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Income Tax Appellate Tribunal, DELHI BENCH ‘F’ : NEW DELHI
Before: SHRI N.K. SAINI & SHRI KULDIP SINGH
Date of Hearing : 18.09.2017 Date of Order : 21.09.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : Since common question of law and facts is involved in the aforesaid appeals filed by the assessee against a single order dated 01.10.2015 passed by the ld. CIT (A) for AYs 2008-09 and 2009- 10, the same are being disposed off by way of consolidated order to avoid repetition of discussion.
The appellant, M/s. Akums Drugs & Pharmaceuticals Ltd. (hereinafter referred to as ‘the assessee company’), by filing the present appeal, sought to set aside the impugned order dated 01.10.2015 passed by the Commissioner of Income-tax (Appeals)-35, New Delhi qua the assessment years 2008-09 & 2009-10 on the grounds inter alia that :-
ASSESSMENT YEAR : 2008-09
“1. That on the facts and circumstances of the case and the provision of law the Ld. CIT (A) has failed to appreciate that the penalty order passed u/s 271C of the Income Tax Act, 1961 by the JCIT is illegal and bad in law.
2. That on the facts and circumstances of the case and the provision of law the Ld. CIT (A) has erred in sustaining penalty of Rs.72,959/- under section 271C of the Income Tax Act, 1961”
ASSESSMENT YEAR : 2009-10
“1. That on the facts and circumstances of the case and the provision of law the Ld. CIT (A) has failed to appreciate that the penalty order passed u/s 271C of the Income Tax Act, 1961 by the JCIT is illegal and bad in law.
2. That on the facts and circumstances of the case and the provision of law the Ld. CIT (A) has erred in sustaining penalty of Rs.49,996/- under section 271C of the Income Tax Act, 1961”
Briefly stated the facts necessary for adjudication of the controversy at hand in both the aforesaid appeals are : on the basis of assessment completed under section 143 (3) of the Income-tax Act, 1961 (for short ‘the Act’) for Assessment Years 2008-09 and 2009-10, Assessing Officer noticed that the TDS was not deducted by the assessee company at source amounting to Rs.72,959/- and Rs.49,996/- respectively, which the assessee was required to disclose. AO, after issuing the notice u/s 271(1)(c) of the Act read with section 274 (1) initiated the penalty proceedings. Assessee submitted that immediately after the objections raised by the tax auditor, assessee company has deducted TDS on the above payment and deposited the same. AO, being dis-satisfied with the explanation, proceeded to impose the penalty to the tune of Rs.72,959/- and Rs.49,996/- for AYs 2008-09 and 2009-10 respectively.
Assessee company carried the matter by way of filing appeals before the ld. CIT (A) who has confirmed the penalty.
Feeling aggrieved, the assessee company has come up before the Tribunal by way of challenging the impugned order passed by ld. CIT (A).
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Undisputedly, assessee company has not deducted and deposited the TDS to the tune of Rs.72,959/- for AY 2008-09 u/s 194C & 194J. Similarly, assessee company has also not deducted TDS for Rs.49,996/- for AY 2009-10 respectively u/s 194C, 194J & 194I. Assessee company has taken defence for non-deducting and non-depositing the TDS as clerical error which was subsequently noticed by tax auditors and immediately thereafter, assessee company has deposited the TDS with tax authorities. It is also not in dispute that in the completed assessment, the assessee has never declared assessee in default nor any order has been passed by the AO subsequently u/s 201 of the Act.
Bare perusal of the facts and circumstances of the case and order passed by the lower revenue authorities leads to the conclusion that omission for non-deduction of the TDS was not intentional rather due to bonafide mistake as immediately after pointing out by the tax auditors, TDS was deposited by the assessee company out of its own pocket without collecting it from the deductee. Assessee company has even deposited the TDS even before deduction made by the revenue authorities.
So, we are of the considered view that it was a reasonable cause for the assessee company not to deposit the TDS within time.
Furthermore, penalty order u/s 271(1)(c) of the Act has been passed without declaring the assessee in default by passing order u/s 201(1) of the Act. So, when AO has not recorded his satisfaction for initiation of the penalty u/s 271(1)(c) in the order required to be passed u/s 201(1) of the Act, the penalty order is not sustainable.
Coordinate Bench of the Tribunal in Indo Nissin Foods Ltd. vs. JCIT – 83 TTJ Bang 440 while deciding the identical issue held that the voluntary payment of tax and interest, albeit with delay, cannot constitute as an act of malafide and as such penalty is not sustainable, by relying upon the decision rendered by Hon’ble Delhi High Court in Azadi Bachao Andolan vs. UOI – (2001) 252 ITR 471 (Del.).
Hon’ble Madhya Pradesh High Court in case of CIT vs. Senior Accounts Officer – (2005) 276 ITR 84 (MP) while deciding the identical issue also decided the same in favour of the assessee as it was not a case of deliberate attempt on the part of the assessee to avoid payment by way of deduction for being deposited.
11. Similarly, Hon’ble Delhi High Court also CIT vs. Cadbury India Ltd. – (2011) 11 taxmann.com 66 (Delhi) also deleted the penalty in a case where there was no malafide intention nor there was negligent intention or want of bona fide but a case of misconceived belief of applicability of one provision of the law than the other. In the instant case, there is not an iota of malafide or an attempt to avoid the payment of tax on the part of the assessee company and as such, the penalty orders are not sustainable.
In view of what has been discussed above, penalty to the tune of Rs.72,959/- and Rs.49,996/- for AYs 2008-09 and 2009-10 respectively is hereby deleted. Consequently, appeals filed by the assessee stand allowed. Order pronounced in open court on this 21st day of September, 2017.