Income Tax Appellate Tribunal - Ahmedabad
Land Acquisition Collector, , U.T. Of ... vs Assessee on 3 February, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL "SMC" BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA K. YADAV, JUDICIAL MEMBER आयकर अपील सं./ ITA Nos. 2811 & 2812/Ahd/2014 नधा रण वष /Assessment Year: 2009-10 & 2012-13 The Land Acquisition Collector, Near Church, Saily Road, Silvassa, U.T. of Daadra & Nagar Haveli ..... Appellant PAN : ACCPD 6345 H Vs Addl. CIT, TDS Range, Surat ..... Respondent Assessee(s) by : Shri Hardik Vora, CA Revenue by : Shri Dileep Kumar, Sr-DR सन ु वाई क तार ख/ Date of Hearing 17/12/2015 घोषणा क तार ख /Date of Pronouncement 03/02/2016 आदे श/O R D E R These two appeals have been filed by the assessee against separate orders of the Learned Commissioner of Income Tax (Appeals), Valsad, both dated 20.08.2014 for Assessment Years 2009-10 & 2012-13. Since the issue involves in both these appeals is similar, these were heard together and are being disposed of by this consolidated order for the sake of convenience.
(SMC) ITA Nos. 2811 & 2812/Ahd/2014 The Land Acquisition Collector vs. ACIT AYs: 2009-10 & 2012-13 2 ITA No. 2811/Ahd/2014 : AY 2009-10
2. In this appeal, the sole ground raised by the assessee reads as under:-
On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming the penalty imposed by the assessing officer u/s 271C of Rs.1,68,588/-
3. In this case, the Assessing Officer levied penalty of Rs.1,68,588/- u/s 271C of the Act, by observing as under:
"Fact of the case is that a verification was carried out in the office of the deductor assessee on 23.01.2012. It was observed from the details submitted that the deductor assessee has made payments to certain land owners during the year under consideration, in the form of consideration against compulsory acquisition of non-agricultural land. Since the payments/considerations were against compulsory acquisition of non agricultural land, the deductor assessee was required to deduct tax at source as per the provisions of section 194LA of the I.T. Act. It was seen that the Land Acquisition Collector, Silvassa had failed to comply with the said provisions of section 194LA of the I.T. Act, thereby committing default under this section. Accordingly order u/s 201(1) and 201(1A) of the Act was passed and an amount of Rs.52,810/- was raised as demand u/s 201(1) or not deducting tax as per section 194LA on the payment made to
(i) M/s Alok Textile Ltd,
(ii) M/s Gulf 0il Corporation Ltd
(iii) M/s Blue Blends (India) Ltd
(iv) Shri Yashwantrao R Kapti
(v) Kum. Chandanben S Delkar
(vi) Shri Rakeshsinh M Chauhan (SMC) ITA Nos. 2811 & 2812/Ahd/2014 The Land Acquisition Collector vs. ACIT AYs: 2009-10 & 2012-13 3
(vii) Shri Natwarsinh R Rathod
(viii) Shri Sandeep N Chauhan Penalty u/s 271C of the I.T. Act was initiated for contravening the provision of section 194LA of the Act for no deduction of tax.
Accordingly, show cause notices were Issued to the deductor assesses to show cause as to why penalty u/s 271C should not be levied for no-deduction of tax on the aforesaid payment. The details of default committed by the deducted assessee given in the show cause notices were as under:
Name of Relevant Amount of Tax Interest Amount Non-
the secton expenditure deductible deducted deduction Expenditure liable to TDS of tax Payment for 194LA 16,85,883 1,68,588 54,923 Nil 1,68,588 compulsory acquisition of L.A. Land
In response to the show cause notice, the assessee has neither availed the opportunity of personal hearing nor filed any written submission.
As the deductor assessee has not compiled the show cause notice, the assessee is considered as assessee in default for the following reasons:
i) The deductor assessee is an assessee in default as it has contravened the provision of section 194LA of the I.T. Act, 1961 as already proved in the order u/s 201(1) and 201(1A) of the Act passed by the AO.
ii) No compliance has been made to the order passed u/s 201(1) and 201(1A) of the IT Act which proves that the intention of the assessee is not genuine.
iii) Had the verification not taken place, the matter would not have been unearthed. Even after pointing out the exact contents of this case and after a lapse of such a long period the tax has not been deducted/collected and paid (SMC) ITA Nos. 2811 & 2812/Ahd/2014 The Land Acquisition Collector vs. ACIT AYs: 2009-10 & 2012-13 4 into the central govt account which caused loss to the Govt. Exchequer.
According to the assessing officer in view of the above, the assessee failed to discharge its initial burden cast upon it u/s 194LA of the Act and thereby became liable for penalty and the penalty of Rs.168588/- being an amount equal to the amount of non-deduction of tax at source u/s 194LA of the Act was levied."
3.1 On appeal, the ld. CIT(A) confirmed the penalty levied by the Assessing Officer u/s 271C of the Act. 3.2 As per Assessing Officer, the deductor was required to deduct TDS u/s 194LA of the Act on the amount of compensation disbursed to the various owners of non- agricultural land which was acquired by the Government. However, at the time of disbursement of compensation no TDS was deducted as required under the Act. All these facts came into notice during the visit of concerned ITO while conducting verification in the office of the deductor, i.e., The Land Acquisition Collector on 23.1.2012. Subsequently, an order u/s 201(1) and 201(1)A of the Act was passed and a demand of Rs.1,68,588/- was raised u/s 201(1) for not deducting tax as per section 194LA of the Act, alongwith penalty u/s 271C of the Act. In this regard, the stand of the assessee has been that all this happened due to ignorance of law. The assessee submitted (SMC) ITA Nos. 2811 & 2812/Ahd/2014 The Land Acquisition Collector vs. ACIT AYs: 2009-10 & 2012-13 5 that there was no intention to violate the provisions of Income Tax Act which in this case - section 194LA of the Act. As soon as the violation of law was brought into assessee's notice, the assessee collected the amount of TDS from some deductees. In case of others the requisite details of TDS to be deducted was collected but by that time those deductees filed their Income Tax return and made the payment of tax due. The proof of such payments made was also collected. During the appellate proceedings, all those details collected by the deductor were filed and the assessee pleaded before the CIT(A) that the whole tax due has been deposited into the Govt account and therefore, there is no revenue loss. In this background, it was submitted that as per the provisions of Section 194LA of the Act, the assessee was required to deduct tax from the payment made towards the compulsory acquisition of non-agricultural land in the Union Territory of Dadra & Nagar Haveli, being unaware of such TDS provisions the assessee had made full payment to the land owners. When the team of Income Tax Officer (TDS), Valsad visited the office of the assessee, then only the office of the assessee came to know about its TDS obligation and thereafter it had taken steps to recover the TDS amount from the land owners and applied for TAN.
(SMC) ITA Nos. 2811 & 2812/Ahd/2014 The Land Acquisition Collector vs. ACIT AYs: 2009-10 & 2012-13 6 3.3 As stated above, the assessee had paid compensation to the land owners amounting to Rs.16,85,883/- but has not deducted the tax u/s 194LA of the Act from such payments as the assessee was under bona fide belief that he was not under any obligation to deduct the tax u/s 194LA of the Act. The omission on the part of the assessee was inadvertent and there was no mala fide intention. After being made aware about assessee's TDS provisions, it had recovered the TDS from the concerned owners of the land and thereafter deposited the sum of Rs.84,099/- and alongwith interest of Rs.33,480/- to the credit of central govt. As stated above, certain parties to whom the assessee had paid the compensation had paid due taxes on their total income. For non-deduction of TDS and delay in filing the TDS, the assessee had paid interest of Rs.33,480/- and also paid interest of Rs.54,923/- determined to be payable u/s 201(1A) of the Act by ITO(TDS), Valsad. Thus, there is no loss to the Revenue. Therefore, I am of the view that there is no mala fide intention on assessee's part, in 1st lapse on its part, as it seems that there is no loss to the Revenue. In this regard, the Authorized Representative for the assessee relied upon the decision of Hon'ble Delhi High Court in the case of CIT vs. (SMC) ITA Nos. 2811 & 2812/Ahd/2014 The Land Acquisition Collector vs. ACIT AYs: 2009-10 & 2012-13 7 Cadbury India Limited in ITA Nos. 1397/2008, 1398/2008 and 429/2009, dated 28.03.2011; wherein the Hon'ble High Court held that "penalty u/s 271C for non-deduction of TDS not leviable if there was no "mala fide intention" or "deliberate defiance" of law". It was also observed by the Hon'ble Delhi High Court in the aforesaid judgment that the levy of penalty u/s 271C is not automatic. Therefore, in the present case, I am of the considered view that there was no mala fide intention on the part of the assessee for non-deduction of TDS since it had recovered the TDS from the concerned as soon as the violation of law was brought into assessee's notice, as discussed above. Therefore, in the fact and circumstances of the case, I hereby delete the penalty of Rs.1,68,588/- levied by the Assessing Officer u/s 271C of the Act.
ITA No. 2812/Ahd/2014 : AY 2012-13
4. Similar issue arose in this appeal also filed by the assessee for AY 2012-13. Facts being similar, so following the same reasoning as discussed above in the case of ITA No.2811/Ahd/2014 (supra), I delete the penalty of Rs.52,810/-
(SMC) ITA Nos. 2811 & 2812/Ahd/2014 The Land Acquisition Collector vs. ACIT AYs: 2009-10 & 2012-13 8 levied by the Assessing Officer u/s 271C of the Act for Assessment Year 2012-13 as well.
5. In the result, both the appeals filed by the assessee are allowed.
Order pronounced in the Court on 3rd February, 2016 at Ahmedabad.
Sd/-
(SHAILENDRA K. YADAV)
JUDICIAL MEMBER
Ahmedabad; Dated 03/02/2016
Biju T., PS
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संब!ं धत आयकर आय#
ु त / Concerned CIT
4. आयकर आय#
ु त(अपील) / The CIT(A)
5. &वभागीय त न!ध, आयकर अपील य अ!धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड फाईल / Guard file.
आदे शानुसार / BY ORDER, TRUE COPY उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद/ ITAT, Ahmedabad