Income Tax Appellate Tribunal - Ahmedabad
Jammu Kashmir Bank Ltd.,, Surat vs Assessee on 27 March, 2012
1 ITA No.2924 to 2927/AHD/2011
Assessment Years 2003-04 to 2006-07
.
IN THE INCOME TAX APPELLATE TRIBUNAL "B " BENCH, AHMEDABAD
(BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL CHATURVEDI, A.M.)
Sr.No. I.T.A. No. Assessment Year
1. 2924/AHD/2011 2003-04
2. 2925/AHD/2011 2004-05
3. 2926/AHD/2011 2005-06
4. 2927/AHD/2011 2006-07
The Jammu Kashmir Bank Vs. Joint Commissioner of
Limited. Income Tax,
Super Tex Tower, TDS Range,
Opp. Kinnary Cinema, Aayakar Bhavan,
Ring Road, Majura Gatge,
Surat.
Surat.
(Appellant) (Respondent)
PAN: AAACT 6167G
Appellant by : Shri Mehul Shah.
Respondent by Shri Samir Tekriwal, Sr.D.R.
आदे श)/ORDER
(आदे Date of hearing : 27-3-2012 Date of Pronouncement : 4-5-2012 2 ITA No.2924 to 2927/AHD/2011 Assessment Years 2003-04 to 2006-07 .
PER: SHRI ANIL CHATURVEDI,A.M. These four appeals are filed by the assessee against the order of Ld. CIT (A) -I, Surat all dated 30-9-2011 for the Assessment Years 2003-04 to 2006-07.
2. Since the facts and issues involved are identical for all the assessment years and the appeals have been heard together, these are being disposed of by a single order for the sake of convenience. The only effective ground in all the assessment years is levy of penalty u/s 271C of the Income tax Act 1961.
3. The Assessee is a private sector bank with its Head office at Srinagar in the State of Jammu and Kashmir. The Income Tax Officer (TDS)-1,Surat noticed that the assessee had not deducted TDS from the payments made to the State Bank of India as MICR charges during the relevant years under consideration. A.O. inferred that the assessee should have had deducted TDS on such payments u/s. 194J of the Act since such payments were towards 'fees for technical charges' which was charged for providing managerial services. He relied upon the decision of Hon'ble ITAT "B"-Bench, Ahmedabad in the case of Canara Bank vs. ITO TDS-1,Surat (117 ITD 207) wherein, it has been held that the said assessee was liable to deduct TDS u/s. 194J of the Act from the payments made to the State Bank of India as 'MICR charges'. A.O. issued a show-cause notice for initiation of penalty proceedings u/s. 271C of the Act vide letter dated 21-4-2010.
3 ITA No.2924 to 2927/AHD/2011Assessment Years 2003-04 to 2006-07 .
A.O. in his penalty order dated 7-10-2010 stated that neither Bank's assessee attended nor submitted any written submission and therefore he presumed that the assessee bank has nothing to say in the matter and completed penalty proceedings on merits and imposed penalty equal to the amount of tax deductible but not deducted.
4. Being aggrieved by the action of the A.O. the assessee carried the matter in appeal before the CIT (A). Before the CIT (A) the assessee reiterated the same arguments as advanced before the A.O. It also relied on various decisions in its support and requested for deletion of penalty. The CIT (A) after considering the submissions of the assessee upheld the action of the A.O.
5. Aggrieved by the decision of CIT (A), the assessee is in now in appeal before the Tribunal.
6. Before us the Ld. A.R. submitted that the Assessee had made payment to State Bank of India towards MICR charges and other services like MICR processing, Floppy charges etc to MICR Centre. The Assessee was of the view that MICR charges paid to SBI was merely an expense of taking clearing services. It was under a bonafide belief that no TDS was deductible on the MICR charges paid to State Bank. It was further stated that the payee, (State Bank of India) had paid tax on the amount received from the Assessee and therefore there was no loss of revenue. Further, the Assessee has paid the amount alongwith the interest for the period between the due 4 ITA No.2924 to 2927/AHD/2011 Assessment Years 2003-04 to 2006-07 .
dates of TDS and the date of payment of Advance tax. The assessee had also co-operated with the Department in depositing the interest and other proceedings. He further stated that non deduction of TDS was not on account of deliberate act but was due to ignorance of law and lack of understanding of nature of payment at grass root level of officials of the bank. He further stated that many other banks in Surat had not deducted TDS on MICR charges which shows that the local banking industry was not aware and was having misconception about the provisions of applicability of TDS. He thus urged that the penalty be deleted. He further relied on the following decisions:-
1) Senior Accounts Officer, Thermal Power Project vs. ACIT 66 TTJ (All) 529.
2) Hindustan Steel Ltd. vs. State of Orissa - 83 ITR 26 (SC)
3) Woodward Governors India (P) Ltd. vs. CIT & Ors. 253 ITR 745
4) CIT vs. Schell International 278 ITR 630 (Bom)
5) CIT vs. Bombay Conductors & Elecricals Ltd 301 ITR 328
6) CIT vs. Viswapriya Financial Services & Secutiries Ltd.
303 ITR 122 (Mad.)
7) CIT vs. Eli Lilly & Co. (I) (P) Ltd. & Ors. 312 ITR 225 (SC)
7. On the other hand, the D.R. argued that nobody appeared before the A.O. in penalty proceedings. He also stated that there is no provision u/s. 271C for reasonable cause. He also submitted that such 5 ITA No.2924 to 2927/AHD/2011 Assessment Years 2003-04 to 2006-07 .
type of mistake continued for 4-5 years and therefore, the penalty was rightly levied.
8. We have heard both the parties perused the material on record. Penalty u/s 271C is not an automatic consequence of non-deduction or short deduction of tax at source, since s. 273B inter alia provides that penalty under s. 271C cannot be imposed in case the person concerned can demonstrate that there was a reasonable cause for his failure referred to in s. 271C. In case the assessee can show reasonable cause for his failure for non-deduction or short deduction of taxes, penalty u/s 271C cannot be imposed. In the present case, from the circumstances narrated and submissions made before us, it was clear that the assessee was under the belief that it was not required to deduct tax at source on payment of MICR charges. Further on being pointed out the requirement of the provisions of the Act to deduct TDS, the Assessee deposited all the TDS alongwith the interest. The belief of the assessee in not deducting tax was thus a bonafide belief particularly when it had made subsequent payments alongwith interest. In these circumstances it cannot be said that the conduct of the assessee was malafide and the payment made without deduction of tax at source was with ulterior motive.
9. We, therefore, taking into consideration of the total facts and circumstances of the case and also explanation given by the assessee delete the penalty levied by A.O. 6 ITA No.2924 to 2927/AHD/2011 Assessment Years 2003-04 to 2006-07 .
10. In the result the appeals of the assessee are allowed.
Order pronounced in Open Court on 4- 5 - 2012.
Sd/- Sd/-
(G.C.GUPTA) (ANIL CHATURVEDI)
VICE PRESIDENT ACCOUNTANT MEMBER
Ahmedabad.
S.A.Patki.
Copy of the Order forwarded to:-
1. The Appellant.
2. The Respondent.
3. The CIT (Appeals) -I, Surat.
4. The CIT concerned.
5. The DR., ITAT, Ahmedabad.
6. Guard File.
By ORDER
Deputy/Asstt.Registrar
ITAT,Ahmedabad.
7 ITA No.2924 to 2927/AHD/2011
Assessment Years 2003-04 to 2006-07
.
1.Date of dictation 27 - 3 -2012
2.Date on which the typed draft is placed before the Dictating 24 / 4 / 2012 Member................Other Member................
3.Date on which the approved draft comes to the Sr.P.S./P.S 2 - 5 -2012.
4.Date on which the fair order is placed before the Dictating Member for pronouncement 4 - 5 -2012
5.Date on which the fair order comes back to the Sr.P.S./P.S 4 - 5 -2012
6.Date on which the file goes to the Bench Clerk 7 - 5 -2012.
7.Date on which the file goes to the Head Clerk.............
8.The date on which the file goes to the Asstt. Registrar for signature on the order........................
9.Date of Despatch of the Order.................