MRS. SONAL SHAH,MUMBAI vs. JOINT COMMISSIONER OF INCOME TAX (TDS) RANGE-3, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI BEFORE SHRI PAWAN SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA No. 6462/MUM/2018 Assessment Year: 2008-09 & ITA No. 6463/MUM/2018 Assessment Year: 2009-10 Mrs. Sonal Shah Joint Commissioner of 17/18, Swastik Bldg. 4th Vs. Income Tax (TDS) Floor, N.S. Road, No. 1. Range-3, Mumbai. JVPD Scheme, Vile Parle (W), Mumbai-400056. PAN No. AQOPS1855M Appellant Respondent

ITA No. 6464/MUM/2018 Assessment Year: 2008-09 & ITA No. 6465/MUM/2018 Assessment Year: 2009-10 Mrs. Tarulata Shah Joint Commissioner of 21/22, Swastik Bldg. Vs. Income Tax (TDS) 5thFloor, N.S. Road, No. 1. Range-3, Mumbai. JVPD Scheme, Vile Parle (W), Mumbai-400056. PAN No. AADPS0777K Appellant Respondent Assessee by : Mr. RaveevWaglay, AR Revenue by : Mr. Chaudhary Arunkumar Singh, DR Date of Hearing : 29/11/2018 Date of pronouncement: 25/02/2019

Mrs. Sonal Shah & Mrs. Tarulata Shah 2 ITA Nos. 6462, 6463, 6464 & 6465/Mum/2018 ORDER PER N.K. PRADHAN, AM The captioned appeals filed by the assessee are directed against the order of the Commissioner of Income Tax (Appeals)-60, Mumbai [in short ‘CIT(A)’] and arise out of the penalty levied u/s 271C of the Income Tax Act 1961 (the ‘Act’). As common issues are involved, we are proceeding to dispose them off through a consolidated order for the sake of convenience. Facts being identical, we decide the case of Mrs. Sonal Shah for the assessment year (AY) 2008-09 (ITA No. 6462/MUM/2018). 2. The grounds of appeal filed by the assessee read as under: On the facts and circumstances of the case, the Ld. CIT(A) erred in - 1. confirming penalty of Rs.1,81,00,765 u/s. 271C of I. T. Act, 1961. 2. confirming the above penalty on the ground that the eventhough the appellant had claimed that the parties to whom payments were made had paid the taxes whereever applicable in their individual capacity, the appellant had not submitted any documents in support of the same. 3. confirming the above penalty on the ground that the penalty order dated 30.10.2014 was not time barred as contended by the appellant since the penalty proceedings were initiated by the JCIT (TDS) vide his show cause notice dated 2.4.2014 as against the stand of the appellant that the penalty proceedings were initiated by the assessing officer vide his communication dated 22.6.2012 to the JCIT (TDS) and hence, the order dated 30.10.2014 passed by the JCIT (TDS) was not within the limitation laid down u/s, 275 (1)(c) of I.T. Act, 1961. 4. confirming the above penalty on the ground that there was no reasonable ground for not deducting the lax at source as against the

Mrs. Sonal Shah & Mrs. Tarulata Shah 3 ITA Nos. 6462, 6463, 6464 & 6465/Mum/2018 stand of the appellant that it had no business income and hence, it had not claimed any deduction on account of interest paid and hence, no tax was deducted on the same & as such, it was a reasonable ground for not deducting the tax at source. 5. not considering the Delhi High Court Judgments in the case of PCIT Vs. Mahesh Wood Product Pvt. Ltd.–(2017) 394 ITR 312 and PCIT Vs. JKD Capital and Finlease Ltd. – (2015) 378 ITR 614 wherein it was clearly held that the order passed by the Joint Commissioner in that case was time barred since he should have passed the order within 6 months from the date on which he received the letter from the Assessing Officer and that the limitation began from the date of the letter from the assessing officer 6. not appreciating various decisions and judgments wherein it was held that when the parties to whom payments were made had paid full taxes on the same on their own, there was no loss of revenue and hence, penalty u/s. 271C was uncalled for. 7. not appreciating that the appellant had furnished the details of the persons to whom the payments were made clearly showing the taxes paid/returns filed by them and hence, the appellant had substantially discharged the burden from her side though Form No. 26A in terms of Rule 31ACB was not filed. 8. not appreciating that but for the letter from the ITO dated 22.06.2012 to the JCIT requesting him to deal with the penalty for not deducting the tax at source, JCIT would not have levied the penalty at all. And as such, it was the letter of the ITO dated 22.6.2012 which was the starting point for initiating the penalty proceedings u/s. 271C. And hence, the order passed by the CIT(A)-60 deserves to be set aside in toto. 3. The assessee is an individual and had e-filed the return of income for the AY 2008-09 on 29.09.2008 showing total income of

Mrs. Sonal Shah & Mrs. Tarulata Shah 4 ITA Nos. 6462, 6463, 6464 & 6465/Mum/2018 Rs.1,31,00,060/-. The appellant had filed an appeal before the CIT(A) and thereafter the matter was restored by the ITAT to the AO. The assessment order u/s 143(3) r.w.s 254 was passed on 19.12.2013. During the course of assessment proceedings, the Assessing Officer (AO) noticed that the assessee had paid an interest of Rs.37,71,018/- on unsecured loans and brokerage of Rs.5,05,621/- on the said unsecured loans. However, the assessee had not made TDS on the said interest and brokerage amount. The AO further found that the assessee had purchased property vide agreement dated 20.02.2008 from Mr. Sunil MangeshSanzgiri, Dr. JyotsanaMangeshSanzgiri and heirs of late MeenalaxmiArunAdarkar, all inhabitants of USA. Since all the three sellers were non-resident Indians, the assessee was liable to make TDS on the said payments. However, the assessee had not made any TDS and therefore, the AO observed that she was liable to penalty u/s 271C of the Act. The AO vide his officer letter dated 26.06.2012 intimated the Joint Commissioner of Income Tax (TDS), Range-3, Mumbai (the JCIT) about the two defaults. In response to a query raised by the JCIT vide letter dated 02.04.2014 to explain as to why penalty u/s 271C should not be imposed, the assessee filed a reply dated 29.04.2014, which has been extracted at para 3 of the penalty order dated 30.10.2010. The assessee filed another submission dated 27.05.2014 that she is in the process of collecting documents relating to income tax returns filed by payees to whom the assessee had made various payments and requested for some more time to present her case. That the assessee failed to file any information, the JCIT further gave time to file those details by

Mrs. Sonal Shah & Mrs. Tarulata Shah 5 ITA Nos. 6462, 6463, 6464 & 6465/Mum/2018 27.10.2014. In response to it the AR of the assessee failed to file those details. After observing that the assessee being an educated person and income tax payee and despite being fully aware of the provisions of the Act, chose to commit default by not making TDS, the JCIT levied a penalty of Rs.3,59,07,663/- u/s 271C of the Act. 4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). The AR of the assessee submitted in the appellate proceedings that since the penalty proceedings u/s 271C were initiated by the AO on 22.06.2012 by referring the matter to the JCIT, penalty order should have been passed on or before 31.12.2012 i.e. within 6 months from 01.07.2012 and since the penalty order was passed on 30.10.2014, the said penalty order was clearly time barred. To summarize the contentions of the AR before the CIT(A), those were (i) the penalty order dated 30.10.2014 passed u/s 271C was totally time barred, (ii) the assessee had reasonable cause for not deducting tax at source, (iii) the parties to whom the payments were made had paid full taxes on the same on their own and (iv) and hence, penalty u/s 271C is on called for. In respect of the above submissions, the AR relied on various case laws, which will be discussed infra. However, the CIT(A) was not convinced to the above submissions for the reason that in the instant case, the initiation of penalty was not communicated by the AO to the assessee but it was an internal communication of passing the order and the default committed by the

Mrs. Sonal Shah & Mrs. Tarulata Shah 6 ITA Nos. 6462, 6463, 6464 & 6465/Mum/2018 assessee. In fact, in this order itself at para 2 (page 3), the JCIT has recorded that on receipt of such intimation, his office issued the show cause notice for levying penalty u/s 271C on 02.04.2014 by fixing the date of appearance on 11.04.2014. Further, the order was passed on 30.10.2014. The CIT(A) observed that the initiation of penalty proceeding was started by the JCIT and the period for imposition of penalty has to be reckoned from that date. Thus he held that the assessee’s main plea that the date of initiation of penalty is the date on which the AO has communicated to the JCIT for imposition of penalty is on a misplaced presumption. Relying on the decision of Special Bench of the Tribunal in the case of Deewan Chandra Amritlal v. DCIT 98 ITD 200 (Chd) (SB) (2006), the CIT(A) observed that the period of limitation for purpose of section 275 is to be reckoned from the date when penalty proceedings are initiated by the Deputy Commissioner (now Joint Commissioner). Also discussing on merit, the CIT dismissed the appeal filed by the assessee. 5. Before us, the Ld. counsel of the assessee files a Paper Book (P/B) containing (i) Written submissions dtd. 16.11.2018, (ii) Assessment order dtd. 24.12.2010, (iii) CIT(A)-32 order dtd. 24.08.2011 for AY 2008-09, (iv) Decision no. 2014] 161 TTJ 11 (Jp-Trib), (v) Copy of return and accounts for the year ended 31.03.2008, (vi) Details of the recipients of interest with copy of their return, (vii) Decision in (2005) 3 SOT 627 (Bang-Trib), (viii) Details of the payments to non-residents for property and the copies of their return, (ix) Decision in (2015) TIOL-843 ITAT-AHE, (x) Decision in (2012) TIOL 626 ITAT-Hyd and (xi) Decision in (2012) 50 SOT 146 (ITAT-Cochin).

Mrs. Sonal Shah & Mrs. Tarulata Shah 7 ITA Nos. 6462, 6463, 6464 & 6465/Mum/2018 The Ld. counsel submits that since the penalty proceedings u/s 271C were initiated by the AO on 22.06.2012 by referring the matter to the JCIT, penalty order should have been passed by the JCIT on or before 31.12.2012 i.e. within 6 months from 01.07.2012 and since the penalty order was passed on 30.10.2014, the said order is clearly time-barred. Reliance is placed by him and the decision in MDC University v. ACIT (2014) 161 TTJ 11 (JP-Trib-UO), PCIT v. Mahesh Wood Products Pvt. Ltd. (2017) 394 ITR 312 (Del), PCIT v. JKD Capital &Finlees Ltd. (2015) 378 ITR 614 (Del), CIT v. Ikea Trading Hongkong Ltd. (2011) 333 ITR 565 (Del). Referring to the above decisions and relying on them, the Ld. counsel submits that it was only when the JCIT received the letter from the ITO on 22.06.2012 that he became aware of the facts on the basis of which penalty could be imposed u/s 271C. This itself shows that the penalty proceedings were initiated by the ITO in terms of his letter dated 22.06.2012. Stating that section 271C(2) talks about imposition of penalty by the JCIT and the imposition is different than intimation, the Ld. counsel submits that the order passed by the JCIT on 30.10.2014 was clearly time-barred as he should have passed the order within 6 months from 01.07.2012 (i.e. from the end of the month in which he received the letter from the Assessing Officer). Secondly, the Ld. counsel submits that there was a reasonable cause for non-deduction of tax at source. Stating that the provisions of Chapter XVIIB (TDS) were invoked on account of assessment under the head ‘business income’ as against the ‘short term capital gain’ returned by the assessee and but for this, TDS provision would not have been made applicable at all. Thus it is stated that there was no mala fide

Mrs. Sonal Shah & Mrs. Tarulata Shah 8 ITA Nos. 6462, 6463, 6464 & 6465/Mum/2018 intention in not deducting the tax at source from the interests paid since the assessee was under a bona fide belief that since she was not carrying on any business and had not even claimed the deduction of interests paid, provisions of TDS were not applicable to her. It is stated that this is clear from the copy of the return and accounts filed by the assessee for the year ended 31.03.2008. Further, after having been assessed under the head ‘business income’, the assessee was not granted deduction in respect of interests paid (and rightly so since she had not deducted the tax at source as required u/s 194A). Thus the assessee was already penalized in terms of payment of taxes in respect of income to the tune of Rs.19,33,131/- in the form of disallowance of interest. Thus it is stated that the penalty u/s 271C should not have been levied as there was a reasonable cause for failure to deduct the tax at source in terms of section 273B of the Act. Thirdly, the Ld. counsel submits that the recipients of interest and sale price of the property had paid taxes in their individual capacity. In this respect a statement of interest paid, showing the name of the persons, their address, amount and their PAN was filed. Reliance is placed by him on the decision in Hindustan Coca Cola Beverage Pvt. Ltd. v. CIT (2007) 293 ITR 226 (SC), Wipro GE Medical Systems Ltd. v. ITO (2005) 3 SOT 627 (Bang-Trib). It is further stated that the first proviso to section 201(1) as also Rule 31ACB were inserted by the Finance Act, 2012 w.e.f. 01.07.2012 and were not applicable for the assessment year prior to that date. As such, the question of filing Form 26A in terms of Rule 31ACB did not arise for the AY 2008-09 in the present case.

Mrs. Sonal Shah & Mrs. Tarulata Shah 9 ITA Nos. 6462, 6463, 6464 & 6465/Mum/2018 As far as the tax deductible from the payment to non-resident of Rs.8.87 crore is concerned, the Ld. counsel submits that tax is deductible in terms of section 195 in the case of non-resident only in respect of other sum chargeable under the Act. In the present case, the sellers had already offered the sale price for taxation by investing the money in capital bonds to the extent allowed and had paid the tax on the balance amount. As such, there was no revenue loss and hence penalty u/s 271C was un-called for having regard to section 273B of the Act. It is stated that the relevant documents of the sellers showing amount paid to them having been offered by them under the head ‘long term gain’ and the tax paid thereon in accordance with law were duly filed before the CIT(A). Also reliance is placed by him on the decision in CIT v. Sencma SA, France (2007) 288 ITR 76 (Del), CIT v. Elililly& Co. (India) Pvt. Ltd. (2009) 312 ITR 225 (SC). Further, it is stated that in most of the cases, the appellant had not claimed deduction u/s 40(a)(iii) in computation of their ‘business income’ and it was one more reason for not imposing the penalty u/s 271C because by not claiming deduction u/s 40(a)(iii), higher corporate tax was paid by the appellant. Employees had paid their taxes directly by way of advance tax/self-assessment tax and the assessee was under the genuine and bone fide belief that it was not under any obligation to deduct the tax at source and hence penalty u/s 271C was uncalled for. Reliance is placed by him on the decision in New Vistas Constructions v. ITO(2015) 174 TTJ 84 (Hyd-Tri), CIT (TDS) v. D.P. Vekaria – (2014) 227 Taxman 92 (Guj.), Bombay Mercantile Co.op Bank Ltd. v. JCIT- (2015) – TIOL – 843-ITAT-AHE. [P. 117-120], Prasad Film Laboratories Pvt.

Mrs. Sonal Shah & Mrs. Tarulata Shah 10 ITA Nos. 6462, 6463, 6464 & 6465/Mum/2018 Ltd.v.Addl. CIT – (2012) TIOL – 626-ITAT-HYD. [P. 121-126], Muthoot Bankers v. JCIT- (2012) 50 SOT-0146 (URO) (ITAT-Cochin) [P. 127-130] and CIT v. Bharti Cellular Ltd. – (2011) 330 239 (SC). Finally, it is stated that the penalty u/s 271C was un-called for in the present case, since the recipients of interest and property consideration had paid taxes on their income independently. 6. On the other hand, the Ld. DR submits that the date when the authority competent to impose such penalty had issued show cause notice is the date of initiation of the penalty for reckoning the proceedings. Accordingly, it is stated that this order is not time-barred. In this regard, reliance is placed by him on the decision in CIT v. Gupta Mills Stores (2009) 184 Taxman 230 (All) and Grihalakshmi Vision v. Addl. CIT (2015) 63 taxmann.com 196 (Ker). Further, the Ld. DR submits that the assessee had no reasonable cause for not deducting tax at source and the penalty u/s 271C is rightly levied by the AO. Thus he supports the order passed by the Ld. CIT(A). 7. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. The 3rd, 5th, 8th grounds of appeal 7.1 The above grounds of appeal are discussed together as they address a common issue.In the case of Mahesh Wood Products (P.) Ltd. (supra), relied on by the Ld. counsel, pursuant to a search operation, a notice u/s 153A of the Act was issued to the assessee. Before issuance of notice u/s 153A, approval of the JCIT would have been taken for issuing

Mrs. Sonal Shah & Mrs. Tarulata Shah 11 ITA Nos. 6462, 6463, 6464 & 6465/Mum/2018 the notice u/s 153A. There was no initiation of penalty proceedings. More than 6 months thereafter, on 23.07.2012, the AO made a reference to the Addl. CIT on the basis of which a notice was issued on 28.08.2012 by the JCIT asking the assessee to show cause as to why penalty be not levied u/s 271D and 271E of the Act as a result of the contravention of section 269SS and 269T of the Act. A further notice was sent on 25.09.2012 seeking the assessee’s reply, which ultimately was submitted on 10.10.2012. In the reply itself, the assessee contended that the penalty proceedings were barred by limitation u/s 275(1)(c) of the Act. The short question before the Hon’ble High Court urged by the Revenue was “whether the ITAT erred in law by holding that the order imposing the penalty was not passed within the time limit laid down u/s 275(1)(c) of the Act?”. The Hon’ble High Court held as under: “8. At the outset, the Court observes that no question arose in IKEA Trading Hong Kong Ltd. (supra) as to whether the starting point of limitation could be a date earlier than the issuance of the SCN, viz., the date on which the AO wrote a letter to the ACIT recommending such initiation. No such contention appears to have been raised or dealt with in the said case. Therefore, the said decision is distinguishable on facts. 9. However, this question came up for consideration in JKD Capital &Finlease Ltd. (supra). The date on which the AO recommended the initiation of penalty proceedings was taken to be the relevant date as far as Section 275(1)(c) was concerned. There was no explanation for the delay of nearly five years in the ACIT acting on the said recommendation. The Court held that the starting

Mrs. Sonal Shah & Mrs. Tarulata Shah 12 ITA Nos. 6462, 6463, 6464 & 6465/Mum/2018 point would be the 'initiation' of penalty proceedings. Given the scheme of Section 275(1)(c) it would be the date on which the AO wrote a letter to the ACIT recommending the issuance of the SCN. While it is true that the ACIT had the discretion whether or not to issue the SCN, if he did decide to issue a SCN, the limitation would begin to run from the date of letter of the AO recommending 'initiation' of the penalty proceedings. 10. In the present case, the limitation in terms of Section 275 (1) (iii) of the Act began to run on 23rd July, 2012 and the last date for passing the penalty orders was 31st January, 2013. Therefore, the penalty orders issued on 26thFebruary 2013 were clearly barred by limitation. 11. No substantial question of law arises for consideration from the impugned common order of the ITAT. The appeals are dismissed.” To sum up, given scheme of section 275(1)(c), limitation would begin to run from the date of letter of the AO recommending ‘initiation’ of the penalty proceedings. 7.2 In the case of Gupta Mills Stores (supra), relied on by the Ld. DR there was a deposit of certain amount in the name of ‘D’ with the assessee-firm. The assessee issued bearer cheques in the name of ‘D’ for repayment of a part of the deposit in the year under consideration. Since as per the provisions of section 269T, the repayment should have been made through account payee cheque or account payee draft, the AO issued the notice u/s 271E on 01.08.2003. Thereafter, the matter was referred to the Joint Commissioner, who issued a notice dated 03.09.2003 to the assessee. The reply filed by the assessee was not accepted by the Joint Commissioner, and he imposed penalty u/s 271E vide order dated 29.03.2004. The assessee filed appeal before the CIT(A)

Mrs. Sonal Shah & Mrs. Tarulata Shah 13 ITA Nos. 6462, 6463, 6464 & 6465/Mum/2018 which was dismissed. On second appeal the Tribunal held that no penalty was leviable, since it was a time barring matter and there was no passing of the money. On appeal to the High Court, the revenue contended that 6 month period was to be calculated from the date of the notice issued by the Joint Commission who was competent to levy the penalty u/s 271E and, therefore, penalty order was passed within time. On further appeal, the Hon’ble High Court held : “6. Having heard learned counsel for the parties, we have perused the impugned order. From a perusal of the record, it is clear that the notice for the levy of penalty under section 271E of the Act was issued by the Income-tax Officer on 1-8- 2003 and by the Joint Commissioner of Income-tax on 3-9-2004. It means that the proceeding has been initiated in the financial year 2003-04 which ended on 31-3-2004. Thus, the penalty order could be passed by 31-3-2004. If the limitation is calculated on the basis of the second part of clause (c) of section 275(1) of the Act from the date of notice issued by the Income-tax Officer on 1-8-2003 from the end of the month, six month expired on 28-2- 2004 and from the date of the notice issued by the Joint Commissioner of Income-tax on 3-9-2003 from the end of this month, six months expired on 31-3-2004. In this way, later period by which the penalty order could be passed was 31-3-2004. In this view of the matter, the order passed on 29-3- 2004 by the Joint Commissioner of Income-tax cannot be said to be barred by limitation. 7. In view of the above, it is not necessary for us to consider whether the period of six months should be calculated from the date of notice issued by the Income-tax Officer or by the Joint Commissioner of Income-tax who was competent to levy the penalty under section 271E of the Act.

Mrs. Sonal Shah & Mrs. Tarulata Shah 14 ITA Nos. 6462, 6463, 6464 & 6465/Mum/2018 8. In this view of the matter, the order of the Tribunal is erroneous. Question No. 1 is answered in favour of the revenue and against the assessee.” 7.3 In the case of Grihalakshmi Vision (supra) relied on by the Ld. DR, the assessee filed the return of income for the AY 2005-06 declaring loss. In the assessment order, it was found that by accepting deposits and making repayments in violation of the provisions contained in sections 269SS and 269T penalty provisions of sections 271D and 271E were attracted. Accordingly, the matter was referred to the Joint Commissioner, who issued notice dated 28.03.2008. To the notice, replies were given and finally order u/s 271D and 271E were passed on 29.07.2008. The penalty orders were confirmed by the CIT(A) and the Tribunal. The question of law, relevant for us, came up for consideration were whether the Tribunal was correct in holding that the orders imposing penalty u/s 271D and 271E were passed within the period of limitation prescribed u/s 275(1)(c) and whether the Tribunal was correct in confirming the findings without examining the circumstances providing reasonable cause as contemplated u/s 273B of the Act. In appeal, the Hon’ble High Court held : “9. As we have already seen, although Section 271D and E of the Income Tax Act provides for levy of penalty for contravention of Sections 269SS and 269T. As per sub section (2) to both these sections any penalty imposable under sub section (1) of these provisions shall be imposed by the Joint Commissioner. It was, therefore, that the matter was referred to the Joint Commissioner who passed orders on 29.7.2008 levying penalty. 10. Question to be considered is whether proceedings for levy of penalty, are initiated with the passing of the order of assessment by the Assessing Officer or whether such proceedings have commenced with the issuance of the

Mrs. Sonal Shah & Mrs. Tarulata Shah 15 ITA Nos. 6462, 6463, 6464 & 6465/Mum/2018 notice issued by the Joint Commissioner. From statutory provision, it is clear that the competent authority to levy penalty being the Joint Commissioner. Therefore, only the Joint Commissioner can initiate proceedings for levy of penalty. Such initiation of proceedings could not have been done by the Assessing Officer. The statement in the assessment order that the proceedings under Section 271D and E are initiated is inconsequential. On the other hand, if the assessment order is taken as the initiation of penalty proceedings, such initiation is by an authority who is incompetent and the proceedings thereafter would be proceedings without jurisdiction. If that be so, the initiation of the penalty proceedings is only with the issuance of the notice issued by the Joint Commissioner to the assessee to which he has filed his reply. 11. The only case of the assessee is that if the period of limitation prescribed in Section 271(1)(c) is reckoned from the date of the assessment order dated 6.11.2007, the penalty order passed by the Joint Commissioner on 29.7.2008 is beyond the time permitted in the above section. As we have already held, the initiation of the penalty proceedings is not by the Assessing Officer but by the Joint Commissioner and if that be so, the order levying penalty passed by the Joint Commissioner is within the time prescribed in Section 275(1)(c).” To sum up, penalty proceedings under provisions of sections 271D and 271E are initiated not by the AO but only with the issuance of notice by the Joint Commissioner. 7.4 In the instant case the AO [ITO-21(2)(4)], Mumbai has intimated the said two defaults of the assessee vide his office letter dated 22.06.2012 to the JCIT. This is clearly evident from page 2 of the penalty order dated 30.10.2010 passed by the JCIT.

Mrs. Sonal Shah & Mrs. Tarulata Shah 16 ITA Nos. 6462, 6463, 6464 & 6465/Mum/2018 As mentioned earlier in the case of Mahesh Wood Products (P) Ltd. (supra), it is held that given scheme of section 275(1)(c), limitation of begin to run from the date of letter of the AO recommending ‘initiation’ of the penalty proceedings. On the other hand, in the case of Gupta Mills Stores (supra), it is held that 6 months period was to be calculated from the date of notice issued by the Joint Commissioner who was competent to levy the penalty u/s 271E. Also in the case of Grihalakshmi Vision (supra), it is held that penalty proceedings under provisions of sections 271D and 271E are initiated not by the AO but only with issuance of notice by the Joint Commissioner. We should prefer the reasoning of the majority of the High Courts to the one found acceptable by one High Court. Such a view is found acceptable in CIT v. P J Chemicals Ltd. [1994] 76 Taxman 611 (SC) Thus, we hold that in the instant case the 6 months period was to be calculated from the date of the notice issued by the Joint Commissioner who was competent to levy the penalty u/s 271C and, therefore, penalty order was passed well within time. Having discussed the decisions by the High Courts, we are not adverting to the orders of the Tribunal cited by both sides. Thus, the 3rd, 5th, 8th grounds of appeal are dismissed. 7.5 The 4th ground of appeal As per section 194A, the person, who is responsible for paying to a resident any income by way of interest other than ‘interest on

Mrs. Sonal Shah & Mrs. Tarulata Shah 17 ITA Nos. 6462, 6463, 6464 & 6465/Mum/2018 securities’, is required to deduct tax thereon at the rates in force. Tax is to be deducted either at the time of payment of interest in cash or by issue of cheque or draft or any other mode or credit of it to any account, whichever is earlier. As per section 194H any person, who is responsible for paying, to a resident, any income by way of commission or brokerage, shall, deduct income tax thereon. It will be deducted at the time of credit of such income to the account of the payee or to any account, whether called suspense account or by any other name or at the time of payment of such income in cash or by issue of a cheque or draft or by any other mode, whichever is earlier. As per section 195 any person responsible for paying to a non- resident, not being a company or to a foreign company, any interest (not being interest referred to in section 194LB or section 194LC or section 194LD) or any sum chargeable under this Act (other than salary) shall, at the time of credit of such income to the account of the payee or at the time of payment thereon in cash or by issue of a cheque or draft or by any other mode, whichever is earlier deduct income tax thereon at the rates in force. Thus the TDS provisions as mentioned above are applicable in the present case. Whether, there was reasonable ground on the part of the assessee in not deducting tax at source is another matter. Thus the 4th ground of appeal is dismissed.

Mrs. Sonal Shah & Mrs. Tarulata Shah 18 ITA Nos. 6462, 6463, 6464 & 6465/Mum/2018 7.6 The 1st, 2nd, 6th & 7th of appeal It is the contention of the Ld. counsel that the appellant had filed the details of recipients of interest with copy of their return and the details of payment to non-residents for property and the copies of their return with the CIT(A). In the case of Hindustan Coca Cola Beverages (P.) Ltd. (supra), the Hon’ble Supreme Court has held that where deductee, recipient of income, has already paid taxes on amount received from deductor, department once again cannot recover tax from deductor on same income by treating deductor to be assessee-in-default for short fall in its amount of tax deducted at source. In the instant case, the JCIT has observed at para 4 of his order dated 30.10.2010 that the assessee failed to submit the details regarding income tax returns filed by the payees to whom it had made various payments. We are of the considered view that the ratio laid down in Hindustan Coca Cola Beverages (P.) Ltd. (supra) has relevance in the instant case. Therefore, we restore the matter in respect of the above grounds of appeal to the file of the JCIT to find out whether the deductee, recipient of income, has already paid taxes on amount received from the deductor. We also direct the assessee to file the relevant documents/evidence before the AO. Needless to say, the AO would give reasonable opportunity of being heard to the assessee before finalizing the penalty order. Thus the 1st, 2nd, 6th & 7th grounds of appeal are allowed for statistical purposes.

Mrs. Sonal Shah & Mrs. Tarulata Shah 19 ITA Nos. 6462, 6463, 6464 & 6465/Mum/2018 Facts being identical, our above decision in ITA No. 6462/MUM/2018 for AY 2008-09 applies mutatis mutandis to ITA No. ITA No. 6463/MUM/2018 (AY 2009-10), ITA No. 6464/MUM/2018 (AY 2008-09) and ITA No. 6465/MUM/2018 (AY 2009-10). 8. In the result, the appeals are partly allowed. Order pronounced in the open Court 25/02/2019. Sd/- Sd/- (PAWAN SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 25/02/2019. Rahul Sharma, Sr. P.S. Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Sr. Private Secretary) ITAT, Mumbai