED C IT(A) THAT THE AMENDED PROVISIONS ARE NOT APPLICABLE TO ASSESSEE DO NOT HO LD ANY FORCE AND THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF CO-O RDINATE BENCHES WE DELETE THE PENALTIES CONFIRMED BY THE LEARNED CIT(A). 11. IN VIEW OF THE ABOVE, THE APPEALS FILED BY ASSE SSEE ARE ALLOWED. 12. IN CIT VS. BANK OF NOVA SCOTIA (SUPRA), THE TRIBUNAL OBSERVED THAT FOR LEVY OF PENALTY UNDER SECTION 271C OF THE ACT, IT I S NECESSARY TO ESTABLISH THAT THERE WAS CONTUMACIOUS CONDUCT ON THE PART OF THE ASSESSEE, WHICH WAS ABSENT IN THAT CASE AND FOLLOWING M/S. ITOCHU CORP ORATION 268 ITR 172 (DEL) AND CIT VS. MITSUI & COMPANY LTD., 272 ITR 545 9D EL.), THE PENALTY WAS CANCELLED. THE DEPARTMENTS APPEAL WAS REJECTED BY THE HONBLE HIGH COURT HOLDING THAT NO SUBSTANTIAL QUESTION OF LAW AROSE. THE HONBLE SUPREME COURT 9 ITA NOS. 388 TO 391(ASR)/2015 AYS. 2005-06 TO 2008-09 HELD THAT THERE WAS NOT SUBSTANTIAL QUESTION OF LAW AND DISMISSED THE DEPARTMENTS APPEAL. 13. NO DECISION TO THE CONTRARY HAS BEEN CITED ON BEHALF OF THE DEPARTMENT. THE FACT REMAINS THAT THE ASSESSEE MARKET COMMITTEE IS GOVERNED BY THE STATE OF PUNJAB THROUGH THE PUNJAB MANDI BOARD AND IT HAS ITS ENTIRE CONSTRUCTION, REPAIR AND CIVIL WORKS CARRIED OUT THROUGH THE ENG INEERING WING OF THE PUNJAB STATE AGRICULTURAL MARKET BOARD. THE WORK UNDER CO NSIDERATION WAS UNDISPUTEDLY GOT CARRIED OUT THROUGH THIS WING. NO CONTRACTOR WAS ENGAGED FOR ANY WORK. THAT BEING SO, NO TAX WAS LIABLE TO BE DE DUCTED AT SOURCE. THE PAYMENT WAS MADE TO THE PUNJAB MANDI BOARD. THE PUN JAB MANDI BOARD HAD FILED ITS INCOME TAX RETURNS. 14. FOR THE ABOVE, OBVIOUSLY, THE PRINCIPAL OFFICER OF THE MARKET COMMITTEE COULD NOT AT ALL SAID TO HAVE ACTED IN A CONTUMACIO US MANNER. CONTUMACIOUS CONDUCT BEING THE ESSENTIAL INGREDIENT FOR LEVY OF PENALTY U/S 271C OF THE ACT, IN THE ABSENCE OF SUCH CONTUMACIOUS CONDUCT, IN KEE PING WITH THE AFORESAID DECISIONS, IT IS HELD THAT NO PENALTY U/S 271C OF T HE ACT WAS LEVIABLE. 15. ACCORDINGLY, THE PENALTY IN ALL THESE CASES IS DELETED. 16. IN THE RESULT, ALL THE FOUR APPEALS ARE ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 23RD JUNE, 2016. SD/- SD/- (T. S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23/06/2016. SKR/- COPY OF THE ORDER FORWARDED TO: 10 ITA NOS. 388 TO 391(ASR)/2015 AYS. 2005-06 TO 2008-09 (1) THE ASSESSEE:THE SECRETARY MARKET COMMITTEE , HOSHIARPUR. (2) THE ITO (TDS)-1, JALANDHAR. (3) THE CIT(A), JLR (4) THE CIT, JLR (5) THE SR DR, I.T.A.T. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.