ITA NOS. 3729 & 3730/Del/2011
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "D", NEW DELHI
BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER
AND
SHRI H.S. SIDHU, JUDICIAL MEMBER
I.T.A.Nos.3729 & 3730/Del/2011
A.YRS. : 2005-06 & 2006-07
INCOME TAX OFFICER, LAND ACQUISITION
WARD 50(3), VS. COLLECTOR (SOUTH WEST),
ROOM NO. 504, 5TH FLOOR, CNCTD, OLD TERMINAL TAX
AAYAKAR BHAVAN, BUILDING,
LAXMI NAGAR, KAPASHERA, DELHI
DELHI 92 (PAN: DELA00657G)
(APPELLANT) (RESPONDENT)
Department by : Shri Gaurav Dudeja, Sr. DR
Assessee by : Sh. Sandeep Kumar, LDC &
Sh. Jitender, UDC
Date of Hearing : 29-06-2015
Date of Order : 29-06-2015
ORDER
PER H.S. SIDHU : JM
The Revenue has filed these Appeals against the common
impugned Order dated 05.5.2011 passed by the Ld. Commissioner
of Income Tax (Appeals)-XXX, New Delhi. Since the issue involved
in both the appeals are common, hence, we are disposing of the
appeals by this consolidated order for the sake of brevity, by dealing
with the ITA No. 3729/Del/2011 (A.Y. 2005-06).
2. The grounds raised in ITA No. 3729 & 3730/Del/2011 (A.Y.
2005-06 & 2006-07) read as under:-
On the facts and in the circumstances of the case
as well as in law, the Ld. CIT(A) has erred in :-
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1) Deleting the penalty imposed u/s. 271C of
Rs. 17,58,561/- for FY 2004-05 and Rs. 3,54,146/-
for FY 2005-06 on the ground that the assessee was
not aware of the provision of I.T. Act and the
intention of the assessee is not malafide.
2) Ignoring the detailed findings recorded by the
Addl. CIT in the penalty order and considering the
submission of the assessee during the appellate
proceedings u/R 46A and decided the issue in favor
of the assessee.
3) The appellant craves leave to add, alter or
amend any of the Grounds of appeal at the time of
hearing.
3. The brief facts of the case are the Order u/s. 201(1)/201(1A) of
the Income Tax Act, 1961 was passed on 30.3.2009 which was
subsequently rectified u/s. 154 of the Act on 29.5.2009. During the
course of verification proceedings, it has been noticed that the
assessee had deducted tax on expenses liable for TDS but failed to
deposit the tax so deducted during the relevant financial years
within the prescribed time limit prescribed under Rule 30 of the
Income Tax Rules, 1962. Thereafter, a show cause notice was
issued to the assessee on 5.11.2009 to explain as to why penalty
u/s. 271(1)(C) of the Income Tax Act, 1961 should not imposed for
the above default and the date of compliance was fixed for
13.11.2009. No compliance was made on the date fixed. Another
opportunity was provided vide notice dated 7.4.2010. Vide letter
dated 13.5.2010 the assessee filed its explanation. After
considering the explanation. AO noticed that there was a short
deduction of TDS. There is short deduction of TDS u/s. 194A of the
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Act and in some cases payment of interest on enhanced
compensation paid on account of land acquisition. He is of the view
that assessee has committed the default of Rs. 17,58,561/- u/s.
201(1) of the Act and of Rs. 9,62,407/- being interest u/s. 201(1A) of
the Act, for which penalty u/s. 271C of the Act is liable to be
imposed. Since the assessee has failed to avail the opportunity
provided to explain the reason as to why penalty should not be
imposed, it becomes amply clear that the assessee has committed a
default. Accordingly, a penalty of Rs. 27,20,969/- was imposed u/s.
271C of the Act vide order dated 21.5.2010.
4. Aggrieved with the aforesaid penalty order, assessee
appealed before the Ld. CIT(A), who vide impugned order dated
21.5.2010 deleted the penalty in dispute by allowing the appeal filed
by the assessee.
5. Now aggrieved with the impugned order, Revenue filed the
present Appeal before the Tribunal.
6. At the time of hearing, Ld. DR relied upon the order of the AO
and reiterated the contention raised by the Revenue in the grounds
of appeal.
7. On the contrary, employee of the Assessee relied upon the
order of the Ld. CIT(A).
8. We have heard both the parties and perused the records
especially the orders of the Revenue Authorities. We find that it
was mentioned in the impugned order that the assessee has no
professional staff nor any chartered accountant and advocate
representing the case of the Department. The LDC Sh. Hari Chand
who was dealing with the TDS matters has represented before THE
Ld. CIT(A), but he could not explained anything on legal disputes in
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the order of the AO. Due to lack of knowledge of Income Tax, the
staff employee deducted TDS @10% on interest paid on enhanced
compensation. The short fall was detected by the survey team of
the I.T. Department. The assessee has timely deposited the tax
deducted in the Govt. Department. It shows that the assessee has
no malafide intention. Moreover, when it comes to the knowledge
of the assessee, the assessee started recovery of balance surcharge
from the landlord at the time of further enhanced compensation
paid to said landlord subsequently and remitted the same into
Government account.
8.1 We note that the Ld. CIT(A) in his impugned order has noted
that the assessee relied on the case of Hon'ble ITAT Chandigarh
Bench in the case of PSEB vs. ITO 121 Taxman (Magazine) 367 in
which it was held as under:-
"The Commissioner (Appeals) while cancelling penalty
under section 271C, had held that the assessee
bonafidely believed that it was not liable to deduct
surcharge from the interest paid on bonds. It had further
been held that the assessee could have derived no
benefit by not deducting surcharge at source as the
amount was to be deducted and paid out of interest paid
to third party. The Commissioner (Appeals) having regard
to material available on record had accepted the plea of
the assessee. The revenue had not brought any material
on record to show that the belief of the assessee was not
bona fide one or that failure to deduct surcharge was
attributable to gross and willful neglect on the part of the
assessee. On the facts and circumstances of the case, it
was not possible to hold that the Commissioner (Appeals)
committed any error in cancelling the penalties levied on
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the assessee u/s. 271C. A reasonable belief that one is
not obliged to deduct tax or surcharge at source can be
treated as good and sufficient cause for not deducting
tax! surcharge at source. There was nothing on record to
show that belief, in the instance case, was not bonafidely
held or that it was malafide. Accordingly, it was to be
held that the Commissioner (Appeals] was fully justified
in cancelling penalty levied on the assessee."
8.2 In view of the above arguments and the precedent relied, we
find that the Ld. CIT(A) was right in observing that the default
committed by the assessee is not malafide but the same is due to
bonafide belief of assessee that it was liable to deduct TDS @ 10%
on the interest paid on enhanced compensation and was not aware
of loading surcharge on tax rate of 10%. We find that the the other
plea was taken by the assessee that the penalty is not amount of
interest on short fall in tax. The penalty is leviable on the principal
amount not on the interest. The plea taken by the assessee is
correct. Hence, the Ld. CIT(A) has rightly deleted the penalty in
dispute.
8.3 Keeping in view of the above facts and circumstances of the
case, we do not see any reason to interfere with the order of the Ld.
CIT(A), accordingly, we uphold action of the Ld. CIT(A) of deleting
the penalty of Rs. 17,58,561/- and decide the issue in dispute
against the Revenue by dismissing the Appeal filed by the Revenue.
ITA NO. 3730/DEL/2011 (AY. 2006-07)
9. Since the facts of this appeal are similar and identical to that
of ITA No. 3729/Del/2011 (AY 2005-06), as aforesaid. Therefore, in
the present Appeal bearing No. 3730/Del/2011 AY 2006-07) also we
follow the same decision of confirming the action of the Ld. CIT(A) of
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deleting the penalty made u/s. 271(1)(c), being similar and identical
facts. Accordingly, in this case also the action of the Ld. CIT(A) of
deleting the penalty of Rs. 3,54,146/- is upheld and issue in dispute
is decided against the Revenue by dismissing the Appeal filed by
the Revenue.
10. In the result, both the Appeals filed by the Revenue are
dismissed.
Order pronounced in the Open Court on 29/06/2015.
Sd/- Sd/-
[S.V. MEHROTRA] [H.S. SIDHU]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date 29/06/2015
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant -
2. Respondent -
3. CIT
4. CIT (A)
5. DR, ITAT
TRUE COPY
By Order,
Assistant Registrar, ITAT, Delhi Benches
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