Income Tax Appellate Tribunal - Cochin
The Acit(Tds), Cochin vs M/S.Mir Realtors P. Ltd, Cochin on 25 May, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
COCHIN BENCH, COCHIN
Before Shri Chandra Poojari, AM & Shri George George K, JM
MA No.143/Coch/2016 : Asst.Year 2010-2011
(Arising out of ITA No.58/Coch/2016
MA No.144/Coch/2016 : Asst.Year 2010-2011
(Arising out of ITA No.59/Coch/2016
The Asst.Commissioner of M/s.MIR Realtors Pvt.Ltd.
Income-tax, TDS Vs. MM Building, Kalabhavan
Kochi. Road, ERnakulam-682
018.
PAN : CHNMO1562B.
(Applicant) (Respondent)
Applicant by : Sri. A.Dhanaraj, Sr.DR
Respondent by : Sri. Rejinar K.P., Advocate
Date of
Date of Hearing : 25.05.2018 Pronouncement : 25.05.2018.
ORDER
Per George George K, JM
These Miscellaneous Applications at the instance of the Revenue arise out of the orders of the Tribunal in ITA Nos.58/Coch/2016 and 59/Coch/2016. The relevant assessment year is 2010-2011.
2. Brief facts of the case are as follows:
The Assessing Officer had imposed penalty u/s 271C of the I.T.Act, for the reason that there was delay caused in depositing the tax deducted at source for the financial year 2009-2010. Aggrieved by the imposition of penalty, the assessee had preferred appeals before the first appellate authority. The CIT(A) rejected the appeals filed by the assessee. On further appeal filed 2 MA Nos.143 & 144/Coch/2016 M/s.MIR Realtors Private Limited.
by the assessee, the Tribunal found that there was reasonable cause for delay in payment of TDS to the credit of the Central Government account. The Tribunal cancelled the penalty orders passed by the Assessing Authority u/s 271C of the I.T.Act and allowed the appeals of the assessee.
3. Thereafter the Revenue has filed the Miscellaneous Applications seeking to recall the orders of the ITAT on the ground that the finding of the Tribunal was arrived at on the basis of misrepresentative of facts by the assessee. Both the MAs filed by the Revenue are identical and they read as follows:-
"The Miscellaneous petition is being filed as per the directions of the Commissioner of Income Tax (TDS), Kochi, The following are submitted for the consideration of the Hon'ble Tribunal :-
An appeal was filed by the assessee before the Hon'ble Income Tax Appellate Tribunal (ITAT) against the order of CIT(A) in Appeal No.ITA-154/T05/EKM/CIT(A)- III/2013-14 dt. 30.11.2015 for the Assessment Year- 2010-11. The Hon'ble ITAT vide ITA.No.59/Coch/2016 dated 20.05.2016 (exihibit-1) passed an order against the order of the Addl. Commissioner of Income Tax (TDS), Kochi, u/s. 271(C)of the Income Tax Act, 1961 dated 15.11.2013(Exhibit-2) allowing the appeal filed by the assessee.
The Hon'ble ITAT decided in favour of the assessee on misrepresented facts as submitted by the assessee. The assessee in his arguments has stated that the Department had not passed an order u/s 201(1) as in para 11 of Page 6 contained in ITA.No.59/Coch/2016 dated 20.05.2016 which is reproduced as under:
"it was also submitted that the department had not passed an order u/s.201 r.w.s.221 of the Act holding the assessee in default. Had there been no good and sufficient reasons for delayed payment of TDS, the 3 MA Nos.143 & 144/Coch/2016 M/s.MIR Realtors Private Limited.
revenue would have treated the assessee company as "assessee in default" and levied penalty u/s.221 of the Act."
In fact an order u/s 201(1) of the Income tax Act,1961 was passed on 14.01.2010 by DCIT(TDS), for the Financial Year-2009-10 (AY-2010-11) holding the assessee as a defaulter, quantifying the demand payable to the tune of Rs. 16,15,640/-. The payment was made only on 23.03.10 & 29.03.2010 and not suo-moto as claimed by the assessee but as per order u/s.201(1) passed on 14.01.2010 [exhibit-31 and in reply to this office notice No.CHNM015628/ Recovery/DCIT(TDSJ/Kochi/2009-10/16 dated 04.03.2010 the assessee has informed that they have remitted the Tax on the above dates.
It is pertinent to mention here that the assessee never put forth the above mentioned ground as a defence before the learned CIT (Appeals).
The Hon'ble ITAT has awarded the decision in favour of the assessee on the basis of mis-represented facts relying the following decision as under:
Hon'ble High Court of Delhi in the case of CIT Vs. Mitsui & Co Ltd., 140 Taxman 430 (PB pg. no.39) referred to para 5 were the Tribunal held as :
"In the present case admittedly, the Department has neither treated the assessee company in default u/s. 201(1) nor it levied any penalty for non-deduction and payment of tax under proviso to Section.201(1) read with 221 of the Income tax Act. The assessee company also paid interest suo moto as required u/s.201(lA) for the delayed payment..................... When no action has been taken by the Revenue for levy of penalty u/s.221and delay in payment of tax has been fully compensated by payment of interest no further action is justified u/s.271C of the Income-tax Act.
In para 14 in page No.7 of ITAT's order dated 20.05.2016 -recalling the ITAT Bangalore Bench's decision :-4 MA Nos.143 & 144/Coch/2016
M/s.MIR Realtors Private Limited.
" 24. on the issue of not passing order u/s.201(l} before initiation of proceedings u/s. 271C,we are inclined to agree with the assessee's contention and rely on the decision of the Tribunal Delhi 'c' Bench in Maruberi Corpn.(Liaison Office) Vs. Joint CIT (2002) 83 ITD 577 (Del.) and the decision of Tribunal Bangalore Bench in ITA Nos.137 to 140/Bang/2002. On this ground also, the order of penalty stands vacated."
Whereas in this case, on the contrary, the department has issued 201(1) order on 14.01.2010 as such the assessee has mis-lead the Hon'ble ITAT by stating that the Department has not issued order u/s.201(l} before initiation of penalty u/s.271C.
Moreover, the judgment in Civil Appeal No.3765 of 2007 arising out of SLP(c) No.3883 of 2007, Supreme Court of India, has explained in the case of Hindustan Coca-Cola Beverages (P) Ltd V. Joint CIT[2004] 90 ITD 720 (Delhi) with the following observations:
"Be that as it may, the circular No. 275/201/95-IT(B) dated 29.01.1997 issued by the Central Board of Direct Taxes, in our considered opinion, should put an end to the controversy. The circular declares "no demand visualized u/s.201(1) of the Income Tax Act should be enforced after the tax depositor has satisfied the officer-in-charge of TDS, that taxes due had been paid by the deductee assessee. However, this will not alter the liability to charge interest u/s.201(1)/1(A) of the Act till the date of payment of taxes by the deductee-assessee or the liability for penalty u/s.271C of the Income Tax Act."
The Hon'ble High Court of Kerala in the case of M/s.U.S. Technologies International (P) Ltd., (2010) 195 Taxman 323 (Ker.) has observed in Para-3 of their order that "so much so, in our view failure to deduct or failure to remit recovered tax, both will attract Penalty under Section 271C of the Act."
The Hon'ble High Court has also made the following observations with regard to the levy of penalty u/s.271C.
5 MA Nos.143 & 144/Coch/2016M/s.MIR Realtors Private Limited.
"So far as failure on the part of the assessee to remit tax recovered at source is concerned, we do not think there can be any justifying circumstances for delay in remittance because assessee cannot divert tax recovered for the Government towards working capital or any other purpose. So much so, in our view, defence available and Section 2738 does not cover failure in payment of recovered tax."
The Hon'ble High Court of Kerala in the case of Classic Concept Home India(P) Ltd. Vs. Commissioner of Income tax (2015) 6 TMI 399 also has upheld the levy of penalty u/s.271C of the Income Tax Act. The Hon'ble High Court has observed that:
"as we have already noticed, it is the admitted case of the parties that the tax was deducted at source and the same was remitted belatedly though with interest. In such a case, the provisions of Sec.271C of the Income Tax Act are fully applicable".
In view of the above facts, it is inferred that there was no reasonable cause for the assessee to be aggrieved by the imposition of penalty.
It is therefore, respectfully prayed that invoking provisions of Sec. 254(2) of the Income Tax Act, the latest order of the learned Tribunal dated 20.05.2016 may kindly be recalled as it is based on misrepresented facts and the grounds put forth by the Department may be decided upon merit."
4. The learned Departmental Representative relied on the MAs filed by the Revenue.
5. The learned AR, on the other hand, had filed a brief written submission, wherein it has been contended that the primary reason for allowing the assessee's appeals was that there was reasonable cause as mandated u/s 271B of the I.T.Act for the delay in payment of TDS to the credit of Central Government 6 MA Nos.143 & 144/Coch/2016 M/s.MIR Realtors Private Limited.
account, and therefore, the penalty u/s 271C of the I.T.Act is not warranted.
6. We have heard the rival submissions and perused the material on record. Imposition of penalty u/s 271C is subject to the provisions of section 273B of the I.T.Act. The section 273B states that no penalty shall be imposed u/s 271C if the assessee is able to prove that there was reasonable cause for the said failure. The Tribunal had primarily allowed the appeals of the assessee by holding there was reasonable cause as mandated u/s 273B of the I.T.Act for the default in remittance of tax deducted at source into the Government account on time, and therefore, it was concluded by the Tribunal that the penalty u/s 271C of the I.T.Act is not warranted. The Tribunal has not made any specific finding as regards misrepresentation of fact by the assessee. This is clear from the findings of the Tribunal at para 8 and 15 of the impugned orders of the Tribunal. The Revenue in its MAs has not challenged the finding of the Tribunal that there was a reasonable cause for the delay in remittance of tax deducted at source into the Government account. Therefore, these MAs having not challenged the specific finding of the Tribunal that there was reasonable cause for the delay, cannot be entertained and the same are to be dismissed.
7. Before parting, it is to be mentioned that the learned DR had relied on the judgment of the Hon'ble jurisdictional High Court in the case of CIT v. Muthoot Bankers [(2017) 398 ITR 276 (Ker.)]. The judgment of the Hon'ble jurisdictional High Court specifically states that penalty u/s 271C could be waived only if the assessee could plead and prove that there was reasonable 7 MA Nos.143 & 144/Coch/2016 M/s.MIR Realtors Private Limited.
cause as mandated u/s 273B of the I.T.Act. In the instant cases, the Tribunal has categorically found that there was reasonable cause for the default and had cancelled the penalty u/s 271C of the I.T.Act. When Tribunal had taken a conscious decision, after examining the facts and circumstances of the case in detail, the finding of the Tribunal cannot stated to be suffering from error apparent on record, warranting our interference u/s 254(2) of the I.T.Act. It is ordered accordingly.
8. In the result, the Miscellaneous Applications filed by the Revenue are dismissed.
Order pronounced on this 25th day of May, 2018.
Sd/- Sd/-
(Chandra Poojari) (George George K.)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Cochin ; Dated : 25th May, 2018.
Devdas*
Copy of the Order forwarded to :
1. The Applicant.
2. The Respondent.
3. The CIT(A)-III, Kochi.
4. The CIT, Kochi.
5. DR, ITAT, Cochin
6. Guard file.
By Order
(Asstt. Registrar)
ITAT, Cochin