Income Tax Appellate Tribunal - Ahmedabad
Sudip Arvindbhai Patel, , Ahmedabad vs Assessee on 27 November, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "C" BENCH
Before: Shri Pramod Kumar, Accountant Member
and Shri S. S. Godara, Judicial Member
ITA No. 136/Ahd/2015
Assessment Year 2008-09
Sudip A Patel, Additional Commissioner
C-11 Karnavati of Income Tax, TDS
Apartment, Opp. NRI Vs Range, Ahmedabad
Tower, Bodakdev, (Respondent)
Ahmedabad-54
PAN: AJKPP6231K
(Appellant)
Revenue by: Shri James Kurian, Sr. D.R.
Assessee by: Shri P.B. Parmar, A.R.
Date of hearing : 07-09-2015
Date of pronouncement : 27-11-2015
आदेश /ORDER
PER : S. S. GODARA, JUDICIAL MEMBER:-
This assessee's appeal for A.Y. 2008-09, arises from order of the CIT(A)-XX, Ahmedabad dated 13-11-2014 in appeal no. CIT(A)- XXI/582/Addl. CIT/13-14, in proceedings under section 271C of the Income Tax Act, 1961; in short "the Act".
I.T.A No. 136/Ahd/2015 A.Y. 2008-09 Page No 2 Sudip Arvindbhai Patel vs. ACIT
2. The assessee's sole substantive ground challenges section 271C penalty of Rs. 96,015/- imposed by both the lower authorities on account of his failure in deducting TDS @ 10.2% on interest payments amounting to Rs. 9,41,315/- u/s. 194A(1) of the Act. The CIT(A)'s findings under challenge are reproduced as follows:-
"4.3 I have considered the facts of the case and-submission made by the appellant. The Addl. CIT has levied the penalty u/s. 27IC for the reason that the appellant has not made the TDS on the interest payment of Rs. 9,41,3157- to various parties. In compliance to the show cause notices the appellant did not respond and only requested for the adjournments. Finally in absence of any reply from the assessee, the Addl. CIT levied the penalty for failure to deduct the tax on the payment made towards interest.
4.4 In the appellate proceedings the appellant submitted that he acted on bonafides as per advice of his financial advisor and the amount has been disallowed u/s. 40(a)(ia) of the Act by his auditor in tax audit report. Further he took the TAN number only on 25.3.2009 and after that date it was informed by various parties that they have already included the interest income in their returns of income and paid the tax liability. It was also claimed that all the parties except one party has given the certificate of their Chartered Accountant in respect of the discharge of tax liability on interest paid by him to them. It was also submitted that he had already made the payment in respect of interest liability u/s. 201 and 201A towards loss of revenue due to late payment of tax by the depositors as determined by lTO(TDS)-4. So it was prayed that the default of TDS has been done due to ignorance of law and there was no malafide intention involved for non-deduction of TDS. It was also stated that due to such mistake there was no loss of revenue to the Government. He relied upon some case laws also and requested to delete the proceedings.
4.5 Considering the facts and submissions of the appellant, it is found that the appellant was under legal obligation to make the TDS on the interest payments of various parties in spite that he was well versed to the provisions which is apparent from the fact that the Chartered Accountant has already advised him about such deduction over the interest payment of Rs.5,000/- to each party. I.T.A No. 136/Ahd/2015 A.Y. 2008-09 Page No 3 Sudip Arvindbhai Patel vs. ACIT Although nothing was on record to verify whether the recipients of the interest income have included that interest income in their returns of income but that even could not save the appellant from the penalty proceedings u/s.271C and at the best the appellant could have taken the shelter to get the relief from the disallowance u/s.40(a)(ia) of IT, Act. So this contention does not survive on the facts. Even making the payment of interest u/s.201A is also a different provision from the penalty proceedings u/s. 271C of the I.T. Act. So there is no bonafide reasons for not to make the TDS on the interest payments and there is no reasonable cause to absolve the appellant from the penalty proceedings. The case laws relied upon by the appellant is not applicable over the facts of the case. In view of the aforesaid facts, the levy of penalty is correct and justified and the same is confirmed.
5. Accordingly, the appeal stands dismissed."
3. We have heard both the parties. Case file perused. Relevant facts stated hereinabove are not repeated for the sake of brevity. There is no dispute that the assessee has not subjected his interest payment to TDS deduction. There is further no issue that but for his accounts being audited u/s. 44AB, he is not otherwise covered u/s. 194A of the Act. The assessee accordingly claims his non deduction of TDS as an inadvertent mistake on a bonafide belief entitled to be treated as a reasonable cause u/s. 234B. He files before us Assessing Officer's order dated 07-03-2013 u/s. 201(1) and 201(1A) of the Act qua the very payment holding that the payees in question have already declared their corresponding income and assessee has been held liable only qua interest portion under the latter provision amounting to Rs. 10,918/-. The Revenue fails in disputing all this factual position. We observe in these facts and circumstances that assessee's default in deducting TDS on his interest payments in I.T.A No. 136/Ahd/2015 A.Y. 2008-09 Page No 4 Sudip Arvindbhai Patel vs. ACIT question has not caused any loss to the Revenue. And the TDS deducting provision u/s. 194A(1) applies in his case for the first time due to his audited books of account as indicated hereinabove. We are of the opinion in this peculiar facts and circumstances that assessee has been able to show his reasonable cause for failure in deducting TDS. His sole substantive ground succeeds. The impugned section 271C penalty of Rs. 96,015/- is deleted.
4. This assessee's appeal is allowed.
Order pronounced in the open court on 27-11-2015 Sd/- Sd/-
(PRAMOD KUMAR) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 27/11/2015 ak
आदेश क त ल प अ े षत / Copy of Order Forwarded to:-
1. Assessee
2. Revenue
3. Concerned CIT
4. CIT (A)
5. DR, ITAT, Ahmedabad
6. Guard file.
By order/आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद