M/s.Roads & Bridges Development Corporation of Kerala Ltd, Ernakulam V. The Jt CIT(TDS), Ernakulam

ITA 524/COCH/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4050 (ITAT-COCHIN)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 09-08-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 17-11-2015
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: K GOPI
• Keywords: Reasonable cause; Ignorance of law
• Section: 273B

Judgement Text

ITA NO./524COCH/2015 1 , IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN . . , ., ! ! ! ! BEFORE S/SHRI B. P. JAIN, AM & GEORGE GEORGE K., JM ' ' ' ' ./ I.TA NO.524/COCH/2015 ( #$ % /ASSESSMENT YEAR : 2007-08) ROADS & BRIDGES DEVELOPMENT COPN. OF KERALA LTD., 2 ND FLOOR, PREETHY BUILDING, M.V. ROAD, PALARIVATTOM, KOCHI-682 025. VS THE JT. COMMISSIONER OF INCOME- TAX, TDS, ERNAKULAM. ( &' &' &' &' /ASSESSEE APPELLANT) ( ( (( ( ) ) ) ) &' &'&' &' /REVENUE -RESPONDENT) & . . ' ./PAN NO. AABOR 7841Q &' * + /ASSESSEE BY SHRI K. GOPI, CA ( ) &' * + /REVENUE BY SHRI A. DHANARAJ, SR. DR ,- * ./ / DATE OF HEARING 09/08/2016 0 % * ./ /DATE OF PRONOUNCEMENT 10/08/2016 1 1 1 1 /ORDER PER B.P. JAIN, AM: THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER O F THE LD. CIT(A)-III, KOCHI DATED 12/08/2015 FOR THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN CONFIRMING THE LEVY OF PENALTY U/S. 271C. HE OUGHT TO HAVE NOTICE D THAT TAX REQUIRED TO BE ITA NO./524COCH/2015 2 COLLECTED AT SOURCE UNDER SECTION 206(1C) OF THE I. T. ACT HAS BEEN SINCE DEPOSITED WITH THE GOVERNMENT AND THERE WAS ONLY A DELAY IN DEPOSITING THE AMOUNT AND THE APPELLANT HAD REMITTED INTEREST ALSO FOR THE SAID DELAY. 2. THE LEARNED CIT(A) OUGHT TO HAVE NOTICED THAT THE PAYER OF THE TOLL FROM WHOM TAX IS REQUIRED TO BE COLLECTED AT SOURCE HAD INCLUDED THE TOLL RECEIPTS AND PAID THE TAX THEREOF TO THE GOVERNMENT. SINCE THE APPELLANT HAS REMITTED THE TAXES DUE ALONG WITH INTEREST, THE LEARNED CIT( A) OUGHT TO HAVE NOT CONFIRMED THE PENALTY. 3. IT IS SUBMITTED THAT THE ORDER OF THE LEARNED CIT(A) CONFIRMING A PENALTY EQUAL TO THE TAX COLLECTIBLE AT SOURCE INSPITE OF T HE FACT THAT THE APPELLANT HAS SINCE REMITTED THE TAX ALONG WITH THE INTEREST IS N OT IN ORDER. THE ORDER OF THE LEARNED CIT(A) IS UNEQUITABLE. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE FURTH ER ADDUCED AT THE TIME OF HEARING THE ORDER OF THE LEARNED COMMISSIONER OF IN COME TAX(APPEALS) REQUIRES TO BE MODIFIED TO THE EXTENT APPEALED AGAI NST. 3. THE BRIEF FACTS OF THE CASE ARE THAT PENALTY U/S. 271CA (WRONGLY WRITTEN AS 271C) OF THE INCOME TAX ACT, 1961 WAS LEVIED BY THE JOINT COMMISSIONER OF INCOME TAX (TDS), ERNAKULAM WHOSE ORDER DATED 12-02 -2009 IS REPRODUCED HEREINBELOW FOR THE SAKE OF CONVENIENCE: 1) THE ASSESSEE IS THE NODAL AGENCY FOR INFRASTRUC TURE DEVELOPMENT. IT IS ALSO RESPONSIBLE FOR INFRASTRUCTURE DEVELOPMENT. IT IS A LSO RESPONSIBLE FOR THE COORDINATING WITH VARIOUS GOVERNMENT DEPARTMENTS AN D AGENCIES FOR THE SPEEDY EXECUTION OF INFRASTRUCTURE RELATED WORKS. 2) DURING THE FINANCIAL YEAR RELEVANT TO AY 2006-07 THE COMPANY HAD AWARDED TWO CONTRACTS TO ONE MR. DILEEP KUMAR OF TR ISSUR FOR COLLECTING THE BRIDGE TOLL FROM SN JUNCTION, IRUMBANAM AND CHITRAP UZHA BRIDGE IN ERNAKULAM FOR RS.24033333/- FOR THE PERIOD 15.5.200 6 TO 14.5.2007 AND RS.3033333 FOR THE PERIOD 31.5.2006 TO 31.5.2007 FO R THE PULMANTHOLDE RIVER BRIDGE. ITA NO./524COCH/2015 3 3) NOTICE U/S. 271C OF THE INCOME TAX ACT WAS ISSUE D ON 20.1.2009 ASKING THE ASSESSEE TO SHOW CAUSE WHY PENALTY SHOULD NOT BE IM POSED UPON IT FOR THE FAILURE TO COLLECT THE AMOUNT. 4) MR. MANOJ BABU THE ADMINISTRATIVE OFFICER OF THE COMPANY APPEARED AND STATED THAT THE COMPANY WAS NOT AWARE OF THE PROVIS ION AND AS SOON AS THEY WERE INFORMED ABOUT THIS, THEY DEPOSITED THE TAX NO T DEDUCTED AS WELL AS THE INTEREST CHARGED BY THE ACIT(TDS) ERNAKULAM IN HER ORDER DATED 22.4.2008 FOR FINANCIAL YEAR 2006-07. BUT WITH RESPECT TO TH E FINANCIAL YEAR 2007-08 IT WAS STATED THAT SHRI DILEEP KUMAR HAD PAID THE TAX ON THE INCOME AND THEREFORE ONLY THE INTEREST FOR THE DELAY HAS TO BE PAID BY THEM. 5) I HAVE CONSIDERED THE ASSESSES EXPLANATION. IT IS NOT SATISFACTORY. IGNORANCE OF LAW IS NO EXCUSE. MOREOVER MERELY BECA USE THE ASSESSEE HAS PAID THE TAX NOT COLLECTED SUBSEQUENTLY IT DOES NOT NECESSARILY FOLLOW THAT THE PENALTY IS NOT IMPOSABLE. THE TAX PAYABLE AND THE PENALTY IMPOSABLE ARE COMING UNDER TWO SEPARATE SECTIONS OF THE INCOME TA X ACT. 6) THEREFORE AFTER DUE CONSIDERATION I IMPOSE PENAL TY OF RS.449424 WHICH IS THE TAX DEDUCTIBLE @ 2% ON THE RECEIPTS DURING THE YEAR AS DETERMINED IN THE ORDER OF THE ACIT(TDS) ERNAKULAM. 6) ISSUE DEMAND NOTICE, CHALLAN AND COPY OF THIS O RDER. (SD/-) SUSAN GEORGE VARGHESE JT. COMMISSIONE R OF INCOME TAX, TDS ERNAKULAM 4. THE LD. CIT(A) CONFIRMED THE ACTION OF THE AS SESSING OFFICER. 5. IT WAS ARGUED BY THE LD. COUNSEL FOR THE ASSE SSEE THAT NO PENALTY SHOULD BE IMPOSED SINCE THE ASSESSEE WAS UNDER THE BONA FIDE BELIEF THAT NO TAX IS TO BE COLLECTED UNDER THE ACT IN RESPECT OF THE CONTRACT REFERRED TO HEREINABOVE. THE RELATIVE INCOME HAS BEEN INCLUDED BY THE CONTRACTOR AND THERE IS NO DELIBERATE INTENTION TO DEFAULT THE COLLECTION AND REMITTANCE OF TAX. AS SOON AS THE MATTER ITA NO./524COCH/2015 4 WAS BROUGHT TO THE ATTENTION OF THE APPELLANT, THE INTEREST FOR DELAY WHICH WAS DEMANDED IN THE ASSESSMENT ORDER WAS REMITTED. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISIONS OF VARIOUS COURT S OF LAW. 6. THE LD. DR ON THE OTHER HAND RELIED UPON THE OR DERS OF BOTH THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE FACTS OF THE CASE. AT THE OUTSET, WE WOULD LIKE TO READ SECTION 206C(6) W HERE ANY PERSON RESPONSIBLE FOR COLLECTING THE TAX FAILS TO COLLECT THE TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION SHALL, NOTWITHSTANDING SUCH FAILURE, B E LIABLE TO PAY TAX TO THE CREDIT OF THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE PR OVISIONS OF SUB-SECTION (3). 8. IN THE PRESENT CASE, THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS FAILED TO COLLECT TAX IN ACCORDANCE WITH THE PROVISIONS OF SECTION 206C OF THE INCOME TAX ACT, 1961. IF WE READ SECTION 271CA, WHERE IT IS PROVIDED THAT IF ANY PERSON FAILS TO COLLECT TAX THE WHOLE OR ANY PART OF THE T AX, AS REQUIRED BY OR UNDER THE PROVISIONS OF CHAPTER XVIIBB, THEN, SUCH PERSON SHA LL BE LIABLE TO PAY, BY WAY OF PENALTY, A SUM EQUAL TO THE AMOUNT OF TAX WHICH SUC H PERSON FAILED TO COLLECT AS AFORESAID. UNDER SECTION 271CA(2), ANY PENALTY IMPOSABLE UNDER SUB-SECTION (1) SHALL BE IMPOSED BY THE JOINT COMMISSIONER. ITA NO./524COCH/2015 5 9. IN THE PRESENT CASE, PENALTY HAS BEEN LEVIED BY THE JOINT COMMISSIONER OF INCOME TAX IS NOT UNDER DISPUTE AS PER HER ORDER RE PRODUCED HEREINABOVE WHICH IS DATED 12/02/2009, BUT THE FAILURE TO COLLE CT THE WHOLE OF THE TAX AS REQUIRED U/S. 206C OF THE ACT WHICH FALLS UNDER CHA PTER XVIIBB OF THE INCOME TAX ACT, 1961, RATHER ESSENTIALLY, SUCH PERSON SHALL BE LIABLE TO PAY BY WAY OF PENALTY IMPOSED BY THE JOINT COMMISSIONER OF INCOME TAX A S UM EQUAL TO THE AMOUNT OF TAX WHICH SUCH PERSON FAILED TO COLLECT AS AFORE SAID WHICH HAS BEEN CORRECTLY DONE IN THE PRESENT CASE. THE ONLY ESCAPE ROUTE FO R THE ASSESSEE ARE THE PROVISIONS CONTAINED IN SECTION 273B WHERE PENALTY IS NOT TO BE IMPOSED IN SUCH CASES UNDER CERTAIN CONDITIONS WHERE THE ASSESSEE R EFERRED TO IN SECTION 273B PROVES THAT THERE WAS REASONABLE CAUSE FOR SUCH FAI LURE. ESSENTIALLY, PENALTY U/S. 271CA IS REFERRED IN SECTION 273B OF THE INCOME TAX ACT, 1961. THE ASSESSEE IS ACCORDINGLY LIABLE TO PROVE THE REASONABLE CAUSE FO R THE SAID FAILURE. IN THIS REGARD, THE LD. COUNSEL FOR THE ASSESSEE HAS ARGUED THAT THE ASSESSEE WAS UNDER THE BONA FID BELIEF THAT NO TAX IS TO BE COLLECTED UNDER THE ACT IN RESPECT OF THE CONTRACT AND WHEN IT WAS BROUGHT TO THE ATTENTION O F THE APPELLANT THE SAID FAILURE, THE APPELLANT STARTED COMPLYING WITH THE P ROVISIONS THEREAFTER AND THERE WAS NO DELIBERATE INTENTION OF DEFAULT IN COLLECTIO N AND REMITTANCE OF TAX AND THIS, ACCORDING TO THE ASSESSEE BECOMES REASONABLE CAUSE U/S. 273B OF THE ACT FOR THE SAID FAILURE OF NOT COLLECTING AND REMITTIN G TAX TO THE INCOME TAX DEPARTMENT. ITA NO./524COCH/2015 6 10. AS REGARDS THE BONA FIDE BELIEF FOR NOT COLL ECTING AND REMITTING TAX AND THEREAFTER, WHEN IT WAS BROUGHT TO THE NOTICE OF TH E ASSESSEE, THE ASSESSEE STARTED COMPLYING WITH THE PROVISIONS OF THE INCOME TAX ACT, IT IS IN NO WAY A REASONABLE CAUSE FOR NOT COLLECTING AND REMITTING T AX U/S. 206C(6) OF THE INCOME TAX ACT, 1961. SUCH A CAUSE OR BELIEF CANNOT BE TE RMED AS REASONABLE CAUSE U/S. 273B OF THE INCOME TAX ACT, 1961 FOR NOT LEVYI NG PENALTY U/S. 271CA OF THE INCOME TAX ACT, 1961. NO DOCUMENTARY EVIDENCE OR A NY OTHER EVIDENCE HAS BEEN BROUGHT ON RECORD BEFORE ANY OF THE AUTHORITIE S BELOW OR EVEN BEFORE US TO ESTABLISH THE BONA FIDE BELIEF OR TO PROVE REASO NABLE CAUSE FOR NOT LEVYING PENALTY U/S. 271CA OF THE ACT. 11. THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE FOLLOWING CASES: 1. MUTHOOT BANKERS VS. JCIT(TDS)18 TAXMANN.COM 203 (COCH.) 2. ITO VS. BENARAS STATE BANK LTD. 160 TAXMAN 210 (ITAT, DELHI ) 3. XEN, IRRIGATION CONSTRUCTION DIVISION VS. JCIT 1 6 TAXMANN.COM 279 (ITAT , JODHPUR) 4. DCIT(TDS) VS. SMS INDIA LTD. 7 SOT 424 (ITAT, MU M.). ALL THE CASES RELIED UPON BY THE LD. COUNSEL FOR TH E ASSESSEE ARE WITH REGARD TO THE BONA FIDE BELIEF AND REASONABLE CAUSE WHICH IN FACT HAS NOT BEEN ESTABLISHED IN THE PRESENT CASE BEFORE US. RATHER, THE CASES RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE, ARE AGAINST THE ASSES SEE WHO HAS NOT ESTABLISHED THE REASONABLE CAUSE. IN SUCH CIRCUMSTANCES AND FA CTS OF THE CASE, WE FIND NO ITA NO./524COCH/2015 7 INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RI GHTLY CONFIRMED THE ORDER OF THE JCIT (TDS) IN LEVYING PENALTY U/S. 271CA OF THE ACT . THUS ALL THE GROUNDS OF THE ASSESSEE ARE DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT O N 10-08-2016 SD/- SD/- ( . ) (GEORGE GEORGE K.) ( . . ) (B. P. JAIN) /ACCOUNTANT MEMBER /JUDICIAL MEMBER & /PLACE: /COCHIN 2 /DATED: 10TH AUGUST, 2016 GJ/ 1 * (.3 43%. /COPY TO: 1. &' /ROADS & BRIDGES DEVELOPMENT COPN. OF KERALA LTD., 2 ND FLOOR, PREETHY BUILDING, M.V. ROAD, PALARIVATTOM, KOCHI-682 025. 2. () &' /THE JOINT COMMISSIONER OF INCOME-TAX(TDS), ERNAKULAM. 3. ,5 . ( )/THE COMMISSIONER OF INCOME-TAX(APPEALS)-III, KOCH I. 4. ,5 . /THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. 367 (. , /THE DR/ITAT, COCHIN BENCH. 6. 79 :- /GUARD FILE. 1, /BY ORDER ; /ASSISTANT REGISTRAR - .