Income Tax Appellate Tribunal - Rajkot
Income Tax Office, Tds-3, Jamnagar vs Barbados Maritime Agencies Pvt. Ltd., ... on 28 November, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT
BENCH, RAJKOT
[Conducted through E-Court at Ahmedabad]
BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER,
AND SHRI S. S. GODARA, JUDICIAL MEMBER.
ITA Nos.167 to 170 Rjt 2015
(Assessment Years:2011-12 & 2014-15)
Income-tax Officer,
TDS-3, Jamnagar Appellant
Vs.
Barbados Maritime Agencies
Pvt. Ltd., 103, First Floor, Cams
Corner, Bedi Port Road, Jamnagar Respondent
PAN: AACCB6096L
राज व क ओर से /By Revenue : Usha Shrote, D.R.
आवेदक क ओर से/By Assessee : Ankit Gokani, A.R.
सन
ु वाई क तार ख/Date of Hearing : 24.11.2016
घोषणा क तार ख/Date of
Pronouncement : 28.11.2016
ORDER
PER S. S. GODARA, JUDICIAL MEMBER
These four Revenue's appeals for assessment years 2011-12 to 2014- 15 arise from the CIT(A), Jamnagar's common order dated 27.02.2015 passed in appeal nos. CIT(A)/Jam/204, 194, 195 and 205/14-15 deleting ITA Nos. 167 to 170/Rjt/2015 (ITO vs. Barbados Maritime Agencies Pvt. Ltd.) A.Y. 2011-12 & 2014-15 -2- penalties of Rs.4,10,133/-, Rs.32,12,740/-, Rs.23,18,809/- and Rs.5,38,462/-, as imposed by the Assessing Officer, in proceedings u/s.271C of the Income Tax Act in short 'the Act'.
2. We first advert to common facts in the instant batch of four appeals. The assessee is a private limited company engaged in the business of shipping agency and allied activities. The department conducted a TDS survey at its business premises on 04.10.2013. This made the Joint Commissioner concern issue notices on 10.01.2014 and 11.07.2014 on the ground that the assessee had failed to pay the amount of TDS to the government account within the specified time period stipulated as pertaining to the impugned assessment years. His case was that appellant's payments made to its various clients are in the nature of port charges, survey fees etc. liable for TDS deduction. The assessee appears to have filed letter dated 26.10.2013 to the departmental authorities concern that it had already deducted TDS on the said payments. We notice from the CIT(A)'s order narrating facts of the case that the concerned TDS authorities' view was that this assessee had failed to deposit tax after deduction amounting to the corresponding figures forming subject matter of instant adjudication before us. It further alleged that the assessee's TDS deduction amounts had not been paid the government within stipulated time period. The said authority accordingly penalized the assessee by imposing the impugned Section 271C levies in question after quoting hon'ble Kerala high court's judgment in case of US Technologies International (P) Ltd. vs. CIT [2010] 195 Taxman 323.
3. The assessee filed four separate appeals. There is no issue that the CIT(A) heard these four appeals together to pass the impugned common order under challenge. He formulated four issues i.e. whether the impugned Section 271C penalty could be levied when there is no default in TDS ITA Nos. 167 to 170/Rjt/2015 (ITO vs. Barbados Maritime Agencies Pvt. Ltd.) A.Y. 2011-12 & 2014-15 -3- deduction and same is deposited with interest to the government. Ld. CIT(A) appears to have discussed not only the statutory provision itself to observe that the same only deals with failure on an assessee part in deducting TDS and not qua other issues. He duly takes into account historical background of Section 271C, CBDT's circular no.551 dated 23.01.1990 issuing clarification for imposition of penalty in case of failure on an assessee's part in deducting TDS followed by yet another circular no.666 dated 08.10.1993. The CIT(A) accordingly concludes that the impugned penalty provision does not apply in case an assessee has deducted TDS but its failure is only in depositing the same in government account.
4. The CIT(A) thereafter framed second issue qua validity of the impugned penalty as to whether Section 271C penal action could be levied for non payment of taxes as per hon'ble Kerala high court's decision hereinabove. He observes that hon'ble Apex court in its judgment dated 19.08.2010 in case of Rajeswar Tiwari vs. Nanda Kishore Roy [2011] 333 ITR 534(SC) has already concluded that the impugned penal provision is not exigible in case of late payment of taxes.
5. We now come to CIT(A)'s third question framed as to whether Section 271C penalty comes into play without passing of any order u/s.201(1) and 201(1A) of the Act. There does not appear to be any dispute that no such order has passed in assessee's cases pertaining to all four assessment years. The CIT(A) then takes into account this tribunal's decision in ITA No.6349/Mum/2009 ACIT vs. American School of Bombay Education Trust that the penal provision in question is not attracted in absence of the above Section 201 and 201(1) & (1A) recovery orders.
ITA Nos. 167 to 170/Rjt/2015 (ITO vs. Barbados Maritime Agencies Pvt. Ltd.) A.Y. 2011-12 & 2014-15 -4-
6. This leaves us with the CIT(A)'s order framing fourth issue as to whether any reasonable cause of delay in depositing taxes deducted invites Section 271C penalty or not. He observes that the above reason of late payment was on account of delay on part of assessee's principals. The CIT(A) relies upon hon'ble jurisdictional high court's decision in Tax Appeal No.2149/09 decided on 04.04.2011 in case of Backbone Enterprises that such a delay on account of late remittances at the end of principals of a deductor does not attract the impugned penal provision. The CIT(A) accordingly deletes the impugned penalties in all four corresponding assessment years leaving behind the Revenue aggrieved.
7. Heard both sides. Case files perused. Relevant facts narrated in preceding paragraphs are not repeated for the sake of brevity. We notice from the case file that assessee has duly deducted TDS in all cases as demonstrated from the various compilation chart contained in the lower appellate order from page 3 to 18. We further find that the Assessing Officer's penalty orders nowhere pinpoint as to whether the assessee has in fact not deducted TDS or not deposited the same. All the penalty orders in question contain an identical para no.1to this effect. It thus transpires that the assessee's main lapse is not in deducting TDS but that in crediting the same in the government account. We deem it appropriate at this stage to refer to crucial expression used in the statutory provision that Section 271C is for imposing penalty upon a deductor assessee who fails to deduct TDS at source. Sub Section 1(a) thereof talks about TDS deduction only. This is followed by the latter clause (b) stipulating payment of the tax deducted u/s.115-O (2) and 194 B proviso admittedly not applicable in facts of the case. We reiterate that we are dealing with a penalty provision in a tax statue liable to be strictly interpreted. Ld. Departmental Representative further fails to point out any illegality or infirmity in the CIT(A)'s common order under ITA Nos. 167 to 170/Rjt/2015 (ITO vs. Barbados Maritime Agencies Pvt. Ltd.) A.Y. 2011-12 & 2014-15 -5- challenge on all four issues (supra) framed therein. We thus find no reason to interfere in the CIT(A)'s order under challenge in all four cases.
8. These four Revenue's appeals are dismissed.
[Pronounced in the open Court on this the 28th day of November, 2016.] Sd/- Sd/-
(N. K. BILLAIYA) (S. S. GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad: Dated 28/11/2016
True Copy
S K Sinha
Copy of the Order forwarded to:-
1. The Appellant.
2. The Respondent.
3. The CIT (Appeals) -
4. The CIT concerned.
5. The DR., ITAT, Ahmedabad.
6. Guard File.
By ORDER
Deputy/Asstt.Registrar
ITAT, Rajkot