The DCITTDS-Circle-, Surat V. Nuclear Power Corporation of India Ltd., Surat

ITA 626/AHD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72982 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 06-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: M K PATEL
• Keywords: Principle of natural justice; Reasonable cause
• Section: 273B; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NOS.625, 626 & 627/AHD/2013 A.YS.2007-08, 2008-09 & 2009-10 THE DCIT, TDS CIRCLE, SURAT. V/S. NUCLEAR POWER CORPORATION OF INDIA LTD., KAKRAPAR POST ANUMALA VIA-VYARA, DIST. TAPI, TAN: SRTN00801G (APPELLANT) (RESPONDENT) REVENUE BY : SHRI O.P. BATHEJA, SR.D.R. ASSESSEE(S) BY : SHRI M.K. PATEL, AR / DATE OF HEARING : 18/02/2014 / DATE OF PRONOUNCEMENT: 21/02/2014 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, J.M. THESE THREE APPEALS HAVE BEEN FILED BY THE REVENUE ARISING FROM THE ORDERS OF LEARNED CIT(A)-IV SURAT, DATED 3 1.12.2012. FOR ALL THE THREE YEARS GROUNDS RAISED ARE IDENTICALLY WORDED. THE MAIN GROUND WHICH IS DECIDED IS GROUND NO.1, REPRODUCED BELOW: 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE PENALTY U/S.271C OF THE IT ACT OF RS.10,25,957/- (F OR A.Y.2007-08), OF RS.12,42,922 (FOR A.Y.2008-09) & RS.7,03,086/- ( FO R A.Y.2009-10) LEVIED BY THE ADDL. CIT, SURAT (HEREIN AFTER REFERR ED AS AO) FOR THE REASON THAT THE PENALTY PROCEEDINGS U/S. 271C WERE NOT INITIATED WHILE PASSING THE ORDER U/S.201(1) & 201(1A) BY THE ITO, TDS-1, SURAT AND IN DECIDING SO SHE COMPLETELY FAILED IN NOT CONSIDE RING THE STATUTORY PROVISIONS OF SEC. 271C(2) ACCORDING TO WHICH THE J T. COMMISSIONER WAS THE STATUTORY AUTHORITY TO IMPOSE THE PENALTY A ND JT. COMMISSIONER INCLUDES ADDL. COMMISSIONER AS DEFINED U/S.2(28C). ITA NOS.625, 626 & 627/AHD/2013 DCIT VS. NUCLEAR POWER CORPORATION OF INDIA LTD. A.YS. 2007-08, 2008-09, 2009-10 - 2 - 2 FOR THE YEARS UNDER CONSIDERATION, PENALTY U/S.27 1C WAS IMPOSED VIDE ORDERS DATED 23.03.2012. THE ASSESSEE IS ENGAGED IN GENERATION OF POWER. A SURVEY WAS CONDUCTED TO VERI FY THE COMPLIANCE OF TDS PROVISIONS. IT WAS FOUND THAT THE RE WAS SHORT DEDUCTION OF TAX IN RESPECT OF REIMBURSEMENT OF FOO D EXPENSES PAID TO EMPLOYEES. IT WAS INFORMED THAT THE COMPANY WAS PAYING RS.600/- PER MONTH TOWARDS CANTEEN REIMBURSEMENT. T HE OBSERVATION OF THE AO WAS THAT AS PER THE PROVISION S OF SECTION 192(1), WHERE ANY PERSON IS RESPONSIBLE FOR PAYING ANY INCOME CHARGEABLE UNDER THE HEAD SALARIES SHALL AT THE T IME OF PAYMENT, DEDUCT INCOME TAX. BEFORE US AN ORDER OF ITAT A B ENCH AHMEDABAD FOR THE YEARS UNDER CONSIDERATION, I.E., A.Y. 2007-08 TO A.Y. 2009-10 IN THE QUANTUM PROCEEDINGS, BEARING ITA NO.3059 AND 3061/AHD/2009, DATED 30 TH OF SEPTEMBER, 2011 HAS BEEN FILED WHEREIN IT WAS HELD THAT THE ASSESSEE WA S REQUIRED TO DEDUCT THE TAX, HOWEVER, IT WAS FOUND THAT THE COMP UTATION OF SHORT DEDUCTION U/S.201(1) WAS MADE ON A FLAT BASIS OF MA XIMUM MARGIN RATE. IT WAS DIRECTED TO RE-COMPUTE THE SHORT DEDUC TION U/S.201(1) OF IT ACT. AS FAR AS THE LEVY OF INTEREST U/S.201(1 A), IT WAS HELD THAT THE SAME IS MANDATORY IN NATURE. ONCE, THE ISS UE OF SHORT DEDUCTION OF TDS WAS DECIDED IN FAVOUR OF THE REVEN UE; HENCE, THEREAFTER THE PENALTY PROCEEDINGS WERE FINALIZED. SINCE, THE ASSESSEE HAD DEFAULTED IN DEDUCTING THE TAX FROM RE IMBURSEMENT OF FOOD, THEREFORE, THE IMPUGNED PENALTIES WERE LEVIED . LEARNED CIT(A) WAS OF THE VIEW THAT THERE WAS A REASONABLE AS WELL AS SUFFICIENT CAUSE FOR THE SAID FAILURE; HENCE, COMPL YING THE ITA NOS.625, 626 & 627/AHD/2013 DCIT VS. NUCLEAR POWER CORPORATION OF INDIA LTD. A.YS. 2007-08, 2008-09, 2009-10 - 3 - PROVISIONS OF SECTION 273B, THE PENALTY LEVIED U/S. 271C WAS DELETED. RELEVANT PORTION IS EXTRACTED BELOW: I HAVE GONE THROUGH THE PENALTY ORDER, SUBMISSION OF THE APPELLANT AND THE CASE LAW RELIED UPON BY IT. THE ADDITIONAL GROUNDS RAISED AT THE TIME OF APPEAL PROCEEDINGS ARE ADMITTED IN THE INTEREST OF NATURAL JUSTICE. ON A PERUSAL OF THE ORDER U/S.201(1) & 201 (1A), IT IS SEEN THAT PENALTY U/S. 271C OF THE IT ACT WAS NOT INITIATED B Y THE AO WHILE PASSING THE ORDER. IT IS ONLY BY THE SHOW CAUSE NOT ICE DATED 02.03.2012 HAS THE ADDL. CIT INITIATED PENALTY PROCEEDINGS U/S .271C OF THE IT ACT. IT IS A FACT THAT THE APPELLANT DID NOT DEDUCT TAX AT SOURCE ON FOOD ALLOWANCES SHOWN AS REIMBURSEMENT U/S. 192 OF THE I T ACT. HOWEVER, ON RECEIPT OF ORDER U/S. 201(1) & 201(1A) THE APPEL LANT PAID THE TAX & INTEREST THEREON. THE ADDL. CIT, TDS DID NOT ACCEPT THE APPELLANT'S CONTENTION THAT IT HAD NOT DEDUCTED AS IT WAS UNDER A BONA FIDE BELIEF THAT TAX WAS NOT DEDUCTIBLE AS PER PROVISION OF SEC TION 17(2) & 192 OF THE IT ACT. THE CONCERNED OFFICER REJECTED THE APPE LLANT'S CONTENTION THAT IT WAS A BONA FIDE MISTAKE ON THE GROUNDS THAT THE APPELLANT HAD NOT SURRENDERED THE MISTAKE COMMITTED BY IT BEFORE THE AO BEFORE THE ORDER U/S. 201 & 201(1A) WAS PASSED BUT HAD AGITATE D AND THE MATTER WAS CARRIED TO THE FIRST APPELLATE STAGE AND THEN T O THE APPELLATE TRIBUNAL. THIS CANNOT BE THE SOLE GROUND FOR IMPOSI TION OF PENALTY UNDER THE ACT. LEVY OF PENALTY U/S. 271G IS NOT AUT OMATIC. BEFORE LEVYING PENALTY THE CONCERNED OFFICER SHOULD PROVE THAT THE FAILURE REFERRED TO IN THE CONCERNED PROVISION WAS WITHOUT A REASONABLE OR SUFFICIENT CAUSE AND THE APPELLANT DELIBERATELY DEF IED THE PROVISION OF LAW. IN THIS CASE THERE WAS NEITHER THE CASE OF MAL A FIDE INTENTION NOR THAT OF NEGLIGENT INTENTION OR WANT OF BONA FIDE BU T A CASE OF MISCONCERNED BELIEF REGARDING THE APPLICABILITY OF PROVISION OF SEC. 192 OF THE IT ACT. IT CANNOT BE SAID JUDICIOUSLY TH AT THE APPELLANT FAILED TO DEDUCT TAX WITHOUT A REASONABLE CAUSE. PENALTY U /S. 271C CANNOT BE IMPOSED IF THERE WAS A BONA FIDE BELIEF FOR NON DED UCTION OF TAX. PENALTY CANNOT BE LEVIED FOR MERE REJECTION OF DEBA TABLE CLAIM. LEVY OF INTEREST U/S. 201(1A) IS AUTOMATIC, HOWEVER IT IS N OT SO IN CASE OF IMPOSITION OF PENALTY U/S. 271C. SECTION 273B PROVI DES DISCRETION TO THE AO TOWARDS IMPOSITION OF PENALTY U/S. 271C AFTE R CONSIDERING THE REASONABLENESS OF THE CAUSE SHOWN BY THE APPELLANT FOR FAILURE ON ITS PART TO DEDUCT TAX AT SOURCE. IN THIS CASE THE APPE LLANT WAS UNDER A BONA FIDE BELIEF THAT IT WAS NOT TO DEDUCT TAX AT S OURCE U/S. 192 FROM REIMBURSEMENT OF FOOD EXPENSES PAID TO ITS EMPLOYEE S. THE FACT THAT APPELLANT HAS PAID THE ENTIRE TAX & INTEREST LEVIED AS PER ORDER U/S. 201 & 201(1 A) FURTHER ESTABLISHES ITS BONA FIDE IN TENTION. 8.2 IT IS A FACT THAT THE APPELLANT PAID THE TAX & INTEREST ON RECEIPT OF ORDER U/S. 201 & 201(1A). THE PENALTY U/S. 271C WAS NOT INITIATED WHILE PASSING THE ORDER U/S. 201 & 201(1A). FROM TH E FACTS & CIRCUMSTANCES OF THE CASE, ALSO, IT IS EVIDENT THAT THE APPELLANT HAD A ITA NOS.625, 626 & 627/AHD/2013 DCIT VS. NUCLEAR POWER CORPORATION OF INDIA LTD. A.YS. 2007-08, 2008-09, 2009-10 - 4 - REASONABLE CAUSE FOR FAILURE TO COMPLY WITH THE PRO VISION OF SEC. 192 AS IT WAS UNDER HONEST & BONA FIDE BELIEF THAT IT W AS NOT TO DEDUCT TAX ON REIMBURSEMENT OF FOOD PAID TO ITS EMPLOYEES. IN SUBSEQUENT YEARS, THE APPELLANT HAS RECTIFIED THIS ERROR AND HAS BEEN DEDUCTING TAX AT SOURCE REGULARLY FROM SUCH REIMBURSEMENTS. PENAL PR OVISION SHOULD BE CONSTRUED STRICTLY AND NO MATERIAL HAS BEEN BROU GHT ON RECORD BY THE AO TO THE EFFECT THAT THE APPELLANT DELIBERATEL Y DEFIED THE PROVISIONS OF LAW. THEREFORE KEEPING IN VIEW THE TO TALITY OF FACTS AND CIRCUMSTANCES, THE PENALTY ORDER U/S. 271C IS CANCE LLED. 3. FROM THE SIDE OF THE APPELLANT-REVENUE, LEARNED SR.D.R., MR. O.P. BATHEJA APPEARED AND PLACED RELIANCE ON TH E STATEMENT OF FACTS AND THE CASE LAWS CITED AS PER THE GROUNDS OF APPEAL. COPIES OF THOSE JUDGMENTS HAVE ALSO BEEN PLACED BEFORE US. 4. FROM THE SIDE OF THE RESPONDENT-ASSESSEE, LEARNE D AR, MR. M.K. PATEL APPEARED AND SUPPORTED THE ORDER OF LEAR NED CIT(A). 5. HEARD BOTH THE SIDES. PERUSED THE MATERIAL PLACE D BEFORE US. IN OUR CONSIDERED OPINION, AS PER THE PROVISIONS OF SECTION 273B NO PENALTY U/S.273C SHALL BE IMPOSABLE IN CASE OF F AILURE REFERRED IN THE SAID PROVISIONS IF THE ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. IN THE PRESE NT CASE, THE EMPLOYER COMPANY HAS RELIED UPON THE PROVISIONS OF SECTION 17(2) R.W.S 192 OF THE IT ACT FOR THE PURPOSE THAT FOOD A LLOWANCE PER MEAL RS.15 PER DAY IS EXEMPTED FROM TAX AND THAT EM PLOYEES WERE PLACED ON REMOTE AREAS; HENCE, NOT CHARGEABLE TO TA X. THE ASSESSEE HAS PLEADED THAT UNDER BONA FIDE BELIEF IT WAS DECI DED THAT REIMBURSEMENT OF CANTEEN SUBSIDY SCHEME WAS NOT S UBJECT TO TDS. WE HAVE NOTED THAT IN THE CASE OF MUTHOOT BANK ERS, 18 TAXMANN.COM 203, IT WAS HELD THAT NO PENALTY IS LEV IABLE IF THERE IS ITA NOS.625, 626 & 627/AHD/2013 DCIT VS. NUCLEAR POWER CORPORATION OF INDIA LTD. A.YS. 2007-08, 2008-09, 2009-10 - 5 - A BONA FIDE OMISSION IN NOT DEDUCTING THE TAX AT SO URCE. WE HAVE ALSO EXAMINED THE CASE LAWS AS INDICATED BY LEARNED SR.D.R. BUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , THOSE CASE LAWS ARE DISTINGUISHABLE ON FACT AND LAW; HENCE, NO T HELPFUL TO THE REVENUE DEPARTMENT. RESULTANTLY, WE HEREBY AFFIRM T HE VIEW TAKEN BY LEARNED CIT(A) AND DISMISS THE GROUND OF T HE REVENUE. 6. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMIS SED. SD/- SD/- (N.S. SAINI) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 21/02/2014 PRABHAT KR. KESARWANI, SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD