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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: SMT. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL
PER SIDDHARTHA NAUTIYAL, JM: This appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax(Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre, (in short “NFAC”) in Order No. ITBA/NFAC/S/250/2021-22/1034566352(1) vide order dated 02.08.2021 passed for Assessment Year 2016-17. 2. The assessee has taken the following grounds of appeals:-
“1. The order of the learned CIT (A), NFAC is bad in law and contrary to the facts of the case. Asst.Year –2016-17
The learned CIT (A), NFAC has erred in upheld the imposing penalty of Rs.4,53,400/- U/s.271C r.w.s. 201(1) of the Act.
The learned CIT (A), NFAC has passed the order without giving us adequate opportunity of being heard.
The learned CIT (A), NFAC has erred in not considering the first proviso to section 201(1) of the Income tax Act, 1961. 5. The learned CIT (A), NFAC has erred in upheld in the imposition of penalty u/s.271C even though no order u/s.201 (1) has been passed by the Joint Commissioner of Income-tax, TDS Range, Rajkot before initiation of proceedings u/s.271C of the Income-tax Act 1961. 6. The learned CIT(A), NFAC has erred in not considering the replies filed in response to the show cause notice issued by The Joint Commissioner of Income-tax, TDS Range, Rajkot.
The learned CIT (A), NFAC has erred in not considering the Adjournment sought by the Appellant for the hearing was fixed on 21.07.2021 by the notice u/s.250 dated 09.07.2021. 8. The order of the learned CIT (A), NFAC is illegal, unjustified and against the principles of natural justice.
Without prejudice to the above your appellant craves to add, amend, alter, vary or withdraw all or any of the grounds on or before the hearing of appeal.” Asst.Year –2016-17
The brief facts of the case are that the assessee purchased two immovable properties amounting to Rs. 3.88 crores and Rs. 64.75 lakhs on which no TDS was deducted under Section 194-IA of the Act. The Assessing Officer initiated penalty proceedings under Section 271C of the Act, during the course of which the assessee submitted that the seller of the aforesaid two properties are regularly assessed to tax and they have disclosed income on sale of the aforesaid properties in their return of income and paid taxes thereon. A certificate from the chartered accountant under the First Proviso to Section 201 of the Act was also furnished before the Assessing Officer. However, the Assessing Officer rejected the contention of the assessee and imposed penalty under Section 271C of the Act, with the following observations:
“2. The reply of the assessee has been considered, but it is not found tenable for the reasons that assessee was liable to deduct tax and pay it to Government as per the provisions of the section 1941A of the Income Tax Act, 1961, within time limit prescribed in the Act. The payment of taxes by seller may give relief to the assessee to the extent of Tax i.e. applicability of provisions of section 201 of the Income Tax Act 1961 but by not deducting the tax assessee is in default and liable for all other provisions including penalty and interest, which is apparent from the submission of the assessee that penal interest u/s 201(1A) of the Income Tax Act, 1961 has been paid.
In view of above mentioned facts the argument that the sellers of property are regularly assessed to tax and they have disclosed income on sale of above referred property in Income Tax Returns and paid tax Asst.Year –2016-17 thereon and therefore, penalty in not leviable is not acceptable. The assessee has without reasonable cause failed to deduct the tax and pay it to the government account within permissible period.”
In appeal, Ld. CIT(Appeals) upheld the levy of penalty with the following observations:
“3.3 I am inclined to agree with the findings of the assessing officer. The AO has succinctly discussed the issue in the order. The mere factum of the seller having disclosed the income of the sale of property in the return and having paid tax thereon and interest having being paid by the appellant does not protect the appellant from penalty. As per the provisions of section 194IA of the IT Act, the appellant was liable to deduct tax and pay it to Government within the time limit prescribed. Section 271C of the Act provides for the levy of penalty in cases where the appellant has failed to comply with provisions as required u/s 201(1) of the IT Act i.e. deduct the whole or any part of the tax as required by or under the provisions of Chapter VXII-B unless there is a reasonable cause for failure as stipulated in Sec 273B. In this case the assessee failed to deduct and deposit the tax as per section 194IA and is therefore liable for penalty u/s 271C. No satisfactory explanation has been offered for the default. Asst.Year –2016-17 for coming within the purview of 273B the imposition of penalty is upheld.
In the result, appeal is dismissed.”
Before us, the Counsel for the assessee submitted that in the instant facts, the assessee which is a partnership firm is engaged in the business of ceramics. The assessee purchased two immovable properties on 01.07.2015. At the relevant time, the assessee was not advised by its income tax consultant to deduct and paid taxes before making the payment. Even at the time of registration, the office of sub-