Addl. CIT (TDS), Ghaziabad V. The Principal Officer, Ghaziabad

ITA 5699/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3943 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 09-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause
• Section: 201(1); 27

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 5699 AND 5700 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) ADDL CIT (TDS), CGO - 1, HAPUR CHUNGI, GHAZIABAD VS. THE PRINCIPAL OFFICER, M/S. NOIDA COMMERCIAL CO - OPERATIVE BANK LTD, SUNDARAM BUILDING, RAJNAGAR, GHAZIABAD PAN:AAABN0147M (APPELLANT) (RESPONDENT) REVENUE BY : SHRI ATIQ AHMAD, SR. DR ASSESSEE BY: SHRI KAPIL GOEL, ADV DATE OF HEARING 01/11/ 2017 DATE OF PRONOUNCEMENT 1 7 / 01 / 2018 O R D E R PER PRASHANT MAHARISHI , A. M. 1. TH ESE ARE THE APPEAL S FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A), GHAZIABAD DATED 21.07.2015 FOR THE ASSESSMENT YEAR 2012 - 13 AND 2013 - 14 . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO. 5699/DEL/2015 FOR THE AY 2012 - 13 : - 1. LD. CIT(A) GHAZIABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CANCELLING THE PENALTY U/S 271C VIDE ORDER DATED 21.07.2015 AMOUNTING TO 36,44,493/ - OBSERVING THAT ASSESSEE HAS REASONABLE CAUSE U/S 275 OF THE INCOME - TAX ACT, WHEREAS THERE WERE NO SUCH REASONABLE BR OUGHT ON RECORDS IN HIS FINDING BY THE CIT (A). 2 THE ID. CIT(A) GHAZIABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE PENALTY U/S.271C EVEN AFTER KEEPING IN VIEW THAT THE ORDER U/S 201(1) & 201(1 A) DATED 17.02.2014, TREATING THE ASSESSEE L IABLE FOR MAKING TDS U/S 194A IN RESPECT OF PAYMENT OF INTEREST, IN CONSEQUENT TO WHICH THE PENALTY U/S 271C HAS BEEN IMPOSED, WAS CONFIRMED BY THE CIT (A) VIDE ORDER DATED 27.08.2014. 3. THE ID. CIT(APPEALS) FAILED TO APPRECIATE THAT ASSESSEE COULD NOT S UBMIT ANY SUCH REASONABLE CAUSE U/S 275 OF THE INCOME - TAX ACT, ADDL CIT (TDS) VS. THE PRINCIPAL OFFICER, ITA NO. 5699 & 5700 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 & 2013 - 14 ) PAGE | 2 WHICH MAY PREVENT HIM FROM THE IMPOSITION OF PENALTY U/S 271C EITHER BEFORE THE ADDL.CIT (TDS) OR BEFORE HIM IN SPITE OF AFFORDING OPPORTUNITIES OF HEARINGS AT BOTH THE LEVELS. 3. THE REVENUE H AS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO. 5700/DEL/2015 FOR THE AY 2013 - 14: - 1. LD. CIT(A) GHAZIABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CANCELLING THE PENALTY U/S 271C VIDE ORDER DATED 21.07.2015 AMOUNTING TO 4124401 / - OBSERVING THAT ASSESSEE HAS REASONABLE CAUSE U/S 275 OF THE INCOME - TAX ACT, WHEREAS THERE WERE NO SUCH REASONABLE BROUGHT ON RECORDS IN HIS FINDING BY THE CIT (A). 2 THE ID. CIT(A) GHAZIABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE PENALTY U/S.271C EVEN AFTER KEEPING IN VIEW THAT THE ORDER U/S 201(1) & 201(1 A) DATED 17.02.2014, TREATING THE ASSESSEE LIABLE FOR MAKING TDS U/S 194A IN RESPECT OF PAYMENT OF INTEREST, IN CONSEQUENT TO WHICH THE PENALTY U/S 271C HAS BEEN IMPOSED, WAS CONFIRMED BY THE CI T (A) VIDE ORDER DATED 27.08.2014. 3. THE ID. CIT(APPEALS) FAILED TO APPRECIATE THAT ASSESSEE COULD NOT SUBMIT ANY SUCH REASONABLE CAUSE U/S 275 OF THE INCOME - TAX ACT, WHICH MAY PREVENT HIM FROM THE IMPOSITION OF PENALTY U/S 271C EITHER BEFORE THE ADDL.C IT (TDS) OR BEFORE HIM IN SPITE OF AFFORDING OPPORTUNITIES OF HEARINGS AT BOTH THE LEVELS. 4. BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS COMMERCIAL COOPERATIVE BANK AND HAS FAILED TO DEDUCT TAX AT SOURCE OF RS. 3644493/ - AND RS. 4127401/ - ON INTEREST P AID TO DEPOSITORS AS PER PROVISIONS OF SECTION 194A OF THE ACT FOR AY 2012 - 13 AND 2013 - 14 RESPECTIVELY . THE CONTENTION OF THE ASSESSEE IS THAT SUCH PAYMENT IS MADE TO THE MEMBERS. THE LD ASSESSING OFFICER HELD THAT PROVISIONS OF SECTION 194A(3)(I)(B) WAS A PPLICABLE TO THE ASSESSEE BUT NOT SECTION 194A(3)(V). THEREFORE, THE ORDER U/S 201(1) AND 201(1)(A) WAS PASSED HOLDING ASSESSEE AS ASSESSEE IN DEFAULT . FURTHER, THE LD ASSESSING OFFICER INITIATED PENALTY U/S 271C . BEFORE THE LD ASSESSING OFFICER ASSESSEE SUBMITTED THAT IT DID NOT DEDUCT TAX AT SOURCE ON INTEREST PAID TO MEMBER SHARE HOLDER OF THE BANK AS PER PROVISION OF SECTION 194A(3)(V). THE LD AO HELD THAT ASSESSEE HAS FAILED DEDUCT THE TAX AND APPLYING THE DECISION OF THE HONBLE KERALA HIGH COURT IN CASE OF US TECHNOLOGIES INTERNATIONAL LTD VS CIT 195 TAXMANN 323 ADDL CIT (TDS) VS. THE PRINCIPAL OFFICER, ITA NO. 5699 & 5700 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 & 2013 - 14 ) PAGE | 3 LEVIED THE PENALTY OF RS. 3644493/ - FOR ASSESSMENT YEAR 2012 - 13 AND RS. 4127401/ - FOR ASSESSMENT YEAR 2013 - 14. 5. THE ASSESSEE CHALLENGED THE ORDERS OF THE PENALTY BEFORE THE LD CIT(A), WHO DEL ETED THE SAME HOLDING THAT THERE IS A SUFFICIENT CAUSE FOR NOT DEDUCTING TAX BY THE ASSESSEE AND HENCE, PENALTY U/S 271(1)(C) READ WITH SECTION 27 3 B CANNOT BE LEVIED. 6. THE LD DEPARTMENTAL REPRESENTATIVE STATED THAT THE LD ASSESSING OFFICER HAS GIVEN DETAIL ED REASONS FOR LEVYING THE PENALTY. 7. THE LD AR SUBMITTED THAT THE IMPUGNED OR DER PASSED U/S 201(1) AND 201(1A ) TRAVELLED UP TO THE COORDINATE BENCH WHEREIN, THE ORDER DATED 31.07.2015 IT WAS UPHELD. DESPITE THIS, HE REFERRED TO PARA NO. 10 OF THE ORDER TO SHOW THAT THERE WERE DIFFERENT JUDICIAL PRECEDENTS ON THIS ISSUE AND A CIRCULAR TOO. HE THEREFORE, SUBMITTED THAT THERE IS A REASONABLE CAUSE IN NOT DEDUCTING TAX AT SOURCE. HE FURTHER SUBMITTED THAT THERE IS NO CONTUMACIOUS CONDUCT OF THE ASSESSEE IN NOT DEDUCTING TAX AT SOURCE AND THEREFORE, PENALTY CANNOT BE LEVIED AS HELD BY THE HON'BLE SUPREME COURT IN CIT VS. BANK OF NOVA SCOTIA IN CIVIL APPEAL NO. 1704/2008 DATED 07.01.2016. HE FURTHER REFERRED TO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. ITC LTD TO SHOW THAT WHERE THERE ARE BONA FIDE AND REASONABLE GROUND TO NOT TO DEDUCT TAX AT SOURCE PENALTY U/S 271C CANNOT BE LEVIED. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE ORDERS OF LOWER AUTHORIT IES. IN THE PRESENT CASE THE ONLY DISPUTE WHETHER THE INTEREST PAID BY THE ASSESSEE TO THE MEMBER SHAREHOLDERS IS SUBJECT TO TAX DEDUCTION AT SOURCE. THERE IS A BONA FIDE DISPUTE BETWEEN THE ASSESSEE AND THE REVENUE WHETHER SUCH DEDUCTION IS REQUIRED TO BE MADE U/S 194A(3)(I)(V) OF THE ACT OR NOT. THE CBDT CIRCULAR DATED 11.09.2002 ALSO SUPPORT THE CASE OF THE ASSESSEE. FURTHER, THE COORDINATE BENCH IN ASSESSEES OWN CASE HAS HELD AGAINST THE ASSESSEE UPHOLDING THE ORDERS U/S 201(1) AND 201(1A) OF THE ACT. HOWEVER, THESE FACTS DO NOT SHOW THAT THERE IS CONTUMACIOUS CONDUCT ON ADDL CIT (TDS) VS. THE PRINCIPAL OFFICER, ITA NO. 5699 & 5700 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 & 2013 - 14 ) PAGE | 4 THE PART OF THE ASSESSEE. THEREFORE, AS HELD BY THE HON'BLE SUPREME COURT IN CIT VS. BANK OF NOVA SCOTIA (SUPRA) WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CIT(A) IN DELETING T HE ABOVE PENALTIES. NO INFIRMITY WAS ALSO POINTED OUT BY THE LD D R. IN VIEW OF THIS WE CONFIRM THE ORDER OF LD CIT(A) IN DELETING THE PENALTY FOR BOTH THE YEAR S . 9. IN THE RESULT, APPEALS FILED BY THE REVENUE FOR BOTH THE YEARS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 7 / 01 / 2018 . - S D / - - S D / - ( AMIT SHUKLA ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 7 / 01 / 2018 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI