BRANCH MANAGER STATE BANK OF INDIA, REGIONAL BUSINESS OFFICE, ADMINISTRETIVE OFFICE,KANPUR vs. ACIT (TDS), KANPUR

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ITA 490/LKW/2024Status: DisposedITAT Lucknow24 April 2025AY 2016-1718 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the only escape route from the penalty under Section 271C of the Act is pleading reasonable cause under Section 273B. The assessee, apart from stating a bonafide belief that tax was not deductible, did not provide any other cause that prevented them from TDS. The Tribunal noted that SBI is a leading corporate entity with ample intellectual resources and that failure to observe due diligence in deducting tax at source, despite easily available informed resources, cannot be accepted as a reasonable explanation. The Tribunal relied on the decision of the Hon'ble Supreme Court in Dharmendra Textile Processors and the Hon'ble High Court of Kerala in Muthoot Bankers (Aryasala) to hold that mens rea is not an essential component for imposing penalty for breach of civil obligation. Therefore, the levy of penalty under Section 271C by the Assessing Officer was upheld. The Tribunal found no material to persuade it to interfere with the impugned appellate orders of the CIT(A). The issue regarding the same DIN for the penalty order and demand notice was not explicitly addressed in the provided excerpt, but the appeals were dismissed on merits. All five appeals filed by the assessee were dismissed.

What were the facts?

These five appeals were filed by the assessee, identified as State Bank of India (SBI) through its Overseas Branch and HR Section, against orders dated 10/06/2025 passed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) had dismissed the appeals filed by SBI, confirming penalties levied under Section 271C of the Income Tax Act, 1961. The penalties were imposed by the Additional Commissioner of Income Tax (TDS) for failure to deduct tax at source on reimbursements of Leave Travel Concession/Leave Travel Allowance (LTC/LTA) paid to employees for foreign travel. The assessment years involved are 2015-16 to 2017-18. The amounts of penalties in dispute were Rs. 1,04,380/-, Rs. 1/-, Rs. 1,46,775/-, and Rs. 3,47,845/-. The appeals before the ITAT were heard ex-parte as there was no representation from the assessee.

What were the issues?

1. Whether the penalty proceedings initiated under Section 271C of the Income Tax Act, 1961, were bad in law and void ab initio due to initiation after approximately 7 years from the end of the financial year, which the assessee contended was not a reasonable time period. 2. Whether the CIT(A) erred in confirming the penalty levied under Section 271C of the Act for disallowance of LTC/LTA under Section 10(5) of the Act, without appreciating that no tax was deductible on the provisions created by the assessee. 3. Whether the CIT(A) erred in confirming the penalty levied under Section 271C of the Act for disallowance of LTC/LTA under Section 10(5) of the Act, without appreciating that there was a 'reasonable cause' for the failure as per Section 273B of the Act. 4. Whether the order imposing penalty was bad in law because the penalty order and notice of demand under Section 156 were issued with the same Document Identification Number (DIN), contrary to CBDT Circular No. 19 of 2019. Assessee's Contentions: The assessee argued that penalty proceedings initiated after 7 years were unreasonable. They contended that no tax was deductible on provisions created for LTC/LTA and that there was a reasonable cause for failure to deduct tax, citing a bonafide belief that tax was not deductible. The assessee also argued that the use of the same DIN for the penalty order and demand notice was illegal as per CBDT Circular No. 19 of 2019. The assessee relied on judicial precedents for the unreasonable time period argument and Section 273B for reasonable cause. Revenue's Contentions: The revenue, through the learned D.R., relied on the orders passed by the Additional CIT (TDS) and the CIT(A). The revenue argued that the assessee failed to provide any reasonable cause under Section 273B for the failure to deduct tax at source. They contended that a bonafide belief of non-deductibility is not a reasonable cause, especially for a large corporate entity like SBI with access to intellectual resources. The revenue also implicitly supported the penalty levied under Section 271C.

Which sections of the Income-tax Act were involved?

Section 271C,Section 10(5),Section 273B,Section 250,Section 156

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Income Tax Appellate Tribunal, LUCKNOW BENCH A, LUCKNOW

Before: SHRI SUDHANSHU SRIVASTAVA & SHRI ANADEE NATH MISSHRA

For Appellant: None
For Respondent: Shri Sanjeev Krishna Sharma,

“1. That on the facts and circumstance of the case and in the law, the order passed u/s 250 r. w. s 271C of the Act dated 10/06/2024 dismissing the appeal filed by the Appellant and confirming the levy of penalty of Rs.1,04,380/- by the Ld. CIT(A), without giving any justifiable reasoning and ignoring the submissions made before the Ld. CIT (A) and without appreciating the facts of the case and judicial precedents, bad in law and is liable to be quashed.

2. That on the facts and in the circumstance of the case and in law, the Ld. CIT (A) failed to appreciate the fact that the order of penalty passed by the Ld. Additional Commissioner of Income Tax (TDS) dated 19-09-2023 U/s 271C of the Act is bad in law and void ab initio, since the penalty proceedings have been initiated after almost 7 years from the end of the financial year which cannot be considered reasonable time period for initiating proceedings as held by various authorities.

3. That on the facts and circumstance of the case and in law, the Ld. CIT (A) erred in confirming penalty levied by the Ld. AO u/s 271C of the Act 1961, disallowance of LTC/LTA under section 10(5) of the Act, without appreciating that no tax was deductible on the provisions created by the Appellant.

4. That on the facts and circumstances of the case and in law, the Ld. CIT (A) erred in confirming penalty levied by the Ld. AO u/s 271C of the Act, disallowance of LTC/LTA under section 10(5) of IT Act 1961, without appreciating that there was 'reasonable cause' for the said failure as per the provisions of Section 273B of the Act 1961.

5. That the grounds of appeal as pleaded before the Learned CIT (Appeal) are relied upon the appeal before the Hon'ble Member, IITAT.

6. That the Learned CIT (Appeal) has erred in law in rejecting the appeal arbitrarily and in utter disregard of the submission made before him.

I.T.A. Nos.487 to 491/Lkw/2024 3

7. That the above grounds are independent and without prejudice to each other.” “1. That on the facts and circumstance of the case and in the law, the order passed u/s 250 r. w. s 271C of the Act dated 10/06/2024 dismissing the appeal filed by the Appellant and confirming the levy of penalty of Rs.1,/- by the Ld. CIT(A), without giving any justifiable reasoning and ignoring the submissions made before the Ld. CIT (A) and without appreciating the facts of the case and judicial precedents, bad in law and is liable to be quashed.

2. That on the facts and in the circumstance of the case and in law, the Ld. CIT (A) failed to appreciate the fact that the order of penalty passed by the Ld. Additional Commissioner of Income Tax (TDS) dated 19-09-2023 U/s 271C of the Act is bad in law and void ab initio, since the penalty proceedings have been initiated after almost 7 years from the end of the financial year which cannot be considered reasonable time period for initiating proceedings as held by various authorities.

3. That on the facts and circumstance of the case and in law, the Ld. CIT (A) erred in confirming penalty levied by the Ld. AO u/s 271C of the Act 1961, disallowance of LTC/LTA under section 10(5) of the Act, without appreciating that no tax was deductible on the provisions created by the Appellant.

4. That on the facts and circumstances of the case and in law, the Ld. CIT (A) erred in confirming penalty levied by the Ld. AO u/s 271C of the Act, disallowance of LTC/LTA under section 10(5) of IT Act 1961, without appreciating that there was 'reasonable cause' for the said failure as per the provisions of Section 273B of the Act 1961.

5.

That the grounds of appeal as pleaded before the Learned CIT (Appeal) are relied upon the appeal before the Hon'ble Member, IITAT.

I.T.A. Nos.487 to 491/Lkw/2024 4

6. That the Learned CIT (Appeal) has erred in law in rejecting the appeal arbitrarily and in utter disregard of the submission made before him.

7.

That the above grounds are independent and without prejudice to each other.”

I.T.A. No.489/Lkw/2024

1. That on the facts and circumstance of the case and in the law, the order passed u/s 250 r. w. s 271C of the Act dated 10/06/2024 dismissing the appeal filed by the Appellant and confirming the levy of penalty of Rs.1,46,775/- by the Ld. CIT(A), without giving any justifiable reasoning and ignoring the submissions made before the Ld. CIT (A) and without appreciating the facts of the case and judicial precedents, bad in law and is liable to be quashed.

2. That the order dated 25-05-2023 passed by the Additional Commissioner of Income Tax (TDS) imposing the penalty of Rs.1,46,775/- is bad in law for the reason that said order under section 271C of the IT Act 1961 dated 25-05-2023 vide DIN No- KNP/95/25-05-2023/00099 and said notice of demand u/s 156 of the IT Act 1961 dated 25-05-2023 vide DIN number:- KNP/95/25-05-2023/00099 has been issued with the same Document Identification Number ("DIN"), which is wrong and against as per Board Circular, which is mandatory in term of circular No.19 of 2019 dated 14-08-2019 issued by the Central Board of Direct Taxes ("CBDT").

3. That on the facts and in the circumstance of the case and in law, the Ld. CIT (A) failed to appreciate the fact that the order of penalty passed by the Ld. Additional Commissioner of Income Tax (TDS) dated 25-05-2023 U/s 271C of the Act is bad in law and void ab initio, since the penalty proceedings have been initiated after almost 7 years from the end of the financial year which cannot be considered reasonable time period for initiating proceedings as held by various authorities.

4.

That on the facts and circumstance of the case and in law, the Ld. CIT (A) erred in confirming penalty levied by the Ld. AO u/s 271C of the Act 1961, disallowance of LTC/LTA under section to 491/Lkw/2024 5

10(5) of the Act, without appreciating that no tax was deductible on the provisions created by the Appellant.

5. That on the facts and circumstances of the case and in law, the Ld. CIT (A) erred in confirming penalty levied by the Ld. AO u/s 271C of the Act, disallowance of LTC/LTA under section 10(5) of IT Act 1961, without appreciating that there was 'reasonable cause' for the said failure as per the provisions of Section 273B of the Act 1961.

6. That the grounds of appeal as pleaded before the Learned CIT(Appeal) are relied upon the appeal before the Hon'ble Member, ITAT.

7. That the Learned CIT (Appeal) has erred in law in rejecting the appeal arbitrarily and in utter disregard of the submission made before him.

1. That on the facts and circumstance of the case and in the law, the order passed u/s 250 r. w. s 271C of the Act dated 10/06/2024 dismissing the appeal filed by the Appellant and confirming the levy of penalty of Rs.3,47,845/- by the Ld. CIT(A), without giving any justifiable reasoning and ignoring the submissions made before the Ld. CIT (A) and without appreciating the facts of the case and judicial precedents, bad in law and is liable to be quashed.

2. That the order dated 25-05-2023 passed by the Additional Commissioner of Income Tax (TDS) imposing the penalty of Rs.3,47,845/- is bad in law for the reason that said order under section 271C of the IT Act 1961 dated 25-05-2023 vide DIN No- KNP/95/25-05-2023/100 and said notice of demand u/s 156 of the IT Act 1961 dated 25-05-2023 vide DIN number:- KNP/95/25-05-2023/100 has been issued with the same Document Identification Number ("DIN"), which is wrong and against as per Board Circular, which is mandatory in term of circular No.19 of 2019 dated 14-08-2019 issued by the Central Board of Direct Taxes ("CBDT").

I.T.A. Nos.487 to 491/Lkw/2024 6

3. That on the facts and in the circumstance of the case and in law, the Ld. CIT (A) failed to appreciate the fact that the order of penalty passed by the Ld. Additional Commissioner of Income Tax (TDS) dated 25-05-2023 U/s 271C of the Act is bad in law and void ab initio, since the penalty proceedings have been initiated after almost 7 years from the end of the financial year which cannot be considered reasonable time period for initiating proceedings as held by various authorities.

4. That on the facts and circumstance of the case and in law, the Ld. CIT (A) erred in confirming penalty levied by the Ld. AO u/s 271C of the Act 1961, disallowance of LTC/LTA under section 10(5) of the Act, without appreciating that no tax was deductible on the provisions created by the Appellant.

5. That on the facts and circumstances of the case and in law, the Ld. CIT (A) erred in confirming penalty levied by the Ld. AO u/s 271C of the Act, disallowance of LTC/LTA under section 10(5) of IT Act 1961, without appreciating that there was 'reasonable cause' for the said failure as per the provisions of Section 273B of the Act 1961.

6. That the grounds of appeal as pleaded before the Learned CIT(Appeal) are relied upon the appeal before the Hon'ble Member, ITAT.

7. That the Learned CIT (Appeal) has erred in law in rejecting the appeal arbitrarily and in utter disregard of the submission made before him.

8. That the above grounds are independent and without prejudice to each other.”

I.T.A. No.491/Lkw/2024

1.

That on the facts and circumstance of the case and in the law, the order passed u/s 250 r. w. s 271C of the Act dated 10/06/2024 dismissing the appeal filed by the Appellant and confirming the levy of penalty of Rs.1,46,775/- by the Ld. CIT(A), without giving any justifiable reasoning and ignoring the submissions made before the Ld. CIT (A) and without to 491/Lkw/2024 7 appreciating the facts of the case and judicial precedents, bad in law and is liable to be quashed.

2.

That the order dated 25-05-2023 passed by the Additional Commissioner of Income Tax (TDS) imposing the penalty of Rs.3,90,393/- is bad in law for the reason that said order under section 271C of the IT Act 1961 dated 25-05-2023 vide DIN No- KNP/95/25-05-2023/00102 and said notice of demand u/s 156 of the IT Act 1961 dated 25-05-2023 vide DIN number:- KNP/95/25-05-2023/00101 has been issued with the same Document Identification Number ("DIN"), which is wrong and against as per Board Circular, which is mandatory in term of circular No.19 of 2019 dated 14-08-2019 issued by the Central Board of Direct Taxes ("CBDT").

3.

That on the facts and in the circumstance of the case and in law, the Ld. CIT (A) failed to appreciate the fact that the order of penalty passed by the Ld. Additional Commissioner of Income Tax (TDS) dated 25-05-2023 U/s 271C of the Act is bad in law and void ab initio, since the penalty proceedings have been initiated after almost 7 years from the end of the financial year which cannot be considered reasonable time period for initiating proceedings as held by various authorities.

4. That on the facts and circumstance of the case and in law, the Ld. CIT (A) erred in confirming penalty levied by the Ld. AO u/s 271C of the Act 1961, disallowance of LTC/LTA under section 10(5) of the Act, without appreciating that no tax was deductible on the provisions created by the Appellant.

5. That on the facts and circumstances of the case and in law, the Ld. CIT (A) erred in confirming penalty levied by the Ld. AO u/s 271C of the Act, disallowance of LTC/LTA under section 10(5) of IT Act 1961, without appreciating that there was 'reasonable cause' for the said failure as per the provisions of Section 273B of the Act 1961.

6.

That the grounds of appeal as pleaded before the Learned CIT(Appeal) are relied upon the appeal before the Hon'ble Member, ITAT.

I.T.A. Nos.487 to 491/Lkw/2024 8

7. That the Learned CIT (Appeal) has erred in law in rejecting the appeal arbitrarily and in utter disregard of the submission made before him.

8.

That the above grounds are independent and without prejudice to each other.”

(A.1) For the sake convenience, these five appeals are hereby disposed of through this consolidated order.

(B) First of all appeal vide is taken up. Vide order dated 19/09/2023, penalty amounting to Rs.1,59,596/- was imposed by Addl CIT (TDS) on the ground that the assessee had failed to deduct tax at source in respect of reimbursements of LTC/LFC paid to the employees for travelling abroad. As the reimbursements of LTC/LFC in respect of foreign travel of the employee is not exempt u/s 10(5) of the Act, the Addl. CIT (TDS) levied the aforesaid penalty u/s 271C of the Act. The relevant portion of the aforesaid order dated 19/09/2023 is reproduced as under: to 491/Lkw/2024 9 ((B.1) The assessee filed against the aforesaid order dated 19/09/2023 levying the penalty u/s 271C of the Act, in the office of the learned CIT(A). Vide impugned appellate order dated 10/06/2024, the learned CIT(A) confirmed the aforesaid penalty and dismissed assessee’s appeal. The relevant portion of the impugned order of the learned CIT(A) is reproduced as under:

I.T.A. Nos.487 to 491/Lkw/2024 10 to 491/Lkw/2024 11 I.T.A. Nos.487 to 491/Lkw/2024 12 I.T.A. Nos.487 to 491/Lkw/2024 13 I.T.A. Nos.487 to 491/Lkw/2024 14 I.T.A. Nos.487 to 491/Lkw/2024 15 to 491/Lkw/2024 16 (B.2) The present appeal vide has been filed by the assessee against the aforesaid impugned appellate order. In the course of appellate proceedings in Income Tax Appellate Tribunal, hearings fixed on 12/11/2024 and 17/02/2024 were not attended by anyone on behalf of the assessee. Once again the hearing was fixed on 22/04/2025 however, there was no representation from the assessee’s side again. In the absence of any representation from assessee’s side, we heard the learned D.R. for Revenue. He relied on the aforesaid orders dated 19/09/2023 and 10/06/2024 passed by the Addl. CIT (TDS) and the learned CIT(A) respectively.

(B.2.1) On perusal of records, it is found that there is no dispute that the assessee was required to deduct tax at source in respect of reimbursement of LTC/LFC paid to employees in respect of foreign travel. It is also found that the assessee could not provide any reasonable cause u/s 273B of the Act for the failure to deduct tax at source in respect of the aforesaid reimbursements. The only explanation furnished by the assessee before the learned CIT(A) was that the assessee was under bonafide belief that tax was not deductible at source. The assessee advanced no other pleading to explain how the assessee was prevented by reasonable cause from deducting tax at source. In the course of appellate proceedings in Income Tax Appellate Tribunal also, no reasonable cause has been advanced from the assessee’s side, within the meaning of section 273B of the Act for failure to 491/Lkw/2024 17 to deduct tax at source in respect of reimbursement of LTC/LFC paid to employees in respect of foreign travel. The assessee, State Bank of India, is a leading corporate entity of India; having no dearth of intellectual resources knowledgeable in the field of Income Tax Act; and the concerned person(s) in the assessee could have easily received knowledge inputs either from within the organization or from outside, if required. Failure to observe due diligence in deducting tax at source, despite informed resources easily available to the assessee, pleading and for such that it failed to deduct tax at source due to lack of knowledge or due to bona fide belief that tax was not deductible at source, cannot be accepted as a reasonable explanation. No material has been presented by either side to persuade us to interfere with the impugned appellate order of learned CIT(A), whereby learned CIT(A) confirmed the levy of penalty u/s 271C of the Act. Therefore, we decline to interfere with the impugned appellate order of learned CIT(A), and the appeal filed by the assessee is dismissed.

(C) The facts in respect of appeals in & 491/Lkw/2024 are similar to the facts of aforesaid appeal I.T.A. No.488/Lkw/2024. The facts being same in pari materia, the appeals vide are also dismissed as the same reasoning will apply mutatis mutandis in these two appeals as in I.T.A. No.488/Lkw/2024.

(D) On merits, facts of and are also similar to facts of appeal vide I.T.A. No.488/Lkw/2024. Facts being similar in pari materia, these two appeals vide I.T.A. No.487/Lkw/2024 and I.T.A. No.489/Lkw/2024 also deserve to be dismissed on merits as the same reasoning would apply mutatis mutandis in these two appeals, as in I.T.A. No.488/Lkw/2024. In addition, we find from the perusal of order sheets in the records that the assessee

I.T.A. Nos.487 to 491/Lkw/2024 18 failed to remove the defects in filing of appeal as communicated by the Registry. However, since the appeals deserve to be dismissed on merits, the matter regarding defect in filing of the appeal in and is merely academic. In view of the foregoing, the appeal vide I.T.A. No.487/Lkw/2024 and I.T.A. No.489/Lkw/2024 are also dismissed.

(E) In the result, all the appeals of the assessee are dismissed.

(Order was pronounced in the open court on 24/04/2025)

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