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Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
ORDER Per N. K. Saini, AM: These three appeals by the assessee are directed against the separate orders each dated 30.04.2015 of the ld. CIT(A)-I, Noida.
Since, the issues involved are common which realte to the confirmation of penalty levied by the AO u/s 271C of the Income Tax Act, 1961 (hereinafter referred to as the Act) and the appeals were heard together, so, these are being disposed off by this common order for the sake of convenience and brevity.
In all these appeals, common issues are involved, the only difference is in the amount of the penalty which is different for each to 3848/Del/2015 2 Jaypee Infratech Ltd. of the years. The grounds raised
in 2011-12 read as under: “1. That the learned CIT (Appeals) [Ld. CIT(A)] has erred in confirming the penalty of Rs. 45,356/- u/s 271C of the Income Tax Act, 1961 (the Act).
2. That the Ld. CIT (A) has erred in law and on facts in not upholding the ground of appeal and contention of the appellant that – 1) The impugned order of penalty is barred by limitation under the proviso to clause (a) of s. 275(1) of the Act. 2) The penalty could be imposed before the expiry of the financial year in which the (main) proceeding - in the course of which action for the imposition of penalty was initiated - was completed, or within one year from the end of the financial year in which the order of the Commissioner (Appeals) was received. 3) Having let the first limitation expire (on 31.3.2014) and opted for the appellate order-based limitation, the Additional CIT could not have imposed the penalty on 31.10.2014 even before the receipt of order of the Commissioner (Appeals) in respect of the main proceeding. 4) The appellate order-based extended limitation under the proviso (supra) becomes available only on the receipt of order of the Commissioner (Appeals) in respect of the main proceeding.
3. That the Ld. CIT (A) has erred in not dealing with and adjudicating the substantial ground of appeal taken and argued on behalf of the appellant that the impugned penalty was imposed without hearing the appellant and without giving it the opportunity to show reasonable cause, as prescribed in sec. 273B, in violation of the fundamental and universal natural-jus rice principle of audi alteram partem. to 3848/Del/2015 3 Jaypee Infratech Ltd.
4. That the Ld. CIT (A) has erred in law and on the facts in upholding the impugned penalty u/s 271C of the Act imposed on the appellant for alleged non deduction of tax at source u/s 1941 of Act from annual lease rent paid to the Yamuna Industrial Development Authority (YEIDA) under the ninety year land lease agreements.
5. That the Ld. CIT (A) has erred on facts and in law in holding that the appellant did not have a reasonable cause for non deduction of tax u/s 1941 of the Act from the annual lease rent paid under the aforesaid ninety-year land lease agreements. The alleged non-deduction of tax u/s 1941 is being vehemently disputed in appeal by the appellant before the Hon'ble ITAT where the appellant believes that it will succeed in its view and where the appellant believes that it will be held on the facts and law involved that no deduction of tax u/s 194I was called for in this case. 6. That the order of Ld. CIT(A) is based on erroneous view and/or non- appreciation of the facts and law involved without properly considering or appreciating the material and explanation on record, without appropriate lawful specific opportunity and is contrary to much case law in the appellant's favour. 7. That the Grounds of Appeal
, as herein are without prejudice to each other.
8. That the order as made is against law and facts of the case involved.
9. That the appellant respectfully craves leave to add, amend, alter and / or forego any ground(s) at or before the time of hearing.” In all other appeals under consideration, similar grounds are raised the only difference in the amount of penalty.
ITA Nos. 3846 to 3848/Del/2015 4 Jaypee Infratech Ltd.
During the course of hearing, the ld. Counsel for the assessee at the very outset stated that the issue under consideration is squarely covered in assessee’s favour vide order dated 23.11.2017 in to 4839/Del/2015 for the assessment years 2011-12 to 2013-14 in assessee’s own case wherein the departmental appeals on the identical issues were dismissed. It was further submitted that the present appeals for the same assessment years had been filed by the assessee. Therefore, the issue is squarely covered. The ld. Counsel for the assessee also furnished the copy of the said order dated 23.11.2017 which is placed on record.
In his rival submissions, the ld. Sr. DR although supported the impugned orders passed by the ld. CIT(A) but could not controvert the aforesaid contention of the ld. Counsel for the assessee.
We have considered the submissions of both the parties and the material on record, it is noticed that an identical issue having similar facts was a subject matter of the departmental appeals in to 4839/Del/2015 for the assessment years 2011-12 to 2013-14 wherein vide order dated 23.11.2017, it has been held as under: “3. We have heard both the sides and perused the relevant material on record. It is observed that the order u/s 201(1)/201(1A) came up for consideration before the Tribunal. Vide order dated 31.08.2017 in ITA No.4279 to 4281/Del/2015 etc., the Tribunal has held the assessee liable for deduction of tax at source in respect of Lease rent and the liability in respect of Interest payment has been has been deleted. A copy of such order is placed on page 99 onwards of the paper book. In view of the fact that the liability of the assessee for deduction of tax at source in respect of Interest payment has been waived by the Tribunal, there remains no question of imposing any penalty u/s 271C in that respect. We, therefore, uphold the impugned order to this extent. 4. As regards TDS on payment of Lease rent, the Tribunal has decided this issue against the assessee by following the judgment of the Hon'ble Delhi to 3848/Del/2015 5 Jaypee Infratech Ltd. High Court in Rajesh Projects (India) (P) Ltd. vs. CIT-TDS (2017) 78 taxmann.com 263 (Del). 5. Before considering the sustainability or otherwise of penalty u/s 271C in respect of Lease rent, it is necessary to record the relevant factual matrix. The assessee was given some land on lease for a period of 90 years. The assessee was free to make any construction on such land. Annual lease rent was paid for such land, which the assessee treated as not attracting the provisions of section 194-I. It is in respect of such payment of lease rent that the issue has been decided by the Tribunal against the assessee by following the judgment of the Hon'ble Delhi High Court, which was delivered on 16.02.2017. Assessment years under consideration are 2011-12 to 2013-14. Our attention has not been drawn towards any judgment prevalent at the material time casting obligation on the assessee to deduct tax at source under similar circumstances. 6. The Kolkata Bench of the Tribunal in ITO vs. Earnest Towers (P) Ltd., vide its order dated 13.05.2015 (ITA No.265/Kol/2012), a copy of which is available at page 72 onwards of the paper book, has held that payment of lease premium in respect of property on which development of the area of land was allowed, cannot convert lease premium into tenancy as per section 194-I of the Act. It is an admitted position that the assessee got possession of the land somewhere in the year 2008 and started paying rent without any deduction of tax at source. It was only pursuant to Survey carried out in the year 2014 that the assessee was held to be liable for deduction of tax at source in respect of such lease rent payment. The fact that the assessee did not deduct tax at source from the lease rental payments in preceding years, is not disputed.
Section 273B of the Act provides that in case of a reasonable cause, penalty otherwise exigible, inter alia, u/s 271C of the Act, cannot be imposed. When we advert to the facts of the instant case, being - no deduction of tax at source made prior to the year of survey on 24.02.2014; no other order against the assessee requiring deduction of tax at source at that time when the assessee made payment of lease rental; and the judgment of the Hon'ble Delhi High Court delivered only on 16.02.2017 casting obligation for making deduction of tax at source -, it becomes abundantly clear that the assessee entertained a bona fide belief that no tax withholding was required on lease rent payments. This belief, being a reasonable cause, for non deduction of tax at source in respect of lease rent payment, magnetizes the provisions of section 273B. Considering the provisions of section 271C read with section 273B, we hold that the penalty imposed u/s 271C is not sustainable. to 3848/Del/2015 6 Jaypee Infratech Ltd. 8. Facts of the cross appeals for subsequent two assessment years, namely, 2012-13 and 2013-14 are, admittedly, similar. Following the view taken hereinabove, while upholding the action of the ld. CIT(A) in deleting the penalty u/s 271C in respect of Interest payment, we order to delete penalty in respect of Lease rent as well.” 7. So, respectfully following the aforesaid referred to order, the impugned penalties u/s 271C of the Act levied by the AO and sustained by the ld. CIT(A) are deleted for all the assessment years under consideration.
In the result, the appeals of the assessee are allowed. (Order Pronounced in the Court on 19/06/2018)