Vigyan Bharati Charitable Trust, Bhubaneswar V. Addl. CIT(TDS), Bhubaneswar

ITA 438/CTK/2010

• Counselvise Citation: 43822114 RSA 2010
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 04-08-2011
• Assessment Year: 2009-2010
• Appeal Filed On: 07-12-2010
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: B D OJHA
• Keywords: Charitable institution; Non-deduction of tax; Reasonable cause

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER, AND HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER. ITA NO. 438/CTK/2010 (ASSESSMENT YEAR 2009 - 10) VIGYAN BHARATI CHARITABLE TRUST, PANDR A, RASULGARH, BHUBANESWAR PAN: AAATV 4531 H VERSUS ADDL.CIT(TDS), BHUBANESWAR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI B.D.OJHA, AR FOR THE RESPONDENT SHRI S.C.MOHANTY, DR ORDER SHRI K.K.GUPTA, ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSE E AGITATES THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) CONFIRMING THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SECTION 271C OF THE INCOME - TAX ACT,1961. 2. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE MAKING SUBMISSIO NS REITERATED THE FA C TS THAT THE ASSESSEE IS A CHARITABLE TRUST ENGAGED IN RUNNING OF EDUCATIONAL INSTITUTION AND MEDICAL COLLEGE. A TDS SURVEY WAS CONDUCTED IN THE OFFICE PREMISES OF THE ASSESSEE AND THE LEARNED ASSESSING OFFICER F OUND THAT AN AMOUNT OF 26,91,158 WAS PAYABLE ON ACCOUNT O F TAX DEDUCTED AT SOURCE AND HAD NOT BEEN PAID TO THE CENTRAL GOVERN MENT. THE ASSESSING OFFICER ALSO CREATED A DEMAND INCLUDING INTEREST TO THE EFFECT WHICH HA D NOT BEEN DEPOSITED TO THE CREDIT OF C ENTRAL GOVERNMENT. THE ASSESSEE ACCORDINGLY PAID THE TAX ON THE DEMAND RAISED BY THE LEARNED ASSESSING OFFICER. THE LEARNED ASSESSING OFFICER THEREAFTER FORWARDED THE CASE FOR INITIATION OF PENALTY U/S 271C. THE ADDL. COMMISSIONER OF INCOME - TAX (TDS) ISSUE D SHOW CAUSE U/S 274 OF THE ACT ON 29.07, 2009. IN RESPONSE TO THE NOTICE THE ASSESSEE SUBMITTED THE REASON FOR WHICH THE TAX COULD NOT BE DEDUCTED AS THE SAME BEING INITIAL YEARS OF THE APPELLANT MISTAKES HAD CREPT IN WHICH WERE UNINTENTIONAL AND WAS ALSO BEYOND THE CONTROL OF THE ITA NO.438/CTK/2010 2 MANAGEMENT OF THE ASSESSEE . THE ADDITIONAL COMMISSION ER INCOME - TAX (TDS) FAILED TO APPRECIATE THAT THERE WAS NO INTENTIONAL FAILURE ON THE PART OF THE APPELLANT RATHER THE ACTION OF THE APPELLANT WAS TOTALLY INCOMPLIANCE TO LAW AN D FOR THAT MATTER PRAYED THE ADDITIONAL COMMISSIONER OF LNCOME - TAX (TDS) NOT TO IMPOSE PENALTY. THE LEARNED ADDITIONAL COMMISSIONER OF INCOME - TAX WITHOUT ACCEPTING THE WRITTEN SUBMISSION IMPOSED THE PENALTY U/S.271C. IT WAS SUBMITTED BEFORE THE AUTHORITIES BELOW THAT THE PAYMENT WAS NOT BELATEDLY MADE AS IT WAS FOUND O N THE BASIS OF TDS SURVEY CARRIED OUT WAS PROMPTLY ADHERED TO WHEN THE INTEREST WAS ALSO LEVIED AND THEREFORE COULD NOT BE FURTHER VISITED THE PROVISIONS OF SECTION 271C AS THE ASSESSEE HAD NO T CONTRAVENED THE PROVISIONS WHEN IT HAD BEEN UNDERGOING EXERCISE OF DEDUCTION OF TAX AT SOURCE UNDER THE VARIOUS PROVISIONS OF SECTIONS 194C, 194I, 194J AND 192 DURING THE FINANCIAL YEAR . HE POINTED OUT THAT THE SURVEY ONLY RESULTED IN PENALTY THEREFORE W AS AGAINST THE PROVISIONS OF THE INCOME - TAX ACT WHEN THE AS SESSEE CH OSE TO AGREE TO PAY THE INTEREST THEREFORE OUGHT TO HAVE BEEN CONSIDERED IN THE LIGHT OF THE FACT THAT THE ASSESSEE COULD PAY THE SAME BEYOND THE STIPULATED DATE WITH INTEREST WHICH WAS NE VER A LOSS TO THE REVENUE. HE POINTED OUT THAT THE INTEREST PORTION IS BORNE BY THE ASSESSEE WHEN THE TAX LIABILITY WAS THE TDS AVAILABLE FOR THE DEDUCTEES TO CLAIM CREDIT WHILE FILING THEIR RETURNS. IT WAS EXPLAINED TO THE ASSESSING OFFICER THE VARIOUS RE ASONS FOR HAVING DEDUCTED THE DIFFERENT AMOUNTS OF TAX BUT NOT PAID THEREFORE COULD AT BEST SUFFER INTEREST TO BE BORNE BY THE ASS ESSEE BEING THE ASSESSEE IN DEFAULT NOT TO BE PENALIZED FOR THE SAME ACTION WHICH COULD BE DONE LATER BUT JUST BECAUSE A SURVE Y WAS CONDUCTED ON 29.1.2009 AND THE FINANCIAL YEAR WAS YET TO END ON 31.3.2009. THE LEARNED CIT(A) ON THE OTHER HAND HELD THIS PAYMENT AS NON - CHALLENGING THE ORDER OF THE ASSESSING OFFICER , THE REASON FOR INVOKING THE PENALTY PROVISIONS OF SECTION 271C. THE LEARNED ITA NO.438/CTK/2010 3 COUNSEL FOR THE ASSESSEE ARGUED THAT THE LAW PROVIDES THAT WHEN THE SAME IS DEMANDED BY THE AUTHORITIES AND IS NOT PAID CAN ONLY BE SUBJECTED TO PENALTY U/S.271C OVER AND ABOVE THE AMOUNT WHICH HAS NOT BEEN PAID WHEN INTEREST IS ALSO LEVIABLE U NDER THE PROVISIONS OF THE ACT FOR THE PURPOSE OF BELATED PAYMENT. THE LEARNED DR, HOWEVER, SUPPORTED THE ORDERS BY PERUSING THE PROVISIONS OF SECTION 271C. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LEVY OF PE NALTY IS ATTRACTED ONLY WHEN THERE IS NO REASONABLE CAUSE OFFERED BY THE ASSESSEE FOR NON - DEDUCTION OF TAX WHEN IN THE CASE BEFORE US IT HAS BEEN ACCEPTED BY THE AUTHORITIES BELOW THAT A SURVEY IN THE MIDDLE OF THE FINANCIAL YEAR WHEN THE FINANCIAL YEAR YE T WAS TO END , CANNOT BE THE BEGINNING OF THE ASSESSEE CONTRAVENING THE PRO VISIONS OF SECTION 201 AND 201( 1A). THE COMPUTATION OF TAX DEDUCTION AT SOURCE AND THE INTEREST DUE WAS UNDERGOING DETERMINATION BUT COMPUTED BY THE SURVEY PARTY WHICH WAS PROMPTLY PAID BY THE ASSESSEE THEREFORE HAD COMPLIED WITH THE SAID SECTION AND MATTER WAS SET AT REST WHEN THE ASSESSEE WAS REQUIRED TO EXPLAIN THE REASONABLE CAUSE IF ANY, FOR NOT TO BE LEVIED PENALTY U/S.271C. THE ASSESSEE EXPLAINED THAT IT WAS IN THE PROCESS OF DEDUCTION OF TAX A T SOURCE AND ALSO PAID THE SAME WITH THE PORTION OF INTEREST ON THE BELATED PAYMENT TO THE GOVERNMENT TREASURY WAS ALSO ACCEPTED BY IT ON DEMAND OF THE ASSESSING OFFICER, TDS CIRCLE. THEREFORE, THE ASSESSING AUTHORITIES THEMSELVES HAVE A CCEPTED THE BONAFIDE OF THE REASONABLE CAUSE OF THE ASSESSEE IN NOT PROMPTLY PAYING THE TDS BY CHARGING INTEREST WHEN THE PROCESS OF DEDUCTION OF TAX AT SOURCE AND ALSO LEVY OF INTEREST WAS AVAILABLE TO THE ASSESSEE TILL 31.3.2009. THE LAW PROVIDES FOR SUC H PAYMENTS AND ISSUE OF CERTIFICATES TO THE DEDUCTEES WHICH COULD NOT BE CONSIDERED AS A DEFAULT BY THE ASSESSING AUTHORITIES IN THE MIDDLE OF THE FINANCIAL YEAR WHEN SUCH ITA NO.438/CTK/2010 4 DEDUCTION OF TAX HAS BEEN CONSIDERED FOR PAYMENT TILL THE DUE DATE OF FILING OF THE RETURN UNDER THE DEEMING PROVISIONS OF SECTION 40(A)A)(IA). IN OTHER WORDS, NO DEFAULT HAD BEEN COMMITTED BY THE ASSESSEE INSOFAR AS SECTION 271C PROVIDES LEVY ONLY FOR FAILURE TO DEDUCT TAX AT SOURCE WHICH THE LAW PROVIDES FOR THE ONUS TO BE DISCHARGED BY THE ASSESSEE UNDER THE PROVISIONS OF SECTION 273B. HERE IN THE PRESENT CASE, TAX HAS BEEN PAID ALONG WITH THE INTEREST AS DEMANDED BY THE ASSESSING OFFICER ON THE BASIS OF A SURVEY OPERATION CARRIED IN THE MIDDLE OF THE FINANCIAL YEAR THEREFORE ITSELF EXP LAINS THE REASON S WHICH WERE NOT TO BE RE - EXPLAINED BY THE ASSESSEE FOR THE PURPOSE OF LEVY OF PENALTY U/S.271C. THEREFORE, THE LEVY OF PENALTY U/S.271C IN THE INSTANT CASE IS NOT LEGALLY JUSTIFIED AND HENCE, THE SAME IS DIRECTED TO BE DELETED. 4. IN THE R ESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN OPEN COURT ON DT. 12.08.2011 S D/ - S D/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 12.08.2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. CO PY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: VIGYAN BHARATI CHARITABLE TRUST, PANDRA, RASULGARH, BHUBANESWAR 2. THE RESPONDENT: ADDL.CIT(TDS), BHUBANESWAR. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.