Appeal Details
Counselvise Citation
[2020] 110 COUNSELVISE.COM (IT) 5014 (ITAT-INDORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 4 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
14-10-2020
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
DB
Assessment Year
2015-2016
Appeal Filed On
29-05-2018
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HONBLE KUL BHARAT, JUDICIAL MEMBER AND HONBLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.500/IND/2018 ASSESSMENT YEAR 2015-16 SHRI JITENDRA SHARMA, 99, SHIVAMPURI, BHOLARAM USTAD MARG, BHAWARKUAN INDORE PAN : AXPS9199P : APPELLANT V/S JCIT (INTL TAXATION) AHMEDABAD : RESPONDENT ITA NO.501/IND/2018 ASSESSMENT YEAR 2015-16 SHRI BHARAT SHARMA, 99, SHIVAMPURI, BHOLARAM USTAD MARG, BHAWARKUAN INDORE PAN : ASSPS6586M : APPELLANT V/S JCIT (INTL TAXATION) AHMEDABAD : RESPONDENT ITA NO.502/IND/2018 ASSESSMENT YEAR 2015-16 SHRI SHATRUGHAN SHARMA, 99, SHIVAMPURI, BHOLARAM USTAD MARG, SHRI JITENDRA SHARMA & ORS ITA NOS. 500 TO 502/IND/2018 2 BHAWARKUAN INDORE PAN : ASZPS7750A : APPELLANT V/S JCIT (INTL TAXATION) AHMEDABAD : RESPONDENT REVENUE BY SMT. VINITA DUBEY , SR.DR ASSESSEE BY S/ SHRI MANOJ MUNISHI & PANKAJ SHAH, CAS DATE OF HEARING 05.10 .2020 DATE OF PRONOUNCEMENT 1 4 .1 0 . 2020 O R D E R PER MANISH BORAD THE ABOVE CAPTIONED APPEALS FILED AT THE INSTANCES OF THE ASSESSEE(S) PERTAINING TO ASSESSMENT YEAR 2015-16 A RE DIRECTED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TA X (APPEALS)-13 (IN SHORT LD.CIT(A)], AHMEDABAD DATED 24.04.2018 WHICH ARE ARISING OUT OF THE ORDER U/S 271C OF THE INCOME TAX ACT 1961(IN SHORT THE ACT) DATED 28.04.2017 FRAMED BY JCIT (I NTL. TAXN.), AHMEDABAD. 2. FROM PERUSAL OF THE RECORD WE OBSERVE THAT COMMO N ISSUE HAVE BEEN RAISED IN ALL THESE THREE APPEALS RELATIN G TO LEVY OF PENALTY U/S 271(1)(C) OF ACT AT RS. 5,15,000/- IN E ACH CASE FOR THE ALLEGED WRONG DEDUCTION OF TAX AT SOURCE IN THE TRA NSACTION OF SHRI JITENDRA SHARMA & ORS ITA NOS. 500 TO 502/IND/2018 3 PURCHASE OF IMMOVEABLE PROPERTY. AS GROUNDS RAISED IN ALL THESE THREE APPEALS ARE SIMILAR, FOR CONVENIENCE WE ARE R EPRODUCING BELOW THE GROUNDS RAISED BY SHRI JITENDRA SHARMA IN APPEA L NO.500/IND/2018; GROUND-I 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS)-13, AHMEDABAD (CIT(A)) ERRED IN EXPARTE DISMISSING THE APPEAL OF THE ASSESSEE F OR NON PROSECUTION AND THEREBY CONFIRMING THE ADDITION MADE BY THE AS SESSING OFFICER. 2. HE FAILED TO APPRECIATE THAT THE NOTICE OF HEARING WAS NOT SERVED ON THE APPELLANT AND THE APPELLANT HAD HIMSELF REQUESTED F OR EARLY HEARING WHICH REMAINED UNRESPONDED. 3. ACCORDINGLY, THE APPELLANT PRAYS THAT THE SAID EXPA RTE ORDER OF LEARNED CIT(A) BEING IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BE SET ASIDE AND RESTORED BACK FOR FRESH HEARING WITH ADEQUATE OPPOR TUNITY OF HEARING. GROUND-II 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) ERRED IN CONFIRMING THE PENALTY UNDER SECTION 271C OF THE ACT AMOUNTING TO RS.515000/- 2. THE APPELLANT PRAYS THAT THE SAID PENALTY BE DELETE D. GROUND-III 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) ERRED IN CONFIRMING THE PENALTY UNDER SECTION 271C BY NOT APPRECIATING THE BONAFIDE AND REASONABLE CAUSE FOR THE DEDUCTION OF TAX AT SOURCE UNDER DIFFERENT PROVISION. 2. THE APPELLANT PRAYS THAT THE SAID PENALTY BE DELETE D. SHRI JITENDRA SHARMA & ORS ITA NOS. 500 TO 502/IND/2018 4 GROUND-IV THE APPELLANT CRAVES LEAD TO ADD, TO AMEN, TO ALTER AND/OR TO DELETE ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 3. AS THE ISSUES RAISED IN THESE APPEALS ARE COMMON , THEY ARE TAKEN TOGETHER FOR ADJUDICATION AND ARE BEING DISPO SED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 4. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORDS AND SUBMITTED BY LD. COUNSEL FOR THE ASSESSEE ARE THAT THE ASSESSEE NAMELY SHRI JITENDRA SHARMA AND OTHER TWO PERSONS N AMELY SHRI BHARAT SHARMA AND SHATRUGHAN SHARMA ENTERED INTO AN AGREEMENT/SALE DEED DATED 24.10.2014 FOR TRANSACTIO N OF PURCHASE OF IMMOVEABLE PROPERTY VALUING AT RS.75 LAKHS. THI S TRANSACTION WAS CARRIED OUT THROUGH A BROKER. THE NAME OF THE SELLER IS SHRI MANOJ GANGWAR. IN THE SALE DEED SHRI MANOJ GANGWA R HAS MENTIONED HIS PAN, LOCAL ADDRESS OF FARUKHABAD, U.P AND PRESENT ADDRESS OF COLORADO, USA. ALL THE THREE JOINT OWNE RS CONSIDERING THE TOTAL TRANSACTION VALUE BEING MORE THAN RS.50 L AKHS, (THOUGH INDIVIDUALLY THE CONSIDERATION WAS RS. 25 LAKHS ONL Y) DEDUCTED TAX AT SOURCE @1% ON THE GROSS SALE CONSIDERATION AND D EPOSITED IT WITH GOVERNMENT TREASURY ON 15.1.2015. SUBSEQUENTLY ON RECEIVING THE SHRI JITENDRA SHARMA & ORS ITA NOS. 500 TO 502/IND/2018 5 INFORMATION FROM ITO (TDS-II), INDORE THE LD. A.O E XAMINED THE TRANSACTIONS OF TAX DEDUCTED AT SOURCE. LD. A.O OB SERVED THAT THE SELLER IS A NON RESIDENT INDIAN THEREFORE THE TAX TO BE DEDUCTED AT SOURCE ON THE GROSS PURCHASE CONSIDERATION SHOULD H AVE BEEN 20.6% AS PROVIDED IN SECTION 195 OF THE ACT. SINCE THE ASSESSEE HAS NOT DEDUCTED TAX AT THE CORRECT RATE HE CONSIDE RED THE ASSESSEE IN DEFAULT. HOWEVER BEFORE THE CONCLUSION OF THE P ROCEEDINGS U/S 201(1)/201(1A) OF THE ACT THE RESPECTIVE ASSESSEE(S ) DEPOSITED THE DUE TAX TO BE DEDUCTED U/S 195 OF THE ACT ALONG WI TH THE APPLICABLE INTEREST. HOWEVER THE LD. A.O INITIATED THE PENALT Y PROCEEDINGS U/S 271C OF THE ACT SEPARATELY. 5. DURING THE COURSE OF PENALTY PROCEEDINGS THOUGH IT WAS CLAIMED BY THE ASSESSEE THAT IN A BONAFIDE BELIEF I T HAS DEDUCTED TAX AT SOURCE U/S 194I A OF THE ACT, BUT THE MOMENT HE CAME TO KNOW ABOUT THE WRONG RATE OF TAX HE DEDUCTED TAX @20.6% U/S 195 OF THE ACT AND DEPOSITED THE DUE AMOUNT WITH THE APPLICABL E INTEREST. BUT THIS SUBMISSION OF THE ASSESSEE COULD NOT SATISFY T HE LD. A.O AND HE PROCEEDED TO LEVY PENALTY AT RS. 5,15,000/- IN EACH CASE FOR THE DEFAULT OF WRONG DEDUCTION OF TAX AT SOURCE. AGGRI EVED ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) BUT COULD NOT SU CCEED AS THE SHRI JITENDRA SHARMA & ORS ITA NOS. 500 TO 502/IND/2018 6 REASONABLE CAUSE MENTIONED BY THE ASSESSEE DID NOT FIND ANY FAVOUR BY THE LOWER APPELLATE AUTHORITY. 6. NOW ALL THE THREE ASSESSEE(S) ARE IN APPEAL BEFO RE THE TRIBUNAL CHALLENGING THE FINDING OF LD. CIT(A) CONFIRMING TH E LEVY OF PENALTY U/S 271C OF THE ACT AT RS. 5,15,000/- IN EACH CASE FOR THE DEFAULT COMMITTED BY THE ASSESSEE(S) FOR WRONG DEDUCTION O F TAX AT SOURCE. 7. LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE PAP ER BOOK RUNNING FROM PAGE 1 TO 25 AND RELIED ON FOLLOWING W RITTEN SUBMISSIONS :- 1. THE APPELLANT IS AN INDIVIDUAL AND HAD PURCHASED AN IM MOVABLE PROPERTY IN THE YEAR 2014-15 AND HAD DEDUCTED THE TA X OF THE SELLER UNDER SECTION 194IA OF ACT AT THE RATE OF ONE PERCENT OF THE SALE CONSIDERATION AND FILED THE TDS RETURN ON THE DATE OF DE DUCTION AS PRESCRIBED. 2. THE ASSESSEE DID NOT KNOW THE SELLER AND THE DEAL OF PR OPERTY WAS DONE THROUGH A BROKER WHO GOT PREPARED THE SALE DEED AND OTHER DOCUMENTS. THE REGISTERED DEED ALSO BORE INDIAN ADDRESS OF FARUKHABAD, U.P. AS WELL AS HIS ABROAD ADDRESS HOWEVER SINCE THE ASSESSEE IS A COMMON INDIVIDUAL UNAWARE ABOUT TECHNIC ALLY SEPARATE TDS MECHANISM FOR RESIDENT AND NON RESIDENT OF SAME TRANSACTION, HE EXECUTED THE DEED AFTER DEDUCTING 1% TAX BASED ON SECTION 194IA OF THE ACT WHICH IS COMMONLY KNOWN LAW AND PRACTICE. SHRI JITENDRA SHARMA & ORS ITA NOS. 500 TO 502/IND/2018 7 3. SUBSEQUENTLY THE APPELLANT WAS INFORMED THAT SINCE TH E SELLER IS HAVING A FOREIGN ADDRESS STATED IN THE DEED HE MAY BE NO N RESIDENT INDIAN AND THEREFORE THE TAX WAS DEDUCTIBLE UNDER SECTI ON 195 OF THE ACT. 4. WHEN SUCH IMPRESSION WAS GIVEN TO THE APPELLANT, HE IMMEDIATELY APPROACHED THE BROKER AND GOT THE DEPOSIT OF TDS OF BALANCE TAX DONE UNDER SECTION 195 AND REPORTED THE S AME BY OBTAINING TAN AND FILING TDS RETURN. 5. THE APPELLANT HAS ACTED BONAFIDELY SINCE A. PAN OF THE SELLER NOWHERE INDICATES HIS RESIDENT IAL STATUS B. THE SELLER AND BUYERS MET EACH OTHER FOR THE FIRST T IME IN REGISTRAR OFFICE ONLY THROUGH BROKER. C. REQUIREMENT OF SUB REGISTRAR OFFICE IS TO SUBMI T TDS CERTIFICATE AS PER SECTION 194IA OF ACT WHICH WAS FURNIS HED AND ACCEPTED BY GOVERNMENT DEPARTMENT WHO ARE ALSO NO T AWARE ABOUT THE TECHNICAL PROVISIONS OF SECTION 195 O F ACT. D. IMMEDIATELY ON BECOMING AWARE THE APPELLANT ENSU RED COMPLIANCE IN FORM OF PAYMENT OF FULL TAX AT SOURCE ON TRANSACTION BY RECOVERING IT FROM NON-RESIDENT INDIAN AS PER SECTION 195 OF THE ACT. E. BE THAT AS IT MAY THE SELLER MAY NOT BE CONSIDERE D AS NON RESIDENT IF HE HAS STATED A FOREIGN ADDRESS ALONG WITH LOCAL ADDRESS AS RESIDENTIAL STATUS DEPENDS ON STAY AS PER CONDITIONS GIVEN IN SECTION 6 OF ACT WHICH HAVE NOT BEEN EXAMINED BY THE AO OR ANY OTHER AUTHORITY. SHRI JITENDRA SHARMA & ORS ITA NOS. 500 TO 502/IND/2018 8 6. THE AO AND CIT(A) HAS RELIED ON SOME SCREENSHOT OF MOBI LE STATING TO BE LETTER OF SELLER RECEIVED THROUGH EMAIL W HICH IS NOT KNOWN TO THE APPELLANT NOR IS SUBMITTED BY IT TO THE DEPARTMENT. 7. SINCE THE FACT ABOUT THE FOREIGN ADDRESS OF THE SELLE R WAS LATER CAME TO APPELLANT NOTICE THERE AFTER APPELLANT DEDUCTED TD S 1% ON IMMOVABLE PROPERTY RATHER THAN COVERING UNDER SECTION 195 AT THE RATE 20%. AS SOON AS THE PROCEDURE FOR NON RESIDENT C AME TO NOTICE, APPELLANT ACKNOWLEDGED THE DEMAND RAISED BY THE DEPARTMENT AND DEPOSITED BALANCE TDS ALONG WITH INTERE ST LEVIED THEREON. 8. PROPOSITIONS A. NO PENALTY SHOULD BE LEVIED SINCE THERE WAS DEDUC TION OF TAX UNDER A DIFFERENT SECTION BEING 194IA INSTEAD OF SECTION 195 OF ACT BONAFIDELY AS BOTH SECTIONS APPLY ON SAME TRANSACTIONS. B. THE DEDUCTOR WHO IS AN INDIVIDUAL COMMON PERSON WAS NOT KNOWING HE RESIDENTIAL STATUS OF SELLER BEING NRI (WHIC H HAS STILL NOT BEEN ESTABLISHED BASED ON SECTION 6 OF THE ACT) NOR HE WAS AWARE ABOUT DIFFERENT TDS PROVISIONS OF SECTI ON 195 AND ACTED AS PER COMMON KNOWLEDGE TO DEDUCT 1% TDS UNDER SECTION 194IA OF THE ACT. C. AS REGARDS THE OBSERVATION OF CIT(A) THAT IGNORA NCE OF LAW IS NO EXCUSE IT IS SUBMITTED THERE IS NO SUCH MAXIM KNOWN TO LAW. YOUR KIND ATTENTION IS INVITED TO DECISION OF SU PREME COURT IN CASE OF MOTILAL PADAMPAT SUGAR MILLS CO. L TD. V. STATE OF UTTAR PRADESH [1979] 118 ITR 326 WHEREIN IT WAS OBSERVED THAT THERE IS NO PRESUMPTION THAT EVERY PE RSON SHRI JITENDRA SHARMA & ORS ITA NOS. 500 TO 502/IND/2018 9 KNOWS THE LAW. IT IS OFTEN SAID THAT EVERYONE IS P RESUMED TO KNOW THE LAW, BUT THAT IS NOT A CORRECT STATEMENT; THERE IS NO SUCH MAXIM KNOWN TO THE LAW. D. PENALTY UNDER SECTION 271C OF ACT IS LEVIED FOR NON COMPLIANCE OF CHAPTER XVII-B OF THE ACT HOWEVER WH EN THE TDS IS DEDUCTED AND DEPOSITED WITH INTEREST THERE IS COMPLIANCE OF CHAPTER XVII - B ON A WHOLE BASIS A ND THEREFORE THE PENALTY SHOULD NOT BE LEVIED IN SUC H CASES. E. THE DEDUCTION OF TAX UNDER DIFFERENT PROVISION AND LATER DEDUCTION AND DEPOSIT OF FULL TAX SHOWS THE BONAFI DE CONDUCT OF APPELLANT 'WHICH IS A 'REASONABLE CAUSE' ON EXI STENCE OF WHICH PENALTY UNDER SECTION 271C OF ACT IS UNWARRA NTED AS PER SECTION 273B OF THE ACT. PRAYER IN VIEW OF ABOVE THE APPELLANT PRAYS THAT THE IMPUG NED PENALTY BE DIRECTED TO BE DELETED 8. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE VEHEMENT LY ARGUED AND APART FROM RELYING THE ORDERS OF BOTH TH E LOWER AUTHORITIES ALSO SUBMITTED THE FACT THAT THE SELLER IS RESIDING IN USA AND NON RESIDENT INDIAN WAS VERY MUCH IN THE KNOWLE DGE OF THE BUYERS AT THE TIME OF ENTERING INTO SALE AGREEMENT. SHE ALSO SUBMITTED THAT THE IGNORANCE OF LAW IS NO EXCUSE AN D PROVISIONS OF SECTION 271C OF THE ACT ARE SQUARELY APPLICABLE ON THE FACTS OF THE SHRI JITENDRA SHARMA & ORS ITA NOS. 500 TO 502/IND/2018 10 INSTANT CASE SINCE THE ASSESSEE HAS FAILED TO DEDUC T CORRECT TAX AS REQUIRED BY THE PROVISION OF CHAPTER XVII-B. 9. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. THE SOLE GRIEVANCE RAISED BY ALL THE THREE ASSESSEE(S) NAMELY S/SHRI JITENDRA SHARMA, BHARAT S HARMA AND SHARTRUGHAN SHARMA ARE AGAINST THE FINDING OF LD. C IT(A) CONFIRMING THE LEVY OF PENALTY AT RS. 5,15,000/- TO EACH U/S 271C OF THE ACT FOR LOW DEDUCTION OF TAX AT SOURCE. 10. WE OBSERVE THAT ALL THREE ASSESSEE(S) JOINTLY P LANNED TO PURCHASE AN IMMOVEABLE PROPERTY VALUING AT RS.75 LA KHS. CONSIDERATION OF RS.25 LAKHS EACH WAS PAID BY THE B UYERS. SELLER IS THE SINGLE PERSON NAMELY SHRI MANISH GANGWAL. IN T HE SALE DEED SELLERS LOCAL ADDRESS IS OF UTTAR PRADESH AND THE PRESENT ADDRESS IS AT COLORADO, USA. AS CLAIMED BY THE LD. COUNSEL FO R THE ASSESSEE THIS TRANSACTIONS WAS CARRIED OUT THROUGH BROKER. T HE COPY OF PAN CARD OF THE SELLER WAS GIVEN WHO HIMSELF WAS AVAILA BLE AT THE TIME OF TRANSACTION. IN THE PAN CARD ADDRESS IS MENTIONED. NO OTHER DOCUMENTARY EVIDENCE OF THE RESIDENTIAL STATUS OF T HE SELLER WAS SHOWN. SHRI JITENDRA SHARMA & ORS ITA NOS. 500 TO 502/IND/2018 11 11. THOUGH THE PROVISIONS OF SECTION 194(IA) OF THE ACT RELATES TO DEDUCTION OF TAX AT SOURCE ON PAYMENT FOR TRANSFER OF IMMOVEABLE PROPERTY OTHER THAN AGRICULTURE LAND AND REFERS TO THE PAYMENT MADE BY PERSON BEING A TRANSFEREE TO THE RESPECTIVE TRANSFERER IF THE CONSIDERATION FOR TRANSFER OF IMMOVEABLE PROPERTY IS RS.50 LAKHS OR MORE, IN THE INSTANT CASE ALL THE THREE ASSESSEE(S) INDIVIDUALLY WERE PAYING THE CONSIDERATION OF RS.25 LAKHS ONLY (WHICH IS LESS THAN RS.50 LAKHS) AS MENTIONED IN SECTION 194IA) OF THE ACT BUT STILL BEING AT A SAFER SIDE THEY DEDUCTED TAX AT SOURCE @ 1% OF THE PURCHASE CONSIDERATION AND DEPOSITED IT. 12. WE FURTHER OBSERVE THAT SUBSEQUENTLY WHEN PROCE EDINGS WERE CARRIED OUT U/S 201(1)/201(1A) R.W.S. 195 OF THE AC T AND RESPECTIVE ASSESSEE(S) WERE BROUGHT TO THE NOTICE THAT THE SEL LER IS A NON RESIDENT INDIAN THEY BONAFIDELY DEDUCTED THE TDS @20.6% (TAX + SURCHARGE) OF RS. 5,15,000/- EACH ON THE PAYMENT OF RS.25 LAKHS AND ALSO PAID INTEREST AT RS.1,03,000/- FOR THE DEL AY AND IN TOTAL ALL THE THREE ASSESSEE(S) THEY DEPOSITED RS. 6,18,000/- EACH BEFORE THE CONCLUSION OF THE PROCEEDINGS AND THUS NO DEMAND WA S PAYABLE. SHRI JITENDRA SHARMA & ORS ITA NOS. 500 TO 502/IND/2018 12 13. HOWEVER LD. A.O FURTHER INITIATED THE PROCEEDIN GS U/S 271C FOR LEVY OF PENALTY AT RS. 5,15,000/- IN EACH OF TH E CASE FOR LOW DEDUCTION OF TAX. NOW THE SHORT ISSUE REMAINS IS W HETHER IN THESE GIVEN CIRCUMSTANCES AS DISCUSSED ABOVE THE LD. A.O WAS JUSTIFIED IN LEVYING PENALTY ON THE ASSESSEE(S) U/S 271C OF THE ACT. 14. BEFORE PROCEEDING FURTHER WE WILL LIKE TO GO TH ROUGH THE FINDING OF THE CO-ORDINATE BENCH OF MUMBAI IN THE CASE OF DCIT V/S SMS INDIA LTD (SUPRA) (2006) 7 SOT 424 MUM DATED 30.11.2005 WHEREIN SIMILAR ISSUE HAS BEEN DEALT WITH RESPECT T O LEVY OF PENALTY U/S 271C OF THE ACT AND THE ASSESSEE HAD REASONABL E CAUSE DUE TO WHICH THERE WAS SHORT PAYMENT OF TAX AND SUBSEQUENT LY THE ASSESSEE PAID THE REMAINING AMOUNT OF SHORT DEDUCTE D TAX AND INTEREST. THE HON'BLE TRIBUNAL DECIDED IN FAVOUR OF THE ASSESSEE CONFIRMING THE FINDING OF LD. CIT(A) OBSERVING AS F OLLOWS :- 10. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. ADMI TTEDLY, THE ASSESSEE FILED ITS ANNUAL SALARY RETURN FOR EACH YEAR IN THE PRESCRIBED FORMS WITHIN THE TIME SPECIFIED. IT IS ALSO AN ADMITTED FACT TH AT IN THE EARLIER YEARS THE ANNUAL SALARY RETURNS WERE ACCEPTED BY THE DEP ARTMENT AS SUCH. IN THE YEAR UNDER CONSIDERATION THE ASSESSEE WAS REQUI RED TO CLARIFY THE BASIS OF DEDUCTION OF TAX UNDER SECTION 192 OF THE ACT. IT HAS BEEN STATED BY THE ASSESSEE'S COUNSEL THAT AT THIS POINT ONLY T HE ASSESSEE TOOK SHRI JITENDRA SHARMA & ORS ITA NOS. 500 TO 502/IND/2018 13 PROFESSIONAL ADVICE RELATING TO DEDUCTION OF TAX AT SOURCE AND WHEN ADVISED TO DEDUCT THE TAX ON IMPUGNED PAYMENTS THE ASSESSEE PAID THE SHORT DEDUCTED TAX AND INTEREST THEREON VOLUNTARILY AND FILED REVISED ANNUAL SALARY RETURNS FOR ALL FOUR YEARS. THE ASSES SING OFFICER LEVIED THE PENALTY MAINLY ON THE GROUND THAT THE DEPOSITS OF T HE SHORT DEDUCTED TAX WAS MADE AFTER INITIATION OF THE PROCEEDINGS AND TH EREFORE, THE SAME WAS IN VOLUNTARY AND ALSO RELIED ON THE PRINCIPLE THAT IGNORANCE OF LAW WAS NO EXCUSE. FROM THE FACTS OF THE CASE IT IS OBSERVED T HAT THE ASSESSEE FILED RETURN FOR ALL YEARS WITHIN THE TIME AND ONCE THE R ETURN FOR FIRST YEAR WAS ACCEPTED AS SUCH, THE BELIEF ON THE PART OF THE ASS ESSEE THAT HE RIGHTLY DEDUCTED THE TAX GOT STRENGTHENED AND THE SAME PRAC TICE CONTINUED TILL THE ASSESSEE WAS ADVISED PROFESSIONALLY OTHERWISE AND T HIS LEADS TO OBVIOUS INFERENCE THAT WHEN THE ASSESSEE WAS CONFRONTED WIT H THIS ISSUE FOR THE FIRST TIME HE IMMEDIATELY ACTED AND RECTIFIED THE S AME. THEREFORE, IN OUR CONSIDERED OPINION BONA FIDE BELIEF IN SHORT DEDUCT ION OF TAX COUPLED WITH VOLUNTARY COMPLIANCE IN THE TERM OF DEPOSITING THE SAME IMMEDIATELY ON COMING TO KNOW THE SAME WOULD CONSTITUTE REASONABLE CAUSE. THE ASSESSING OFFICER ALSO GAVE A FINDING THAT IGNORANC E OF LAW IS NO EXCUSE BUT SIMULTANEOUSLY IT IS ALSO TRUE THAT THERE IS NO PRE SUMPTION THAT EVERYONE KNOWS THE LAW. WHAT IS IMPORTANT IS THE FACT THAT T HE MOMENT A PERSON COMES TO KNOW THAT HE HAS COMMITTED A MISTAKE AND B EING A PERSON OF REASONABLE INTELLIGENCE AND ORDINARY PRUDENCE IF HE TAKES THE CORRECTIVE MEASURES TO RECTIFY THE SAME IMMEDIATELY, THEN IT C ANNOT BE SAID THAT HE ACTED DELIBERATELY WITH COMPLETE DISREGARD TO LAW. THERE IS ALSO CONSIDERABLE FORCE IN THE CONTENTION OF THE ASSESSE E THAT NON-RECORDING OF SATISFACTION BY ASSESSING OFFICER IN THE ORDER UNDE R SECTION 201(1) WITH REGARD TO THE FACT THAT CASE IS FIT FOR LEVY OF PEN ALTY MAKES THE LEVY OF PENALTY VOID AB INITIO. IN VIEW OF ABOVE DISCUSSION AND IN THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE C ONSIDERED OPINION THAT THE FINDINGS OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN HIS APPELLATE ORDER ARE IN ACCORDANCE WITH LAW AND THER EFORE, WE UPHOLD THE SHRI JITENDRA SHARMA & ORS ITA NOS. 500 TO 502/IND/2018 14 ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEAL S). THUS, ALL GROUNDS OF REVENUE IN ALL APPEALS ARE REJECTED. 11. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. ADMI TTEDLY, THE ASSESSEE FILED ITS ANNUAL SALARY RETURN FOR EACH YEAR IN THE PRESCRIBED FORMS WITHIN THE TIME SPECIFIED. IT IS ALSO AN ADMITTED FACT THA T IN THE EARLIER YEARS THE ANNUAL SALARY RETURNS WERE ACCEPTED BY THE DEPARTME NT AS SUCH. IN THE YEAR UNDER CONSIDERATION THE ASSESSEE WAS REQUIRED TO CLARIFY THE BASIS OF DEDUCTION OF TAX UNDER SECTION 192 OF THE ACT. IT H AS BEEN STATED BY THE ASSESSEE'S COUNSEL THAT AT THIS POINT ONLY THE ASSE SSEE TOOK PROFESSIONAL ADVICE RELATING TO DEDUCTION OF TAX AT SOURCE AND W HEN ADVISED TO DEDUCT THE TAX ON IMPUGNED PAYMENTS THE ASSESSEE PAID THE SHORT DEDUCTED TAX AND INTEREST THEREON VOLUNTARILY AND FILED REVISED ANNUAL SALARY RETURNS FOR ALL FOUR YEARS. THE ASSESSING OFFICER LEVIED THE PE NALTY MAINLY ON THE GROUND THAT THE DEPOSITS OF THE SHORT DEDUCTED TAX WAS MADE AFTER INITIATION OF THE PROCEEDINGS AND THEREFORE, THE SA ME WAS IN VOLUNTARY AND ALSO RELIED ON THE PRINCIPLE THAT IGNORANCE OF LAW WAS NO EXCUSE. FROM THE FACTS OF THE CASE IT IS OBSERVED THAT THE ASSESSEE FILED RETURN FOR ALL YEARS WITHIN THE TIME AND ONCE THE RETURN FOR FIRST YEAR WAS ACCEPTED AS SUCH, THE BELIEF ON THE PART OF THE ASSESSEE THAT HE RIGH TLY DEDUCTED THE TAX GOT STRENGTHENED AND THE SAME PRACTICE CONTINUED TILL T HE ASSESSEE WAS ADVISED PROFESSIONALLY OTHERWISE AND THIS LEADS TO OBVIOUS INFERENCE THAT WHEN THE ASSESSEE WAS CONFRONTED WITH THIS ISSUE FO R THE FIRST TIME HE IMMEDIATELY ACTED AND RECTIFIED THE SAME. THEREFORE , IN OUR CONSIDERED OPINION BONA FIDE BELIEF IN SHORT DEDUCTION OF TAX COUPLED WITH VOLUNTARY COMPLIANCE IN THE TERM OF DEPOSITING THE SAME IMMED IATELY ON COMING TO KNOW THE SAME WOULD CONSTITUTE REASONABLE CAUSE. TH E ASSESSING OFFICER ALSO GAVE A FINDING THAT IGNORANCE OF LAW IS NO EXC USE BUT SIMULTANEOUSLY IT IS ALSO TRUE THAT THERE IS NO PRESUMPTION THAT E VERYONE KNOWS THE LAW. WHAT IS IMPORTANT IS THE FACT THAT THE MOMENT A PER SON COMES TO KNOW THAT SHRI JITENDRA SHARMA & ORS ITA NOS. 500 TO 502/IND/2018 15 HE HAS COMMITTED A MISTAKE AND BEING A PERSON OF RE ASONABLE INTELLIGENCE AND ORDINARY PRUDENCE IF HE TAKES THE CORRECTIVE ME ASURES TO RECTIFY THE SAME IMMEDIATELY, THEN IT CANNOT BE SAID THAT HE AC TED DELIBERATELY WITH COMPLETE DISREGARD TO LAW. THERE IS ALSO CONSIDERAB LE FORCE IN THE CONTENTION OF THE ASSESSEE THAT NON-RECORDING OF SA TISFACTION BY ASSESSING OFFICER IN THE ORDER UNDER SECTION 201(1) WITH REGA RD TO THE FACT THAT CASE IS FIT FOR LEVY OF PENALTY MAKES THE LEVY OF PENALT Y VOID AB INITIO. IN VIEW OF ABOVE DISCUSSION AND IN THE TOTALITY OF FACTS AND C IRCUMSTANCES OF THE CASE WE ARE OF THE CONSIDERED OPINION THAT THE FINDINGS OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN HIS APPELLATE ORDER ARE IN ACCORDANCE WITH LAW AND THEREFORE, WE UPHOLD THE ORDER OF LEARNED COMMI SSIONER OF INCOME TAX (APPEALS). THUS, ALL GROUNDS OF REVENUE IN ALL APPE ALS ARE REJECTED. 15. FROM GOING THROUGH THE ABOVE DECISION OF HON'BL E TRIBUNAL AND EXAMINING THE FACTS OF INSTANT CASE WE FIND THA T THIS DECISION IS SQUARELY APPLICABLE ON THE FACTS OF THE INSTANT CAS E WHEREIN ALSO THE ASSESSEE IN ADDITION TO THE TAX DEDUCTED U/S 194(1A ) @ 1% IN ADDITION ALSO DEPOSITED DEDUCTED AND DEPOSITED TDS U/S 195 OF THE ACT ALONG WITH THE INTEREST FOR DELAY. 16. EVEN OTHERWISE IN OUR VIEW THE PROVISIONS OF SE CTION 273B OF THE ACT THE PENALTY IS NOT TO BE IMPOSED IN CERTAIN CASES IS APPLICABLE ON THE ASSESSEE AS SECTION 273B OF THE A CT CONTEMPLATES THAT NO PENALTY SHALL BE IMPOSABLE ON THE PERSONS FOR ANY VIOLATION SHRI JITENDRA SHARMA & ORS ITA NOS. 500 TO 502/IND/2018 16 REFERRED TO IN THE SAID PROVISIONS (WHICH IN THIS C ASE IS SECTION 271C OF THE ACT) IF HE PROVES THAT THERE WAS A REASONABL E CAUSE FOR THE SAID FAILURE. IN THE CASE OF THE ASSESSEE(S) ALSO WHEN THE TRANSACTIONS TOOK PLACE THERE WAS ONLY COPY OF PAN CARD ISSUED BY INCOME TAX DEPARTMENT HAVING NO ADDRESS. SELLER CA ME TO INDIA FOR REGISTRATION. SELLER HAS NOT PROVIDED ANY DOCUMENT ARY EVIDENCE TO SHOW THAT HE IS A NON RESIDENT INDIAN. HAVING LOCA L ADDRESS IN USA CANNOT BE A SUFFICIENT EVIDENCE TO SHOW THAT TH E PERSON IS A NON RESIDENT INDIAN. THE ASSESSEE(S) PRUDENTLY DED UCTED TAX @1% U/S 194 (1A) OF THE ACT. SUBSEQUENTLY WHEN IT WAS B ROUGHT TO THEIR NOTICE THAT THE SELLER IS A NON RESIDENT INDIAN THE Y AS LAW ABIDING CITIZENS IMMEDIATELY DEPOSITED THE CORRECT AMOUNT O F TDS @20.6% APPLICABLE ON THE SAID TRANSACTION U/S 195 OF THE A CT ALONG WITH INTEREST IN ADDITION TO 1% ALREADY DEPOSITED. MENS REA TO EVADE TAX IS NOT APPEARING AT ANY STAGE OF THE PROCEEDINGS ON THE PART OF THE ASSESSEE. IT WOULD HAVE MADE NO DIFFERENCE FOR THE M TO DEDUCT TAX @1% OR 20.6% SINCE IT WAS TO BE WITHHELD FROM THE P URCHASE CONSIDERATION. THERE CANNOT BE ANY OTHER MAL INTENT ION FOR DEDUCTION OF TDS AT LOWER OR WRONG RATE. SHRI JITENDRA SHARMA & ORS ITA NOS. 500 TO 502/IND/2018 17 17. WE THEREFORE ARE OF THE CONSIDERED VIEW THAT IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSEE(S) ARE D ULY ELIGIBLE TO GET THE BENEFIT OF THE PROVISIONS OF SECTION 273B OF TH E ACT AS THEY HAVE PROVED BEYOND DOUBT THAT IN A BONAFIDE BELIEF THEY DEPOSITED TAX @1% U/S 194IA OF THE ACT CONSIDERING THE SELLER AS RESIDENT INDIAN AND LATER ON BEFORE CONCLUSION OF THE PROCEEDINGS B EFORE THE LD. A.O HAVE DEPOSITED CORRECT AMOUNT OF TAX @20.6% AND APP LICABLE INTEREST. THUS THEY HAD A REASONABLE CAUSE FOR THE SAID FAILURE AND IN ADDITION THE DECISION OF HON'BLE MUMBAI TRIBUNAL IN THE CASE OF SMS INDIA LTD (SUPRA) ALSO APPLIES SQUARELY ON THE CASE OF THE ASSESSEE. WE THUS SET ASIDE THE FINDING OF LD. CIT( A) AND DIRECT THE REVENUE AUTHORITIES TO DELETE THE PENALTY OF RS.5,1 5,000/- LEVIED U/S 271C OF THE ACT IN THE CASE OF ALL THE THREE ASSESS EE(S). THUS GROUND NO.2 RAISED IN ALL THE 3 APPEALS ARE ALLOWED . 18. THE COMMON GROUND NO.I REFERRING TO THE ACTION OF LD. CIT(A) OF EX-PARTE DISMISSING THE ASSESSEE(S) APPEAL AND THE REQUEST OF RESTORING BACK FOR FRESH HEARINGS WITH LD. CIT(A) H AVE NOT BEEN ADDRESSED BY LD. COUNSEL FOR THE ASSESSEE WHICH SHO WS THAT ALL THE THREE ASSESSEE(S) ARE NOT INTERESTED TO PRESS THIS GROUND, THEREFORE SHRI JITENDRA SHARMA & ORS ITA NOS. 500 TO 502/IND/2018 18 THIS COMMON GROUND NO.I IS DISMISSED AS NOT PRESSED AND GROUND NO. IV IS GENERAL IN NATURE WHICH NEEDS NO ADJUDICA TION THEY ARE ALSO. 19. IN THE RESULT COMMON GROUNDS RAISED IN GROUND N O. II & GROUND III ARE ALLOWED IN CASE OF ALL THE ASSESSEE( S) AND GROUND NO.I IS DISMISSED AS NOT PRESSED. ALL THE THREE APP EALS (ITA NO.500 TO 502/IND/2018) ARE PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 14.10. 2020. SD/- SD/- ( KUL BHARAT) (MANI SH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 14 OCTOBER, 2020 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE
