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Income Tax Appellate Tribunal, DELHI BENCH ‘G’ : NEW DELHI
Before: SHRI R.K. PANDA & SHRI KULDIP SINGH
Date of Hearing : 03.02.2021 Date of Order : 17.02.2021
O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, ITO, Ward 78 (4), New Delhi (hereinafter referred to as ‘the Revenue’) by filing the present appeal sought to set aside the impugned order dated 21.03.2017 passed by the Commissioner of Income-tax (Appeals)-41, New Delhi qua the assessment year 2011-12 on the grounds inter alia that :-
“1. Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in holding that the assessee was not liable to penalty under section 271C of the Income Tax Act as there was no contumacious conduct on the part of the assessee particularly when the assessee itself had deducted tax under section 194C of the 1. T. Act on payments to the same Deductee in not only FY 2010- 11 but also in preceding years?
1.1 Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in holding that there was no loss to the revenue as the Deductee had offered such receipt as its income and consequentially treated it as a reasonable cause as per section 273B of the I.T. Act particularly when the assessee was required to pay interest under section 201(1A) of the 1. T. Act till the date of deduction to the date of filling of ITR by the Deductee even in such cases? 1.2 Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in cancelling penalty levied under section 271C of the 1. T. Act by holding that there was no malafide intention for non-deduction of tax particularly when the assessee itself had deducted tax under section 194C of the I.T. Act not only on payments to the same Deductee in FY 2010-11 but also in preceding years?
1.3 Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in cancelling penalty levied under section 271C of the I.T. Act without demonstrating genuineness of the stated reasonable cause of the assessee particularly when the assessee was having good technical & legal assistance of employees and professionals? 2 That the order of the CIT(A) being erroneous in law and on facts needs to be vacated and the order of the JCIT be restored.”
Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessing Officer (AO) levied a penalty of Rs.51,28,950/- under section 271 C of the Income-tax Act, 1961 (for short ‘the Act’) on receipt of reference from ITO, Ward 78 (4), Delhi that assessee has failed to deduct tax at source of Rs.51,28,950/- on 20.08.2010 u/s 194J of the Act.
Assessee carried the matter before the ld. CIT (A) by way of filing the appeal who has deleted the penalty by accepting the appeal. Feeling aggrieved by the order passed by the ld. CIT (A), the Revenue has come up before the Tribunal by way of filing the present appeal.
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 failed to deduct tax at source of Rs.51,28,950/- on due date of 20.08.2010. It is also not in dispute that subsequently, tax was deducted at source on 31.03.2011 and the same was deposited in the Government account on 29.09.2011 prior to due date of filing of income-tax return. It is also not in dispute that tax deducted at source has been deposited by the assessee company on its own account without intervention of the Revenue Department.
In the backdrop of the aforesaid undisputed facts, we are of the considered view that when the assessee company has suo motu deposited the tax deducted at source along with interest in the Government account to settle the dispute with the Revenue, no malafide to the assessee company can be attributed.
Hon’ble Delhi High Court in the case of CIT vs. ITOCHU Corpn. (2004) 139 taxman 348 (Delhi) while dealing with the identical issue held that when tax along with interest has been voluntarily paid, it shows the bonafide belief for the assessee for not deducting the tax at source and as such, there was a reasonable cause which was covered by section 273B. 8. Hon’ble Supreme Court in case of CIT-XVIII vs. Bank of Nova Scotia 2016-TIOL-3-SC-IT also upheld the judgment passed by the Hon’ble High Court of Delhi upholding the order passed by the Tribunal on the ground that when there is no malafide on the part of the assessee, penalty u/s 271C is not sustainable. 9. In view of what has been discussed above, we are of the considered view that when, in the undisputed facts and circumstances of the case, assessee company has voluntarily on its own deducted the tax and deposited the same with Government exchequer along with interest well prior to date of filing of income- tax return, it shows its bonafide creating a reasonable cause to be covered u/s 273B of the Act, hence penalty imposed by the AO is not sustainable. So, finding no illegality or perversity in the impugned order passed by the ld. CIT (A), present appeal filed by the Revenue is hereby dismissed. Order pronounced in open court on this 17th day of February, 2021.