The Dy. Commr. Of Income Tax, TDS Circle, RAJKOT-GUJARAT V. M/s Gujarat Siddhi Cement Ltd., Veraval

ITA 405/RJT/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9050 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 31-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 09-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: USHA N SHROTE
• Keywords: Non-deduction of tax; Reasonable cause
• Section: 273B; 133A; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AH MEDABAD] (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 405/RJT/2015 (ASSESSMENT YEAR: 2011-12) DEPUTY COMMISSIONER OF INCOME TAX, TDS CIRCLE, RAJKOT V/S M/S. GUJARAT SIDDHI CEMENT LTD., VERAVAL KODINAR ROAD, VERAVAL (APPELLANT) (RESPONDENT) PAN: AAACG 8057G APPELLANT BY : MS. USHA N. SHROTE, SR. D. R. RESPONDENT BY : SHRI VIMAL DESAI, A.R. ( )/ ORDER DATE OF HEARING : 31 -05-201 7 DATE OF PRONOUNCEMENT : 06 -06-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)-I, RAJKOT DATED 25.06.2015 PERTAINING TO A.Y. 2011-12. ITA NO. 405/ RJT/2015 . A.Y. 2011-12 2 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE REVEN UE IS THAT THE LD. CIT(A) ERRED IN DELETING THE PENALTY OF RS. 17.40 LACS LEV IED U/S. 271C OF THE ACT. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT DURIN G THE COURSE OF A SURVEY OPERATION CONDUCTED U/S. 133A OF THE ACT FOR THE VE RIFICATION OF TAX DEDUCTED AT SOURCE. IT WAS NOTICED THAT THE ASSESSE E HAS MADE SEVERAL PAYMENTS WHERE SHORT DEDUCTION OF TDS WAS FOUND. 4. TAKING A LEAF OUT OF THIS SHORT DEDUCTION OF TAX PE NALTY PROCEEDINGS U/S. 271C WERE INITIATED ALLEGING THAT THE ASSESSEE DEFA ULTED IN DEDUCTING TAX AT SOURCE AND, THEREFORE, IS LIABLE FOR THE PENALTY. 5. ASSESSEE STRONGLY OBJECTED TO THE PROPOSED LEVY OF PENALTY STATING THAT IT WAS UNDER A BONA FIDE BELIEF THAT PROVISIONS OF SEC TION 194C APPLIED ON THE IMPUGNED PAYMENTS AND HAVE DEDUCTED TAX AT SOURCE A CCORDINGLY. IT WAS ARGUED THAT MERELY BECAUSE THE REVENUE WAS OF THE O PINION THAT PROVISIONS OF SECTION 194I/194J WERE APPLICABLE, THIS CANNOT B Y ITSELF BE TREATED AS A WILLFUL DEFAULT FOR THE LEVY OF PENALTY. 6. THE CONTENTION OF THE ASSESSEE DID NOT FIND ANY FAV OUR WITH THE A.O. BUT CONCLUDED THE PENALTY PROCEEDINGS BY LEVYING PENALT Y OF RS. 17.40 LACS. 7. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED ITS CONTENTION. ITA NO. 405/ RJT/2015 . A.Y. 2011-12 3 8. THE LD. CIT(A) WAS CONVINCED THAT THE FACTS OF THE CASE DO NOT WARRANT LEVY OF PENALTY AUTOMATICALLY. THE LD. CIT(A) FURTHER OB SERVED THAT THE A.O. HAS LEVIED THE PENALTY MECHANICALLY WITHOUT CONSIDERING THE MERITS OF THE CASE. IN THE OPINION OF THE LD. CIT(A), THE ASSESSEE WHIL E DEDUCTING TAX AT SOURCE U/S. 194C OF THE ACT WAS UNDER A BONA FIDE BELIEF T HAT THE SAME IS APPLICABLE ON THE IMPUGNED PAYMENTS. THE LD. CIT(A) CONCLUDED BY HOLDING THAT THE ASSESSEE HAS SUCCESSFULLY DEMONSTRATED A R EASONABLE CAUSE AND, THEREFORE, THE PENALTY U/S. 271C DESERVES TO BE CAN CELLED. 9. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 10. THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O. LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. 11. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTH ORITIES BELOW. THE DIFFERENTIAL OF TDS CAN BE UNDERSTOOD FROM THE FOLL OWING CHART:- SR. AMOUNT NO. (RS.) DESCRIPTION ASSESSEE'S STAND FINAL DECISION 1 53,162/ - AMOUNT PAID TO ARJUN INFRASTRUCTURE PVT . LTD. FOR MATERIAL HANDLING. SEC. 194C WAS APPLICABLE AND TDS WAS MADE UNDER THAT SECTION. SEC. 1941 WAS APPLICABLE TO THE IMPUGNED PAYMENT. 2 4,898/ - AMOUNT PAID TO VENU ELECTRICAL & SYSTEM FO R FILTRATION OF TRANSFORMERS. SEC. 194C WAS APPLICABLE AND TDS WAS MADE UNDER THAT SECTION. SEC. 194J WAS APPLICABLE TO THE IMPUGNED PAYMENT. ITA NO. 405/ RJT/2015 . A.Y. 2011-12 4 3 29,738/ - AMOUNT PAID TO V - ELECTRICAL FOR MAINTENANC E OF GAS ANALYSER. SEC. 194C WAS APPLICABLE AND TDS WAS MADE UNDER THAT SECTION. SEC. 194J WAS APPLICABLE TO THE IMPUGNED PAYMENT. 4 8,330/ - AMOUNT PAID FOR PEST CONTROL. SEC. 194C WAS APPLICABLE AND TDS WAS MADE UNDER THAT SECTION. SEC. 194J WAS APPLICABLE TO THE IMPUGNED PAYMENT 5 40,395/ - AMOUNT PAID FOR REPAIR & MAINTENANCE TO GAYATRI ENGI. & FOUNDRY. SEC. 194C WAS APPLICABLE AND T DS WAS MADE UNDER THAT SECTION. SEC. 194J WAS APPLICABLE TO THE IMPUGNED PAYMENT. 6 14,626 AMOUNT PAID TO D&H SECHERON ELECTRODES FOR WELDING JOB WORK. SEC. 194C WAS APPLICABLE AND TDS WAS MADE UND ER THAT SECTION. SEC. 194J WAS APPLICABLE TO THE IMPUGNED PAYMENT. 7 2,96,8207 - DEMURRAGE CHARGES NO TDS WAS MADE AS THE CHARGES WERE PAID FOR NON LIFTING THE CARGO IN AGREED TIME. SEC. 1941 WAS APPLICABLE TO THE IMPUGNED PAYMENT 8 12,69,017/ - AMOUNT PAID TO PADHIAR HI- TECH ENGINEERING TDS WAS MADE U/S. 1 94C CONSIDERING THE PAYMENTS AS CONTRACTUAL IN NATURE DIFFERENTIAL TDS U/S. 194J WAS DEPOSITED BY THE ASSESSEE BEFORE PASSING OF ORDER U/S. 201(1)/(1A). 9. 23,317/ - INTEREST U/S. 201(1)/(1A) 17,40,303 TOTAL 12. A PERUSAL OF THE ABOVE CHART SHOWS THAT UNDER A BON A FIDE BELIEF, THE ASSESSEE HAS MADE DEDUCTION IN THE LIGHT OF THE PRO VISIONS OF SECTION 194C OF THE ACT. THE REVENUE AUTHORITIES WERE OF THE OPI NION THAT SECTION 194I/194J WAS APPLICABLE ON THE IMPUGNED PAYMENTS. IN OUR CONSIDERED OPINION, THE A.O. SHOULD NOT HAVE LEVIED THE PENALT Y MECHANICALLY WITHOUT GOING INTO THE MERITS OF THE CASE. ON THE GIVEN FAC TS, IT CANNOT BE SAID THAT ITA NO. 405/ RJT/2015 . A.Y. 2011-12 5 THE ASSESSEE HAS WILLFULLY DEFAULTED IN DEDUCTING T AX AT SOURCE. FROM THE ABOVE CHART, WE FIND THAT ONLY DEMURRAGE CHARGES OF RS. 2,96,820/- WERE PAID WITHOUT ANY DEDUCTION OF TAX. WE FURTHER FIND THAT THE SAID PAYMENT WAS MADE FOR DELAY IN LIFTING THE GOODS AND THE SAM E WAS OF PENAL IN NATURE WHICH CAN BE SAFELY ACCEPTED AS A REASONABLE CASE F OR NON-DEDUCTION OF TAX AT SOURCE. 13. WE FURTHER FIND THAT PRIOR TO THE PASSING OF THE OR DER U/S. 200(1) OF THE ACT, THE ASSESSEE HAS PAID THE DIFFERENTIAL AMOUNT OF TA X IN THE CASE OF PADHIYAR HI-TECH ENGINEERING. THIS ITSELF SHOWS THAT THERE W AS NO MALA FIDE ON THE PART OF THE ASSESSEE TO WILLFULLY EVADE THE PROVISI ONS OF THE LAW. SECTION 273B OF THE ACT PROVIDES THAT NO PENALTY SHALL BE I MPOSABLE ON THE ASSESSEE FOR ANY FAILURE REFERRED TO IN THE SAID PROVISIONS IF HE PROVES THAT THERE WAS A REASONABLE CAUSE FOR THE SAID FAILURE. ON THE FAC TS OF THE CASE, WE FIND THAT THERE WAS A REASONABLE CAUSE FOR THE FAILURE. WE, THEREFORE, FIND NO ERROR OR INFIRMITY IN THE FINDINGS OF THE LD. CIT(A ). 14. APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 06 - 06 - 2 017. SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED: 06/06/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT.