STATE BANK OF INDIA, Surat V. Add. CIT,TDS Range, , Surat

ITA 56/SRT/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2378 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-03-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 31-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SINGLA
• Keywords: Salary income; Reasonable cause; Condonation of delay; TDS
• Section: 10; 201; 192; 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM &DR. A.L.SAINI, AM आयकर अपीलसं./ITA Nos.50 to 58/SRT/2019 (Ǔनधा[रणवष[ / Assessment Years: (2012-13 to 2014-15) (Virtual Court Hearing) State Bank of India Regional Business Office-IV, 2 nd Floor, Sai Leela Mall, Nr .Railway Bridge, Dharampur Road,Abrama,Valsad-396001 Vs. Additional CIT, TDS Range, Surat. ̾थायीलेखासं./जीआइआरसं./PAN/GIR No.: AAACS8577K (Applicant) (Respondent) आयकर अपीलसं./ITA Nos.73 to 77/SRT/2019 (िनधाᭅरणवषᭅ / Assessment Years: (2013-14 to 2014-15) State Bank of India Regional Business Office-IV, 2 nd Floor, Sai Leela Mall, Nr. Railway Bridge, Dharampur Road,Abrama,Valsad-396001 Vs. Additional CIT, TDS Range, Surat. ᭭थायीलेखासं./जीआइआरसं./PAN/GIR No.: AAACS8577K (Applicant) (Respondent) Assessee by : Shri Divyang J. Shah, C.A Revenue by : Ms. Anupama Singla, Sr-DR सुनवाई कᳱ तारीख/ Date of Hearing : 08/03/2022 घोषणा कᳱ तारीख/Date of Pronouncement : 25/03/2022 आदेश / O R D E R PER BENCH: Captioned bunch of fourteen appeals filed by single assessee, pertaining to assessment years (AYs) 2012-13 to 2014-15, are directed against the separate orders passed by the Learned Commissioner of Income Tax(Appeals)-Valsad/3- Surat, [for short “ld. CIT(A)”], which in turn arise out of separate penalty orders passed by the Assessing Officer under section 271C of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). Page | 2 ITA No.50 to 58/SRT/2019 & 73 to 77/SRT/2019 AYs. 2012-13 to 2013-14 & 2013-14 to 2014-15 State Bank of India 2. At the outset, Shri Divyang J Shah, Ld. Authorized Representative (AR) of the assessee states that all assessee’s appeals are barred by limitation by 150, 144 and 174 days respectively. The ld Counsel has stated that assessee has filed separate petitions for condonation of delay, requesting the Bench to condone the delay in filing these fourteen appeals. The contention raised by the assessee in sample affidavit, in ITA No.50/SRT/2019, (explaining the reasons for late filing of these appeals before the Tribunal), is reproduced below: “I, Shri Ashok Vadera (above stated person) hereby confirm the fact that State Bank of India was in appeal in front of first appellate authority against the order passed u/s 271C of the Act in case of ‘State Bank of India, Station Road Branch, Valsad; Vide TAN-SRTS04036E for AY 2012-13”. IMPUGNED ORDER also confirm the fact that State Bank of India was also in receipt of First Appellate order for above stated appeal. For filing a second appeal in above case, an approval is required from “Deputy General Manager-Banking & Operation (Surat Area Office)” of State Bank of India [hereinafter referred as DGM-B&O (SAO)].Further, before granting approval by DGM-B&O(SAO), he also have to take recommendation from appropriate authority from Local Head Office situated at Ahmedabad for given matter. Due to this reason (which merged with other tiny issues), DGM- B&O(SAO) can accord his approval only as on 24/01/2019 for above state matter. Thus, for given matter, due to following reasons, there is a delay in filing second appeal under Income tax Act:- i) DGM-B&O (SAO) have to take recommendation from appropriate authority from Ahmedabad for given matter, and ii) Thus, Chief Manager-Human Resource (Surat Area Office) was in receipt of approval only on 24/01/2019 Due to above stated reason, there is a reasonable cause because of which there is delay in filing second appeal in above state mater. Due to this reason, we request your honour to condone the delay in filing appeal for given matter. I, Shri Ashokkumar Ramniklal Vadere (Deponnt), declare and verify that the above mentioned contents are true to best of my knowledge.” 3. Learned AR submits that based on the reasons given in the affidavit, the delay in filing the appeal may be condoned. 4. On the other hand, Ms. Anupama Singla, Ld. Sr. Departmental Representative (Sr.DR) for the Revenue, strongly opposed the prayer for condonation of delay and submits that delay in filing in these appeals should not be Page | 3 ITA No.50 to 58/SRT/2019 & 73 to 77/SRT/2019 AYs. 2012-13 to 2013-14 & 2013-14 to 2014-15 State Bank of India condoned merely because of the reasons that Chief Manager of the Bank-Human Resource, has to take approval from higher authorities and in taking the approval the delay has occurred. Therefore, Ld. Sr.DR argues that delay in filing these appeals may not be condoned. 5. We have heard both the parties on this preliminary issue. We note that before filing second appeal before the Tribunal, the branch manager has to inform to the Chief Manager of the Bank-Human Resource. Then Chief Manager of the Bank-Human Resource, has to take permission from Deputy General Manager- Banking & Operation. This is Public sector Bank and has to follow the procedure mentioned in their internal control system, therefore delay has occurred in following the steps mentioned in their internal process. We are of the view that provisions of law have to be adhered strictly and that one cannot be allowed to act in leisure and make a mockery of enacted law, because law and provisions are laid down to benefit both sides of litigation. Be that as it may, we have to do justice and the Hon’ble Supreme Court in the case of Collector, Land Acquisition vs Mst. Katiji and others , reported in 167 ITR 471, (1988 SC 897) (7) has observed as follows: “4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay.” 6. When we weigh these two aspects then the side of justice becomes heavier and casts a duty on us to deliver justice. We note that reasons given in the affidavit for condonation of delay were convincing and these reasons would constitute reasonable and sufficient cause for the delay in filing these appeals. We, therefore, condone the delay in each appeal and admit all the appeals for hearing. 7. Since, the issues involved in all these fourteen appeals are common and identical; therefore, these appeals have been clubbed and heard together and are being disposed of by this consolidated order. For the sake of convenience, the Page | 4 ITA No.50 to 58/SRT/2019 & 73 to 77/SRT/2019 AYs. 2012-13 to 2013-14 & 2013-14 to 2014-15 State Bank of India grounds as well as the facts narrated in ITA No.50/SRT/2019, for assessment year 2012-13, have been taken into consideration for deciding the above appeals en masse. 8. The grounds of appeal raised by the assessee in “lead case” in ITA No.50/SRT/2019, for A.Y 2012-13, are as follows: 1. Whether, on facts and in circumstances of the case and in law, Ld. Assessing Officer has erred in levying penalty of Rs.64,260/- u/s 271C of the Act.” 9. When these appeals were called out for hearing, learned counsel for the assessee invited our attention to the order dated 27.01.2021, passed by the Division Bench of ITAT Mumbai in assessee’s own case, vide order reported in Taxmann, [State Bank of India, 123 taxmann.com 447 (Mum-Trib), whereby the issue relating to LTC/LFC involving enroute foreign travel have been discussed and adjudicated in favour of assessee. Learned counsel for the assessee submitted that these fourteen appeals are squarely covered by the aforesaid order of the Tribunal, a copy of which was also placed before the Bench. 10. However, Ld. Sr.DR relied on the orders of authorities below. 11. We see no reason to take any other view of the matter than the view so taken by Division Bench of ITAT Mumbai, in assessee’s own case (supra), In this order, the Tribunal has inter alia observed as follows: “7. As we proceed to adjudicate on connection of the impugned demands, it is important to bear in mind while dealing with the demands relating to a tax deduction of at source from payments of salaries that there is a subtle line of demarcation between what is taxable in the hands of the assessee and what is the amount of estimated income in respect of which tax is required to be deducted at source by the employer. Section 192 (1), which imposes tax withholding obligations on the employers in respect of payments for salaries, requires that tax deduction is made by the employer "on the estimated income of the assessee under this head (i.e., income from salaries) for that financial year". Thus, the tax withholding obligation is clearly in respect of "estimated income of the assessee" and not in respect of "taxable income of the assessee". The mere fact of taxability of a payment in not in respect of "taxable income the hands of an assessee under this head". Clearly, therefore, taxability of an income, in the hands of the employee concerned, under the head' income from salaries' per se is thus not sufficient to invoke the tax withholding obligations of the employer. There can be situations in which the employer genuinely Page | 5 ITA No.50 to 58/SRT/2019 & 73 to 77/SRT/2019 AYs. 2012-13 to 2013-14 & 2013-14 to 2014-15 State Bank of India and reasonably estimates income of the employees under the head salaries, and yet actual taxability of income under the head salaries of the related employees may be higher than employer's estimation. Therefore, while examining the question as to whether the employer has properly discharged his duties under section 192, all that is to be seen is whether the employer has reasonably, or bona fide, estimated the income of the employees and deducted tax in respect of such estimated income. As long as the conduct of the employer in this exercise is bona fide, he cannot be said to be wanting in his conduct under section 192. Explaining this legal position, in the oft- quoted landmark judgment in the case of Gwalior Rayon Co. Silk Co. Ltd. v. CIT [1983] 14 Taxman 99/140 ITR 832 (MP), Hon'ble Madhya Pradesh High Court judgment has, inter alia, observed that, "A duty is cast on an employer to form an opinion about the tax liability of his employee in respect of the salary income. While forming this opinion, the employer is undoubtedly expected to act honestly and fairly. But if it is found that the estimate made by the employer is incorrect, this fact alone, without anything more, would not inevitably lead to the inference that the employer has not acted honestly and fairly. Unless that inference can be reasonably raised against an employer, no fault can be found with him. It cannot be held that he has not deducted tax on the estimated income of the employee". We humbly bow to the law so laid down by Their Lordships, and this, in our humble understanding, the correct and applicable legal position consistently followed by several coordinate benches of this Tribunal. There is not even a whisper of dissent on this point. It is in this light that we have, therefore, proceed further. The question that we need to, therefore, address is whether the action of the employer in not deducting tax at source from the leave travel facility in question could be said to be reasonable or bona fide. Let us, in this backdrop, take a look at the related legal provisions under section 10(5) read with rule 2 B: Section 10(5)- exemption in respect of leave travel concession 10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included ** ** ** (5) in the case of an individual, the value of any travel concession or assistance received by, or due to, him,— (a) from his employer for himself and his family, in connection with his proceeding on leave to any place in India; (b) from his employer or former employer for himself and his family, in connection with his proceeding to any place in India after retirement from service or after the termination of his service, Subject to such conditions as maybe prescribed (including conditions as to number of journeys and the amount which shall be exempt per head) having regard to the travel concession or assistance granted to the employees of the Central Government; Provided that the amount exempt under this clause shall in no case exceed the amount of expenses actually incurred for the purpose of such travel Page | 6 ITA No.50 to 58/SRT/2019 & 73 to 77/SRT/2019 AYs. 2012-13 to 2013-14 & 2013-14 to 2014-15 State Bank of India (remaining statutory provision not reproduced as it is not considered to be relevant for the present discussion) Conditions for the purpose of section 10(5) as prescribed under rule 2 B of the Income-tax Rules, 1962 2B. (1) The amount exempted under clause (5) of section 10 in respect of the value of travel concession or assistance received by or due to the individual from his employer or former employer for himself and his family, in connection with his proceeding— (a) on leave to any place in India; (b) to any place in India after retirement from service or after the termination of his service, shall be the amount actually incurred on the performance of such travel subject to the following conditions, namely:— (i) where the journey is performed on or after the 1st day of October, 1997, by air, an amount not exceeding the air economy fare of the national carrier by the shortest route to the place of destination; (ii) where places of origin of journey and destination are connected by rail and the journey is performed on or after the 1st day of October, 1997, by any mode of transport other than by air, an amount not exceeding the air- conditioned first class rail fare by the shortest route to the place of destination; and (iii) where the places of origin of journey and destination or part thereof are not connected by rail and the journey is performed on or after the 1st day of October, 1997, between such places, the amount eligible for exemption shall be:— (A) where a recognised public transport system exists, an amount not exceeding the 1st class or deluxe class fare, as the case may be, on such transport by the shortest route to the place of destination; and (B) where no recognised public transport system exists, an amount equivalent to the air-conditioned first class rail fare, for the distance of the journey by the shortest route, as if the journey had been performed by rail. (remaining statutory provision not reproduced as it is not considered to be relevant for the present discussion) 8. A plain reading of the above provisions does not indicate any requirement of taking the shortest route for travelling to "any place in India" or putting any kind of restrictions the route to be adopted for going to such a destination. Quite to the contrary, the statutory provisions do envisage the possibilities of someone taking a route other than the shortest route, as is implicit in the restriction that "an amount not exceeding the air economy fare of the national carrier by the shortest route to the Page | 7 ITA No.50 to 58/SRT/2019 & 73 to 77/SRT/2019 AYs. 2012-13 to 2013-14 & 2013-14 to 2014-15 State Bank of India place of destination" will only be eligible for exemption under section 10(5). What is essentially implies, to give a simple example, is that if someone is based in Mumbai and he decides to go to Delhi via, let us say, Lucknow, Kolkata, or Chennai, the amount admissible for exemption under section 10(5) will be restricted to the price of direct flights between Mumbai and Delhi on the national carrier. This proposition is not even disputed by the income tax department. The question, however, arises whether when the same person goes to Delhi, via Dubai, the exempt leave travel concession being restricted to the price of Mumbai Delhi direct flight. Of course, the stand of the income tax department is that even the cost of the direct flight from Mumbai to Delhi, on the national carrier- assuming that it is less than Mumbai- Dubai-Delhi airfare, will not be admissible leave travel assistance exemption in such a case. That is the approach approved by the coordinate benches as well, and, therefore, we need not question that at this stage. The relevant question, however, is not the actual status of taxation; the relevant question is whether the assessee employer could be said to unreasonable or mala fide in proceeding on the basis that in such a situation also, the cost of a direct flight between Mumbai Delhi on national airlines will be available for exemption under section 10(5). When we look at the detailed statement of facts, extracts from which have been extensively reproduced by us earlier in this order, we do not find anything wrong or unreasonable in the conduct of the assessee employer. There is no specific bar in the law on the travel, eligible for exemption under section 10(5), involving a sector of overseas travel, and, in the absence of such a bar, the assessee employer cannot be faulted for not inferring such a bar. The reimbursement is restricted to airfare, on the national carrier, by the shortest route- as is the mandate of rule 2B. The employee has actually travelled, as a part of that composite itinerary involving a foreign sector as well, to the destination in India. The guidance available to the assessee employer indicates that, in such a situation, the exemption under section 10(5) is available to the employee- though to the extent of farthest Indian destination by the shortest route, and that is what the assessee employer has allowed. In the light of this analysis of the legal position and the factual backdrop, whatever may be the position with respect of taxability of such a leave travel concession in the hands of the employee, the assessee employer cannot be faulted for not deducting tax at source from the leave travel concession facility allowed by him to the employees. As we hold so, we may add that we have not really addressed ourselves to the larger question with respect to the actual taxability of this leave travel concession in the hands of the employees concerned, even though we have our prima facie reservations on the coordinate benches decisions holding taxability of these amounts in the hands of the employees concerned, because that aspect of the matter is not really relevant as on now. We leave it at that for the time being. The coordinate bench decisions deal with only the issue of taxability of leave travel facility under section 10(5) and not with the broader question about the nature of tax deduction at source liability under section 192, as also the issue about bona fides of the stand of the assessee employer. These decisions, therefore, do not come in the way of our present decision. Once we hold, as we do in this case, that estimation of income, in the hands of the employees under the head' income from salaries', by the employer was bona fide and reasonable, the very foundation of impugned demands raised under section 201 r.w.s 192 ceases to hold good in law. We must, therefore, vacate these demands. 9. In view of the above discussions, as also bearing in mind entirety of the case, we cancel the impugned demands under section 201 r.w.s. 192 as unsustainable in law. Page | 8 ITA No.50 to 58/SRT/2019 & 73 to 77/SRT/2019 AYs. 2012-13 to 2013-14 & 2013-14 to 2014-15 State Bank of India Ground no 3 is thus allowed, and all the remaining grounds of appeal are dismissed as infructuous. The assessee gets the relief accordingly. 10. As we part with the matter, we have a couple of observations to make. The first observation is this. Mr.Khlasa, learned Departmental Representative, upon being explained the legal position during the course of hearing, did not have much to say and he graciously left the matter to us. His short point, however, was that the fact that whether entire travel costs are borne by the employer or whether only the partial costs, limited to direct flight on the shortest route and as per the national carrier, are borne by the employer, is not unambiguous from the findings of the authorities below, and the matter should, at least for this verification, be restored to the file of the Assessing Officer. We see no merits in this plea. It has been a specific stand of the assessee all along that the leave travel facility extended by the assessee employer is restricted to the cost of direct flights, on the national carrier, by the shortest route taken, and that is reiterated in the statement of facts filed before the CIT(A) as well. This stand of the assessee remains uncontroverted. There is no reason to doubt the same and prolong the proceedings. In case the Assessing Officer finds that this relief is based on incorrect facts, its open to him to seek appropriate remedy by, inter alia, seeking a recall of this order, but, on our own and merely to double-check, we are not inclined to remit the matter to the file of the Assessing Officer. Inconvenience to the assessee and smallness of the amounts involved apart, this is a case of a public sector undertaking, and any unnecessary further prolonging of the proceedings can only at the cost of taxpayers' hard-earned monies. We must avoid that. The second point we must make is that we are alive to the fact that on materially identical facts, the coordinate benches have decided the matter against the assessee by holding that exemption under section 10(5) is not available to the employees on the facts of these cases. That does not, however, affect our conclusions, which are essentially based on our interpretation about the impact of section 192(1) so far as obligations of the assessee employer are concerned, and, in none of the cases cited before us, any findings are given about the mala fides, or even lack of bonafides, on the part of the assessee employer. There is thus no conflict between our decision and the coordinate bench decisions in similarly placed cases; the path we have followed is different, and so are the conclusions we have arrived at. With the greatest respect to the coordinate benches, but without the slightest hesitation, we are of the view that the core issue in appeal remained unaddressed in these coordinate bench decisions, and, therefore, even though these coordinate benches decisions are in respect of similarly situated cases, these decisions do not bind us on the conclusions. Finally, we must place on record our deep appreciation for a very well-drafted statement of facts and the grounds of appeal, which, in the absence of any assistance during the course of hearing, were indeed of immense help to us.” 12. As the issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench, in assessee`s own case and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Coordinate Bench (supra). We find no reason to interfere in the said order of the Coordinate Bench, therefore, respectfully following the binding Page | 9 ITA No.50 to 58/SRT/2019 & 73 to 77/SRT/2019 AYs. 2012-13 to 2013-14 & 2013-14 to 2014-15 State Bank of India judgment of the Coordinate Bench in assessee’s own case we delete the delete the penalty. 13. As we have noted that similar and identical facts are involved in these fourteen appeals, therefore, respectfully following the binding decision of ITAT Mumbai, in assessee’s own case (supra), we allow all the assessee’s appeals and delete the penalty levied by Assessing Officer, under section 271C of the Act. We order accordingly. 14. In the result, all the fourteen (14) appeals of the assessees are allowed. A copy of the instant common order be placed in the respective case folder / file(s). Order is pronounced on 25/03/2022 by placing result on Notice Board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat ᳰदनांक/ Date: 25/03/2022 Dkp Outsourcing Sr.P.S/**SS Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat