JCIT (TDS), Dehradun V. The Divisional Forest Officer, Pithoragarh Forest Division, Uttrakhand

ITA 4578/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3840 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2011-2012
• Appeal Filed On: 20-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief; Question of law; Reasonable cause
• Section: 273B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: D , NEW DELHI BEFORE SHRI R .K. PANDA , ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER ITA NO. 4575 /DEL/201 4 A.Y. 20 0 8 - 09 ITA NO. 4576 /DEL/201 4 A.Y. 20 09 - 10 ITA NO. 4577 /DEL/201 4 A.Y. 20 10 - 11 ITA NO. 4578 /DEL/201 4 A.Y. 20 11 - 12 & ITA NO. 4579 /DEL/201 4 A.Y. 20 12 - 13 JT.CIT (TDS) VS. THE DIVISIONAL FOREST OFFICER DEHRADUN PITHORAGARH FOREST DIVISION PITHORAGARH, UTTARAKHAND ITA NO. 4580 /DEL/201 4 A.Y. 20 08 - 09 ITA NO. 4581 /DEL/20 1 4 A.Y. 20 09 - 10 ITA NO. 4582 /DEL/201 4 A.Y. 20 10 - 11 & ITA NO. 4583 /DEL/201 4 A.Y. 20 11 - 12 JT.CIT (TDS) VS. THE DIVISIONAL FOREST OFFICER DEHRADUN BAGESHWAR FOREST DIVISION BAGESHWAR, UTTARAKHAND 2 ITA NO. 4584 /DEL/201 4 A.Y. 20 08 - 09 ITA NO . 4585 /DEL/201 4 A.Y. 20 09 - 10 ITA NO. 4586 /DEL/201 4 A.Y. 20 10 - 11 ITA NO. 4587 /DEL/201 4 A.Y. 20 11 - 12 ITA NO. 4588 /DEL/201 4 A.Y. 20 12 - 13 JT.CIT (TDS) VS. THE DIVISIONAL FOREST OFFICER DEHRADUN CHAMPAWAT FOREST DIVISION CHAMPAWAT, UTTARAKHAN D ITA NO. 458 9 /DEL/201 4 A.Y. 20 08 - 09 ITA NO. 45 90 /DEL/201 4 A.Y. 20 09 - 10 ITA NO. 4591 /DEL/201 4 A.Y. 20 10 - 11 & ITA NO. 4592 /DEL/201 4 A.Y. 20 11 - 12 JT.CIT (TDS) VS. THE DIVISIONAL FOREST OFFICER DEHRADUN NAINITAL FOREST DIVISION NAINITAL , UTTARA KHAND ITA NO. 4593 /DEL/201 4 A.Y. 20 08 - 09 ITA NO. 4594 /DEL/201 4 A.Y. 20 09 - 10 ITA NO. 4595 /DEL/201 4 A.Y. 20 10 - 11 ITA NO. 4596 /DEL/201 4 A.Y. 20 11 - 12 3 ITA NO. 4597 /DEL/201 4 A.Y. 20 08 - 09 ITA NO. 4598 /DEL/201 4 A.Y. 20 09 - 10 ITA NO. 4599 /DEL/201 4 A.Y. 20 10 - 11 ITA NO. 4600 /DEL/201 4 A.Y. 20 11 - 12 JT.CIT (TDS) VS. THE DIVISIONAL FOREST OFFICER DEHRADUN ALMORA FOREST DIVISION ALMORA, UTTARAKHAND (APPELLANT) (RESPONDENT ) APPELLANT BY : SH.AMIT JAIN, SR.D.R. RESPONDENT BY : NONE DATE OF HEARING: 11/01/2018 DATE OF PRONOUNCEMENT : ORDER PER BENCH THE PRESENT APPEALS FOR VARIOUS ASSESSMENT YEARS HAVE BEEN PREFERRED BY REVENUE AGAINST THE SEPARATE ORDER S DATED 15/06/14 PASSED BY LD. CIT(A) - 2, DEHRADUN. 1.1. THE LD. AO LEVIED PENA LTY UNDER SECTION 271CA OF THE INCOME TAX ACT, 1961 (THE ACT) V IDE ORDER DATED 09/12/13 FOR ALL THE YEARS UNDER CONSIDERATION. 1.2. ALL T HE GROUNDS CHALLENGED IN THESE APPEALS ARE COMMON , AS PENALTY WAS LEVIED BY LD. AO UNDER SECTION 271C OF THE ACT, ON THE GROUND OF THE RE BEING A DEFAULT ON PART OF ASSESSEE IN COMPLYING WITH PROVISIONS OF SECTION 206C (1) OF THE ACT WHICH HAS BEEN DELETE D BY LD. CIT (A) . 4 2. AT THE TIME OF HEARING NONE APPEARED ON BEHALF OF THE RESPONDENT ASSESSEE WHEN THE NAMES OF THE ASSESSEES WERE CALLED. FROM THE RECORDS IT IS OBSERVED THAT THE NOTICE S WERE ISSUED ON 17/11/17 TO THE RESPECTIVE ASSESSEE S INTIMATIN G THE DATE OF HEARING TO BE FIXED ON 10/01/18. AT THE TIME WHEN THE MATTER WAS CALLED OUT ON THE SAID DATE, AS NOBODY APPEARED APPEALS W ERE ADJOURNED TO 11/01/18 C ONSIDERING THE NATURE OF PENALTY LEVIED . ON 11/01/18 AGAIN NOBODY APPEARED ON BEHALF OF AS SESSEE FOR WHICH ALL THESE APPEALS ARE BEING DECIDED BASED ON THE DETAILS/MATERIAL AVAILABLE ON RECORD. 2.1 . FROM THE SUBMISSIONS OF THE ASSESSEE BEFORE AUTHORITIES BELOW IT IS OBSERVED THAT ASSESSEE IS A GOVERNMENT DEPARTMENT AND IS INVOLVED IN MAKING AUCTION SALES OF FOREST PRODUCTS. AT THE TIME OF SALE ASSESSEE D ID NOT COLLECT TAX AT SOURCE FROM THE AUCTION PURCHASES UNDER THE BONA FIDE BELIEF THAT TAX IS NOT LIABLE TO BE DEDUCTED AT SOURCE ON SALE OF MATERIALS. IT HAS BEEN SUBMITTED THAT ALL THE BUYE RS HAVE DECLARED THE RELEVANT PAN NUMBERS IN FORM 27C AND THAT THE ONLY DEFAULT COMMITTED BY THE ASSESSEE WAS THAT IT WAS SUBMITTED BELATEDLY FOR WHICH PENALTY UNDER SECTION 271CA OF THE A CT HAS BEEN LEVIED . 2. 2 . AGGRIEVED BY THE ORDER OF LD. AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A) . BEFORE THE LD. CIT (A) ASSESSEE HAD SUBMITTED THAT; .. 5. THAT THE TAX HAS BEEN FULLY PAID BY THE PURCHASER/MANUFACTURER OF THE REASON, WHO ARE REGULAR I.TAX ASSESSEE, THERE PAN ARE AVAILABLE AND HAVE BEEN SUBMITTED ALONG WITH THE FORM NUMBER 27.C, THEY HAVE PAID THE TAX ON THEIR INCOME . HENCE ANY COLLECTION 5 OF TAX AT SOURCE BY THE APPELLANT FROM THE BUYERS WOULD AMOUNT TO DOUBLE PAYMENT OF TAX TO THE INCOME TAX DEPARTMENT, WHICH IS ILLEGAL AND UNWARRANTED FOR . M/S HINDUSTAN COCA - COLA BEVERAGES VS. CIT (2007) 163 TAXMAN 355 (S. C.) LD.CIT (A) ON THE BASIS OF THE SUBMISSIONS ADVANCED BY ASSESSEE DECIDED THE ISSUE AS UNDER: 4.1 THE FINDINGS OF THE LD. AO AND THE AVERMENTS OF THE LD. ARS HAVE BEEN CAREFULLY CONSIDERED . RIGHT AT THE OUTSET IT NEEDS TO BE MENTIONED THAT THE FACTUM OF THE DEFAULT HAVING BEEN COMMITTED IS ALREADY SETTLED AGAINST THE APPELLANT THROUGH FINDINGS GIVEN IN THE FIRST APPELLATE ORDER FOR THE APPELLANT IN THE QUANTUM MATTER. IN FACT THE CASE LAWS CITED TO PLEAD THAT PRIMA FACIE THERE WAS NO DEFAULT COMMITTED, DO NOT ALTER THE POSITION IN FAVOUR OF THE APPELLANT IN ANY WAY. THUS GROUNDS OF APPEAL 4, 5 AND 6 ARE DISMISSED. 4.2 REGARDING THE OTHER GROUNDS (2,3 &7) IT IS SEEN THAT THERE IS CONSIDERABL E MERIT IN THE CLAIM THAT THERE EXISTS 'REASONABLE CAUSE' AS MANDATED U/S 273B OF THE ACT IN THIS CASE. THUS IT IS BELIEVABLE THAT THE APPELLANT WAS UNDER A BONAFIDE BELIEF THAT HIS DUTY, AS PER LAW, WAS DISCHARGED WHEN HE DEPOSITED FORM 27 - C WITH THE INCO ME TAX DEPARTMENT, ALBEIT BELATEDLY. ALSO THIS PROVISION WAS NEWLY INTRODUCED AT THAT TIME AND A P ROCEDURAL LAPSE COULD ALWAYS BE ATTRIBUTED TO OVERSIGHT OR IGNORANCE OF THE PR OCEDURES. ACCORDINGLY, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CASE, THI S MATTER IS IN FAVOUR OF THE APPELLANT WITH THE DELETION OF PENALTY LEVIED ON THE GROUND THAT TH ERE WAS 'REASONABLE CAUSE' FOR THE DEFAULT LEADING TO THE IMPUGNED PENALTY. 3. AGGRIEVED BY THE ORDER OF LD. CIT (A) REVENUE IS IN APPEAL BEFORE US ON THE IS SUE THAT ASSESSEE HAD NOT ESTABLISHED THE REASONABLE CAUSE DURING THE PENALTY PROCEEDINGS FOR NOT COLLECTING TAX ON SALE OF FOREST PRODUCTS. 6 3 . 1. LD.DR SUPPORTED THE ORDER S PASSED BY LD. AO. 4. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES I N THE LIGHT OF THE RECORDS PLACED BEFORE US. BEFORE DECIDING THE ISSUE RELEVANT PROVISIONS OF SECTION 271 CA AS WELL AS 273B ARE REPRODUCED HEREINBELOW: [ PENALTY FOR FAILURE TO COLLECT TAX AT SOURCE. 271CA. (1) IF ANY PERSON FAILS TO COLLECT THE WHOLE OR ANY PART OF THE TAX AS REQUIRED BY OR UNDER THE PROVISIONS OF CHAPTER XVII - BB, THEN, SUCH PERSON SHALL BE LIABLE TO PAY, BY WAY OF PENALTY, A SUM EQUAL TO THE AMOUNT OF TAX WHICH SUCH PERSON FAILED TO COLLECT AS AFORESAID. [ PENALTY NOT TO BE IMPOSED IN C ERTAIN CASES. 273B. NOTWITHSTANDING ANYTHING CONTAINED IN THE PROVISIONS OF [CLAUSE ( B ) OF SUB - SECTION (1) OF] [ SECTION 271 , SECTION 271A , [ SECTION 271AA ,] SECTION 271B [, SECTION 271BA ], [ SECTION 271BB ,] SECTION 271C , [ SECTION 271CA ,] SECTION 271D , SECTION 271E , [ SECTION 271F , [ SECTION 271FA , ] [ SECTION 271FAB ,] [ SECTION 271FB ,] [ SECTION 271G ,]] [ SECTION 271GA ,] [ SECTION 271GB , ] [ SECTION 271H ,] [ SECTION 271 - I ,] [ SECTION 271J , ] CLAUSE ( C ) OR CLAUSE ( D ) OF SUB - SECTION (1) OR SUB - SECTION (2) OF SECTION 272A , SUB - SECTION (1) OF SECTION 272AA ] OR [ SECTION 272B OR] [SUB - SECTION (1) [OR SUB - SECTION (1A)] OF SECTION 272BB OR] [SUB - SECTION (1) OF SECTION 272BBB OR] CLAUSE ( B ) OF SUB - SECTION (1) OR CLAUSE ( B ) OR CLAUSE ( C ) OF SUB - SECTION (2) OF SECTION 273 , NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PROVISIONS IF HE PROVES THAT THERE WAS REASONABLE CAUSE 30 FOR THE SAID FAILURE. 7 4.1. IT HAS BEEN CATEGORICALLY RECORDED IN FINDINGS BY LD. CIT(A) S REGARDING FORM 27C BEING DEPOSITED BY ASSESSEE WHICH HAS NOT BEEN DISPUTED BY LD. DR. FURTHER CONSIDERING THE FACT THAT FORM 27C WAS DEPOSITED BY BUYERS WITH ASSESSEE BELATEDLY, AMOUNTS TO REASONABLE CAUSE UNDER SECTION 273B OF THE ACT . UNDER SUCH CIRCUMSTANCES AS PER THE PROVISIONS OF LAW ASSESSEE WAS VERY MUCH UNDER THE BONA FIDE BELIEF THAT THERE IS NO REQUIREMENT TO COLLECT TA X AT SOURCE FROM THE BUYERS. 4. 2 . ADMITTEDLY DEPARTMENT PREFERRED APPEAL ONLY IN RESPECT OF THERE BEING NO REASONABLE CAUSE FOR NOT DEDUCTING TAX AT SOURCE. WE OBSERVE FROM THE ORDER OF LD.CIT(A) IN PARA 4.2 WHICH HAS BEEN REPRODUCED HEREINABOVE THAT ASSESSE E HAS DEPOSITED FORM 27C WITH THE I NCOME T AX DEPARTMENT ALBEIT BELATEDLY. IN OUR OPINION THE DEFAULT OF BELATEDLY FILING FORM 27C IN THE INSTANT CASE WAS NOT DELIBERATE BUT MERELY A TECHNICAL DEFAULT. 4.3. AN IDENTICAL SITUATION EMERGED BEFORE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS MATSUSHITA ELECTRIC INDUSTRIAL LTD., REPORTED IN 278 ITR 162 . HON BLE DELHI HIGH COURT HELD AS UNDER : 'IT IS NOT NECESSARY FOR US TO NOTICE THE MERIT OR OTHERWISE OF THE CONTENTIONS RAISED BEFORE US IN ANY GREATER DE TAIL. SUFFICES IT TO NOTE AND WHICH IS FAIRLY POINTED OUT BY THE LEARNED COUNSEL APPEARING FOR REVENUE DEPARTMENT THAT THE CONTROVERSY IN THE PRESENT CASE IS SQUARELY COVERED ON FINDING OF FACT AS WELL AS ON QUESTION OF LAW BY A JUDGMENT OF THIS COURT IN T HE CASE OF COMMISSIONER OF INCOME - TAX V. ITOCHU CORPORATION 268 ITR 172. IN THAT CASE, THE COURT HELD THAT FINDING RELATION TO THE FACT WHETHER THE ASSESSED ACTED BONA FIDE WAS A FINDING OF FACT AND THE ASSESSED HAD PAID THE TAX IN TERMS OF LAW SUBSEQUENTLY. ON SUCH FINDING OF FACT, THE TRIBUNAL WAS JUSTIFIED IN DELETING THE PENALTY AND IT WOULD NOT GIVE RISE TO A SUBSTANTIAL QUESTION OF LAW UNLESS THE FINDING RECORDED WAS PATENTLY PERVERSE. IN THIS VERY JUDGMENT WHILE RELYING UPON IN THE DIVISION BENCH JUDGMENT OF THIS 8 COURT IN THE CASE OF WOODWARD GOVERNOR INDIA (P) LTD. V. CIT (2002) 253 ITR 745, THE BENCH ALSO NOTICED THAT WHETHER THERE WAS REASONAB LE CAUSE OR NOT FOR THE ASSESSED NOT TO DEDUCT TAX AT SOURCE, IS A QUESTION OF FACT WHICH HAS TO BE DETERMINED BY THE TRIBUNAL AND NORMALLY WOULD NOT GIVE RISE TO A QUESTION OF LAW. WITH RESPECT, WE WOULD ADOPT THE REASONING OF THE DIVISION BENCH IN THE CIT V. ITOCHU CORPN . (SUPRA). IN THE PRESENT CASE, THE TRIBUNAL HAS COME TO A FINDING OF FACT THAT THE REASONABLE CAUSE CAN BE REASONABLY SAID TO BE A CAUSE WHICH PREVENTS A MAN OF AVERAGE INTELLIGENCE AN D ORDINARY PRUDENCE ACTING UNDER A NORMAL CIRCUMSTANCES WITHOUT NEGLIGENCE OR INACTION OR WANT OF BONAFIDE. IT THEN RECORDED A DEFINITE FINDING THAT THE ACT ON THE PART OF THE ASSESSED WAS BONAFIDE AND IT ACTED UNDER A REASONABLE BELIEF. 4. 4 . WE FURTHER FI ND THE HON BLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL V S S TATE OF ORISSA REPORTED IN 83 ITR 26 HAS HELD AS UNDER: AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS A RESULT OF QUASI - CRIMINAL PROCEEDING , AND PENALTY WILL N OT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED , EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST , OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION . PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS P RESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE A PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTIES, WHEN THERE IS A TECHNICAL OR V ENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FROM A BONA FIDES BELIEF THAT THE OFFENDER IS NOT LI ABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 9 4. 5 . APPLYING THE ABOVE RATIO TO THE FACTS OF THE PRESENT CASE ASSESSEE A GOVERNMENT ORGANISATION IN OUR OPINION WAS UNDER A BONA FIDE BELIEF THAT ON DEPOSIT OF FORM 27C WITH THE I NCOME T AX DEPARTMENT THERE IS NO LI ABILITY CAST UPON ASSESSEE TO DEDUCT TAX AT SOURCE. IN OUR CONSIDERED OPINION THE PRESENT CIRCUMSTANCES WARRANT THE ACCEPTABILITY OF REASONABLE CAUSE FOR FURNISHING FORM 27C BELATEDLY . RESPECTFULLY FOLLOWING THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS MATSUSHITA ELECTRIC INDUSTRIAL LTD (SUPRA), AND HON BLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA (SUPRA), THE GROUNDS RAISED BY REVENUE STAND DISMISSED IN ALL THE ASSESSMENT YEARS UNDER CONSIDERATION. 4.6. CONSIDERI NG THE RELEVANT FACTS OF THE INSTANT CASE, THE DEFAULT COMMITTED BY THE ASSESSEE CAN BE TREATED AS A TECHNICAL DEFAULT. THUS, FOR TECHNICAL DEFAULT OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, NO PENALTY UNDER SECTION 271 CA CAN BE VALIDLY IMPOSED. 5. I N THE RESULT APPEAL S FILED BY REVENUE STAND DISMISSED FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION. ORDER PRONOUNCED IN THE OPEN COURT ON 24.01.2018. SD/ - SD/ - ( R .K. PANDA ) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24 TH JANUARY, 2018 10 *MV COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASST. REGISTRAR ITA T, DELHI BENCHES, NEW DELHI 11 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON DRAGON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPA TCH OF ORDER