M/s. Asha Builders Ltd., Phagwara V. The Joint Commissioner of Income Tax(TDS), Ludhiana

ITA 53/ASR/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0799 (ITAT-AMRITSAR)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 13-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL
• Keywords: Bonafide belief; Reasonable cause
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S. KAPOOR, HONBLE ACCOUNTANT MEMBER [ I.T.A NOS. 51, 52 & 53 (ASR)/2016 ASSESSMENT YEARS: 2007-08, 2008-09 & 2009-10 M/S. ASHA BUILDERS LTD. NAME CHANGED TO HAVELI RESTAURANT & RESORTS LIMITED, VILLAGE KHAJURLA, JALANDHAR PHAGWARA HIGHWAY, PHAGWARA. PAN:JLDA00401C VS. JCIT, (TDS), AAYAKAR BHAWAN, RISHI NAGAR, LUDHIANA. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SURINDER MAHAJAN (C A.) RESPONDENT BY: SH. S.S.KANWAL (DR.) DATE OF HEARING: 03.05. 2016 DATE OF PRONO UNCEMENT: 04.05.2016 ORDER PER T. S. KAPOOR (AM): THIS IS A BUNCH OF THREE APPEALS FILED BY ASSESSEE AGAINST THE SEPARATE ORDERS OF LEARNED CIT(A), ALL DATED 28.10. 2015. 2. IN ALL THESE APPEALS A COMMON ISSUE OF LEVY OF P ENALTY U/S 271C IS INVOLVED AND THESE APPEALS WERE HEARD TOGETHER, THE REFORE, FOR THE SAKE OF CONVENIENCE A COMMON AND CONSOLIDATED ORDER IS BEIN G PASSED. 3. THE ONLY GRIEVANCE INVOLVED IS THE ACTION O F LEARNED CIT(A) BY WHICH HE HAD CONFIRMED THE PENALTY IMPOSED BY ASSESSING O FFICER U/S 271(C) OF THE ACT. AT THE TIME OF HEARING THE LEARNED AR INVI TED OUR ATTENTION TO AN ITA NOS. 51, 52 & 53 (ASR)/2016 ASST. YEARS: 2007-08, 2008-09 & 2009-1 0 2 ADDITIONAL GROUND OF APPEAL WHICH HAS BEEN TAKEN IN ALL THE APPEALS AND WHICH READ AS UNDER: THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, P ENALTY IMPOSED U/S 271C OF THE ACT IS ILLEGAL AND BAD IN LAW SINCE ASS ESSEE HAS NOT BEEN HELD ASSESSEE IN DEFAULT U/S 201(1) OF THE ACT. PENALTY U/S 271C IS CONSEQUENTIAL IN NATURE FOR THE DEFAULT COMMITTED U /S 201(1) OF THE ACT. ADDITIONAL GROUND INVOLVING LEGAL ISSUES CAN BE RAI SED, KEEPING IN VIEW JUDGMENT OF THE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER CO LTD. COMMISSIONER OF INCOME TAX 299 ITR 383. 4. THE LEARNED AR SUBMITTED THAT SINCE THE ADDITION AL GROUND WAS A LEGAL GROUND AND IN VIEW OF THE HONBLE SUPREME COU RT JUDGMENT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. COMMISSIONER OF INCOME TAX 229 ITR 383 , IT CAN BE RAISED AT ANY STAGE. 5. THE LEARNED DR DID NOT OBJECT TO THE ADMISSION O F ADDITIONAL GROUND RAISED IN THE APPEALS. WE FIND THAT THE GROU ND TAKEN BY ASSESSEE IS A LEGAL GROUND AND THEREFORE WE ADMITTED IT FOR ADJUDICATION. 6. INVITING OUR ATTENTION TO THE FACTS OF THE CASE THE LEARNED AR SUBMITTED THAT ASSESSEE HAD MADE CERTAIN PAYMENTS O N ACCOUNT OF INTEREST TO NON BANKING, FINANCIAL COMPANIES AND IN VIEW OF ITS BONAFIDE BELIEF THAT IT WAS NOT REQUIRED TO DEDUCT TDS ON PA YMENTS OF INTEREST TO NON-BANKING FINANCIAL COMPANIES THE TAX WAS NOT DED UCTED. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER PASSED THE PEN ALTY ORDER U/S 271C WITHOUT DECLARING THE ASSESSEE AN ASSESSEE IN DEFAU LT U/S 201(1) OF THE ACT WHICH IS BAD IN LAW. INVITING OUR ATTENTION TO THE PROVISIONS OF SECTION 201(1), THE LEARNED AR SUBMITTED THAT W.E.F. 1.07.2 012, THE ASSESSEE ITA NOS. 51, 52 & 53 (ASR)/2016 ASST. YEARS: 2007-08, 2008-09 & 2009-1 0 3 CANNOT BE SAID TO BE AN ASSESSEE IN DEFAULT FOR NON DEDUCTION OF TAX IF THE PERSON TO WHOM INTEREST PAYMENTS WERE MADE HAD DECLARED SUCH INCOME IN THEIR INCOME TAX RETURNS. HE SUBMITTED TH AT ADMITTEDLY THE PAYEES OF INTEREST HAD DECLARED THEIR INCOME IN THE IR TAX RETURNS AND THIS PLEA WAS TAKEN BEFORE THE ASSESSING OFFICER AND LEA RNED CIT(A) BUT IT WAS NOT ACCEPTED BY THEM. IT WAS SUBMITTED THAT LEARNED CIT(A) HAD NOT ACCEPTED THE PLEA OF ASSESSEE HOLDING THAT THE PROV ISIONS WERE AMENDED ONLY ON 1.07.2012 AND THE CASES INVOLVED WERE PRIOR TO 1.07.2012. CONTINUING HIS ARGUMENTS THE LEARNED AR INVITED OUR ATTENTION TO AN ORDER OF CHANDIGARH TRIBUNAL DATED 14.10.2015 IN TH E CASE OF H.P. STATE ELECTRICITY BOARD VS. ACIT, IN ITA NO. 38 TO 41/CHD /2015 AND SUBMITTED THAT IN THAT CASE THE HONBLE BENCH HAD DELETED THE PENALTY HOLDING THAT ASSESSEE WAS NOT DECLARED AS ASSESSEE IN DEFAULT AN D THE ASST. YEARS INVOLVED WERE 2007-08 TO 2010-11 WHICH WERE ALSO BE FORE 2012 AND THEREFORE, HE PRAYED THAT THE PENALTIES BE DELETED AS THERE WAS NO ORDER DECLARING THE ASSESSEE AS ASSESSEE IN DEFAULT U/S 2 01(1) OF THE ACT. 7. THE LEARNED DR, ON THE OTHER HAND SUBMITTED THAT ASSESSING OFFICER HAD DULY PASSED THE ORDER U/S 201(1) AND IN THIS RESPECT HE INVITED OUR ATTENTION TO THE ORDER DATED 07.03.2011 AND TOOK US TO THE LAST PARA OF THE ORDER AND THEREFORE, HE SUBMITTED THAT THE PENALTIES HAS BEEN RIGHTLY UPHELD. ITA NOS. 51, 52 & 53 (ASR)/2016 ASST. YEARS: 2007-08, 2008-09 & 2009-1 0 4 8. THE LEARNED AR IN HIS REJOINDER SUBMITTED THAT T HIS ORDER WAS PASSED U/S 201(1A) AND NOT U/S 201(1) AND THEREFORE , NO PENALTY WAS IMPOSABLE. 9. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT IT IS AN UN DISPUTED FACT THAT ORDER U/S 201(1A) WAS PASSED VIDE ORDER DATED 07.03 .2011 AND NO ORDER U/S 201(1) HAS BEEN PASSED AS THE ORDER POINTED OUT BY LEARNED DR WAS PASSED U/S 201(1A) AND NOT U/S 201(1). THE LEARNED DR WAS NOT ABLE TO POINT OUT ANY ORDER PASSED U/S 201(1) OF THE ACT. T HE AMENDED PROVISIONS OF SECTION 201 OF THE ACT ALSO STATES TH AT IF THE PERSON TO WHOM ANY AMOUNT HAS BEEN PAID WITHOUT DEDUCTION OF TAX A ND SUCH PERSON HAD TAKEN SUCH INCOME IN THEIR INCOME TAX RETURNS A ND HAD PAID TAXES ON SUCH INCOME THE ASSESSEE CANNOT BE SAID TO BE AN ASSESSEE IN DEFAULT. THE AUTHORITIES BELOW HAS NOT DISPUTED THIS FACT TH AT PAYEES OF INCOMES HAD DECLARED THE PAYMENTS IN THEIR INCOME TAX RETUR N AND THAT IS WHY ORDER U/S 201(1) HAS NOT BEEN PASSED AND IF THE ORD ER U/S 201(1) HAS NOT BEEN PASSED THE ASSESSEE CANNOT BE SAID TO BE ASSES SEE IN DEFAULT. THE HONBLE CHANDIGARH BENCH OF ITAT, IN ITA NOS. 38 TO 41 FOR ASST. YEARS 2007-08 TO 2010-11 IN ITS ORDER DATED 14.10.2015 UN DER SIMILAR CIRCUMSTANCES HAS DELETED THE PENALTY U/S 271(C) BY HOLDING AS UNDER. 11. IN THE PRESENT CASE, WE FIND THAT THE ASSESSEE HAS NOT BEEN TREATED AS AN ASSESSEE IN DEFAULT' AS PER SECTION 201 OF THE ACT AND IS THEREFORE NEITHER LIABLE TO DEDUCT NOR PAY ANY TAX AS PER CHA PTER XVII B. IN SUCH CIRCUMSTANCES, WE FIND THAT THE QUESTION OF LEVY OF PENALTY U/S 271C, DOES ITA NOS. 51, 52 & 53 (ASR)/2016 ASST. YEARS: 2007-08, 2008-09 & 2009-1 0 5 NOT ARISE. THIS VIEW HAS BEEN UPHELD BY THE HONBLE ITAT HYDERABAD IN THE CASE OF ACIT VS. M/S GOOD HEALTH PLAN LIMITED I N MA NO. 155/HYD/2013, WHEREIN PENALTY LEVIED U/S 271C WAS D ELETED SINCE THE ASSESSEE WAS NOT HELD TO BE AN ASSESSEE IN DEFAULT. THE HON'BLE TRIBUNAL WHILE DELETING THE PENALTY HELD AS FOLLOWS: 22. WHEN THE AO HIMSELF TREATED THE ASSESSEE AS AN ASSESSEE NOT IN DEFAULT IN RESPECT OF THE AMOUNTS OF TDS TO BE DEDU CTED, THEN THERE CANNOT BE ANY SCOPE FOR LEVYING PENALTY U/S 27IC OF THE AC T. AS IN THIS CASE THE AMOUNT OF TAX HAS BEEN PAID BY THE RECIPIENT OF THE INCOME. BEING SO, THE PROVISION OF SECTION 271C CANNOT BE APPLIED TO THE ASSESSEE'S CASE AS THESE PROVSIONS CLEARLY STATE THAT IF ANY PERSON TA ILS TO DEDUCT WHOLE OR ANY PART OF THE TAX AS REQUIRED UNDER THE PROVISION S OF CHAPTER XVII B , THEN SUCH PERSON SHALL BE LIABLE TO PAY BY WAY OF P ENALTY AN AMOUNT EQUAL TO THE AMOUNT OF TAX WHICH SUCH PERSON FAILED TO DE DUCT OR PAY AS ABOVE SAID. BEING SO, IN THE PRESENT CASE THE ASSESSEE BE ING NOT IN DEFAULT IN RESPECT OF THE AMOUNT OF TAX ITSELF, THERE CANNOT B E ANY LEVY OF PENALTY U/S 271C, MORE SO, WHERE THERE WAS A REASONABLE CAUSE F OR NOT DEDUCTING THE TDS ON THE PAYMENT MADE BY THE ASSESSEE. CONSIDERIN G THE CUMULATIVE EFFECT OF ALL THE FACTS AND CIRCUMSTANCES OF THE CA SE, WE ARE INCLINED TO CONFIRM DELETION OF PENALTY BY THE CIT/A).' IN VIEW OF THE SAME WE HOLD THAT NO PENALTY U/S 271 (C) COULD BE LEVIED IN THE PRESENT CASE. 10. WE FIND THAT THIS ORDER PERTAINS TO ASST. YEAR 2007-08 TO 2010-11 WHICH IS ALSO BEFORE THE AMENDMENT IN SECTION 201 W HICH HAPPENED TO BE IN 2012 AND THEREFORE, THE CONTENTIONS OF LEARNED C IT(A) THAT THE AMENDED PROVISIONS ARE NOT APPLICABLE TO ASSESSEE D O NOT HOLD ANY FORCE AND THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF CO-ORDINATE BENCHES WE DELETE THE PENALTIES CONFIRMED BY THE LEARNED CIT(A ). 11. IN VIEW OF THE ABOVE, THE APPEALS FILED BY ASSE SSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH MAY, 2016 SD/- SD/- (A.D. JAIN) (T . S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEM BER DATED:04.05.2016. /PK/ PS. ITA NOS. 51, 52 & 53 (ASR)/2016 ASST. YEARS: 2007-08, 2008-09 & 2009-1 0 6 COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER