PR.CIT V. CORONATION INFRASTRUCTURE LTD.

ITA/514/2015

AI Insights

The case involves multiple appeals by the Commissioner of Income Tax against Coronation Infrastructure Ltd. concerning penalties under Section 271C of the Income Tax Act, 1961, for non-deduction of TDS on interest payments and tax on scrap sales during various assessment years. A survey operation revealed these lapses, leading to penalties. However, both the Commissioner of Income Tax (Appeals) and the ITAT found that the respondent's failure to deduct TDS was due to bona fide reasons, as the NBFCs had reported the interest income and paid the necessary taxes. The Revenue's appeal to the High Court argued that the lapses were only discovered due to the survey, but the court upheld the ITAT's decision, dismissing the appeals.

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 687588 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 31-07-2015
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: N P SAHNI; NITIN GULATI
• Keywords: Bonafide reasons; Income Tax; Penalty; Survey operation; TDS
• Section: 133A; 271C; 206C; 260A(1)

Judgement Text

"* 2. + 3. + IN THE HIGH COURT OF DELHI AT NEW DELHI ITA 505/2015 PR.COMMISSIONER OF INCOME TAX Appellant Through: Mr. N.P. Sahni, Senior Standing counsel with Mr. Nitin Gulati, Advocate. versus CORONATION INFRASTRUCTURE LTD. Respondent WITH ITA 506/2015 PR.COMMISSIONER OF INCOME TAX Appellant Through: Mr. N.P. Sahni, Senior Standing counsel with Mr. Nitin Gulati, Advocate. versus CORONATION INFRASTRUCTURE LTD. Respondent WITH + ITA 507/2015 PR.COMMISSIONER OF INCOME TAX Appellant Through: Mr. N.P. Sahni, Senior Standing counsel with Mr. Nitin Gulati, Advocate. versus CORONATION INFRASTRUCTURE LTD. Respondent ITA Nos. 505, 506, 507 & 514 of 2015 Page 1 of4 Digitally Signed By:AMULYA Signature Not Verified AND 6. + ITA 514/2015 PR.COMMISSIONER OF INCOME TAX Appellant Through: Mr. N.P. Sahni, Senior Standing counsel with Mr. Nitin Gulati, Advocate. versus CORONATION INFRASTRUCTURE LTD Respondent CORAM: HON'BLE DR. JUSTICE S. MURALIDHAR HON'BLE MR. JUSTICE VIBHU BAKHRU ORDER % 31.07.2015 CM Nos. 13222/2015.13223/2015 & 13243/2015 (for exemption^ 1. Exemptions allowed subject to all just exceptions. 2. The applications are disposed of. ITA Nos. 505/2015. 506/2015. 507/2015 & 514/2015 3. These are appeals by the Revenue under Section 260A (1) against orders of the Income Tax Appellate Tribunal (TTAT') for various Assessment Years ('AYs') on issue of penalty under Section 271C of the Income Tax Act, 1961 ('Act'). ITA Nos. 505, 506, 507 & 514 of 2015 Page 2 of 4 4. A survey operation undertaken on 12'^ November 2008 under Section 133 A of the Act revealed that the Respondent Assessee made payments of interest on loans borrowed from four Non-Banking Financial Companies ('NBFCs') without deducting tax at source. It was also found that the Respondent had not collected tax collected at source under Section 206C of the Act on the sale of scrap. In that context that the penalty was levied under Section 271-C of the Act. 5. The Assessee succeeded both before the Commissioner of Income Tax (Appeals) [CIT(A)] as well as the ITAT who concurrently held that the non- deduction of TDS was for bonafide reasons. Among the factors that ^weighed with both the CIT (A) and the ITAT were that the NBFCs in question had in their returns accounted for the interest amount earned and had paid the taxes thereon. Further, the repayment schedule was fixed and post-dated cheques were collected upfront which included the principal amount together with the interest. 6. It was urged by Mr. Sahni, learned Senior Standing counsel for the Revenue that it was only on account of the survey operation undertaken that the above lapse was detected and it is only thereafter that the Assessee made ITA Nos. 505, 506, 507 & 514 of 2015 Page 3 of 4 good the lapse. 7. The Court is of the view that where two authorities have, in the context of penalty proceedings under Section 271 C of the Act, been convinced with the reasons offered by the Assessee and have concluded that the failure to deduct TDS was for bonqfide reasons, no substantial question of law arises for determination by the Court. 8. The appeals are dismissed. S. MURALIDHAR, J VIBHU BAKHRU, J JULY 31,2015/dn ITA Nos. SOS, S06, S07 & S14 of201S Page 4 of 4 "