The Dy. Commr. of Income Tax, TDS Circle, RAJKOT-GUJARAT V. Jyoti Power Corporation Pvt. Ltd., Ahmedabad

ITA 441/RJT/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9068 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 24-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: DM RINDANI
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AHMEDABAD] BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI, MANISH BORAD, ACCOUNTANT MEMBER ./ I.T.A. NO.441/RJT/2015 ( / ASSESSMENT YEAR : 2014-15) DEPUTY COMMISSIONER OF INCOME-TAX, TDS CIRCLE, RAJKOT. / VS. JYOTI POWER CORPORATION PVT. LTD. ./ ./ PAN/GIR NO. : RKTJO 1382 D ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI AVINASH KUMAR, SR. DR / RESPONDENT BY : SHRI D. M. RINDANI, AR / DATE OF HEARING 17/04/2017 !'# / DATE OF PRONOUNCEMENT 19/04/2017 $% / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, RAJKOT, DATED 21/07/2015 FOR THE ASSESSMENT YEAR (AY) 2014- 15. 2. DEPARTMENT HAS BEEN TAKEN FOLLOWING GROUNDS OF A PPEALS: I. THE LEARNED CIT(A) HAS ERRED IN LAW AS WELL AS W ELL AS FACTS OF THE CASE IN HOLDING THAT PENALTY OF RS.83,10,083/- U/S. 271C CANNOT BE SUSTAINED MERELY ON THE GROUND OF DEFAULT WITHOUT CONSIDERING THE EXISTENCE OF REASONABLE CAUSE. ITA NO.441/RJT/ 2015 DCIT VS. JYOTI POWER CORPORATION PVT. LTD. ASST.YEAR 2014-15 - 2 - II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESS ING OFFICER. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- IT HAS COME TO THE NOTICE THAT THE ASSESSEE COMPANY HAD FAILED WITHOUT REASONABLE CAUSE TO DEDUCT TAX AT SOURCE AS ALSO TH E ASSESSEE COMPANY HAS FAILED TO PAY THE AMOUNT OF TDS TO THE CREDIT OF GO VERNMENT ACCOUNT WITHOUT SPECIFIED TIME DURING FINANCIAL YEAR 2013-1 4 AND HAVE THUS DEFAULTED THE LEGAL PROVISIONS OF SECTION 271C OF T HE INCOME-TAX ACT. 4. SHAW CAUSE NOTICE WERE ISSUED ON 28/08/2014 AND 09/09/2014 DIRECTING THE ASSESSEE TO SHOW CAUSE AS TO WHY PENA LTY U/S. 271C OF THE IT ACT SHOULD NOT BE IMPOSED FOR THE DEFAULT MADE B Y IT IN RESPECT OF FAILURE TO DEDUCT PROPER TAX OR DELAY IN PAYING THE AMOUNT OF TDS TO GOVERNMENT ACCOUNT. 5. THEREAFTER, REPLY WAS FILED BY THE ASSESSEE. THE ASSESSEES SUBMISSION HAS BEEN CONSIDERED. THE ASSESSEE HAS PO INTED OUT THAT DUE TO DISPUTE REGARDING RIGHT OF WAY THERE WAS A DELAY OF 252 TO 300 DAYS IN THE PROJECTS UNDERTAKEN BY THEM WHICH HAS RESULTED INTO THREATS OF BLACKLISTING OF THE COMPANY BY GETCO, THE CONTRACTO R, WHICH WOULD HAVE PUT THE COMPANY INTO INCURRING OF LOSSES MORE THAN 300 CR. THE COMPANY HAS ALSO STATED THAT IT WAS NOT THE INTENTI ON OF THE COMPANY TO DEBIT OR DELAY OF AVOID ANY STATUTORY LIABILITY. TH E SUBMISSIONS MADE ARE CONTRARY TO THE BEHAVIOR AND ATTITUDE OF THE COMPAN Y TOWARDS COMPLIANCE ITA NO.441/RJT/ 2015 DCIT VS. JYOTI POWER CORPORATION PVT. LTD. ASST.YEAR 2014-15 - 3 - OF STATUTORY TDS LIABILITIES. IT WAS NOTICED DURING THE SURVEY THAT THE ASSESSEE HAS DEDUCTED TDS TO THE EXTENT OF RS.51,62 ,474/- FOR THE PERIOD FROM 04/2013 TO 10/2013 BUT HAD FAILED TO DEPOSIT T HE SAME INTO THE GOVERNMENT ACCOUNT. EFFECTIVELY THE COMPANY HAS RET AINED ALL THESE AMOUNT BELONGINGS TO GOVERNMENT UNAUTHORISELY AND H AS UTILIZED THE SAME FOR THEIR BUSINESS. THERE IS NO SATISFACTORY E XPLANATION ON PART OF THE COMPANY WHICH RENDERS IT LIABLE FOR PENALTY PRO VISIONS OF SECTION 271C OF THE I.T. ACT. 6. CONSIDERING ALL THE RELEVANT FACTS IT IS CLEAR F ROM THE RECORDS THAT THE ASSESSEE HAS DEFAULTED IN COMPLYING WITH THE TD S PROVISIONS OF THE IT ACT AND HAS THUS RENDERED ITSELF LIABLE FOR LEVY OF PENALTY U/S. 271C OF THE I.T. ACT. 7. TOTAL AMOUNT OF TAX THE ASSESSEE HAS FAILED TO D EDUCT OR PAY TO THE GOVT. ACCOUNT WORKS OUT TO RS.83,10,083/- AS UNDER: TDS PAYABLE UPTO NOV., 2013 -RS. 41,73,401 TDS ON SALARY UPTO OCT., 2013 -RS. 9,89,073 TDS PAYABLE FROM DEC., 2013 TO MARCH, 2014 -RS. 31 ,47,609 AS PER PROVISIONS OF SECTION 271C OF THE I.T. ACT T HE ASSESSEE COMPANY IS LIABLE TO PAY, BY WAY OF PENALTY, A SUM EQUAL TO THE AMOUNT OF TAX WHICH IT HAS FAILED TO DEDUCT OR PAY AS THE CASE MA Y BE. ACCORDINGLY, JOINT COMMISSIONER OF INCOME TAX, IT WAS A FIT CASE FOR LEVY OF PENALTY U/S. 271C OF THE I.T. ACT AND THEREFORE, HE IMPOSED ORDER TO LEVY THE ITA NO.441/RJT/ 2015 DCIT VS. JYOTI POWER CORPORATION PVT. LTD. ASST.YEAR 2014-15 - 4 - PENALTY OF RS.83,10,083/- I.E. EQUAL TO THE AMOUNT OF TAX WHICH IT HAS FAILED TO DEDUCT OR PAY. 8. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LEARNED CIT(A), WHO ALLOWED THE APPEAL O F THE ASSESSEE. 9. WE HAVE CONSIDERED THE IMPUGNED ORDER AND HEARD THE RIVAL SUBMISSIONS, IN OUR OPINION, LEARNED CIT(A) HAS MEN TIONED IN HIS ORDER THAT THE APPELLANT IS FAIRLY COVERED WITHIN THE PRO VISIONS OF THE SECTION 273B AS IT HAD A REASONABLE CAUSE FOR LATE DEPOSIT OF TDS TO THE CREDIT OF THE GOVT. AND FURTHER THAT THE ACTUAL PAYMENT OF TA X WITH INTEREST AND THAT TOO BEFORE DUE DATE U/S. 139(1) ALSO IN MY CONSIDER ED VIEW, SHOWS BONA FIDES ON THE PART OF THE APPELLANT. 10. LEARNED AR CITED JUDGMENTS OF SUPREME COURT: (I) CIT VS BANK OF NOVA SCOTIA (2016) 380 ITR 0550 (SC) : IT HAS BEEN HELD WITH REGARD TO LEVY OF PENALTY U/S . 271C, IT WAS NECESSARY TO ESTABLISH THAT THERE WAS CONTUMACIOUS CONDUCT ON PART OF ASSESSEE. THE ASSESSEE HAD ALREADY PAID AMO UNTS OF TDS. (II). INDO NISSIN FOODS LTD. VS JCIT(2004) 3 SOT 0495 BAN G TRIBUNAL: PAYMENT OF TAX AND INTEREST HAVING BEEN MADE VOLUNT ARILY BEFORE ANY DETECTION BY THE DEPARTMENT ALBEIT WITH DELAY, THERE WAS A BONA FIDE BELIEF NOT ATTRACTING PENALTY U/S 271C. ITA NO.441/RJT/ 2015 DCIT VS. JYOTI POWER CORPORATION PVT. LTD. ASST.YEAR 2014-15 - 5 - (II) CIT VS ITOCHU CORPORATION (2004) 268 ITR 0172 DEL HC: SINCE THE ASSESSEE HAD PAID THE TAX ALONG WITH INTE REST VOLUNTARILY AND THERE EXISTED A BONA FIDE BELIEF FO R NOT DEDUCTING THE TAX AT SOURCE ON ACCOUNT OF EMOLUMENTS PAID TO THE EXPATRIATE EMPLOYEES OUTSIDE INDIA, NO PENALTY UNDER SECTION 2 71C IS EXIGIBLE BY THE ALLEGED DEFAULT. FURTHER, THE ASSES SEE HAD CO- OPERATED IN REGARD TO THE TDS MATTERS WITH THE DEPA RTMENT, WE FEEL THAT THERE EXISTED A REASONABLE CAUSE WHICH IS COVERED BY THE PROVISIONS OF SECTION 273B. 11. RESPECTFULLY, FOLLOWING THE ABOVE SAID ORDER, W E ARE NOT INCLINE TO INTERFERE IN THE ORDER PASSED BY THE LEARNED CIT(A) . IN THE RESULT, APPEAL FILED BY THE DEPARTMENT IS DISMISSED. 12. IN THE RESULT, APPEAL FILED BY THE DEPARTMENT I S DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 19/04/2017 SD/- SD/- (MANISH BORAD) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDI CIAL MEMBER AHMEDABAD; DATED 19/04/2017 PRITI YADAV, SR. PS ITA NO.441/RJT/ 2015 DCIT VS. JYOTI POWER CORPORATION PVT. LTD. ASST.YEAR 2014-15 - 6 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-I, RAJKOT. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD 6. .34 5 / GUARD FILE. / BY ORDER, , / //TRUE COPY// / !'# ( DY./ASSTT.REGISTRAR) #$ %, / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION 17/04/2017 (DICTATION-PAD 6 PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 18/04/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER