Income Tax Appellate Tribunal - Delhi
Nagar Palika Parishad, Ghaziabad vs Acit(Tds), Range Ghaziabad, Ghaziabad on 7 December, 2022
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'E', NEW DELHI
Before Dr. B. R. R. Kumar, Accountant Member
Sh. Yogesh Kumar US, Judicial Member
ITA No. 7399/Del/2019 : Asstt. Year : 2013-14
ITA No. 7400/Del/2019 : Asstt. Year : 2014-15
ITA No. 7401/Del/2019 : Asstt. Year : 2015-16
ITA No. 7402/Del/2019 : Asstt. Year : 2017-18
ITA No. 7403/Del/2019 : Asstt. Year : 2018-19
Nagar Palika Parishad, Vs ACIT(TDS),
56, Gandhi Markelt, Modia Nagar, Range,
Ghaziabad, U.P.-201204 Ghaziabad
(APPELLANT) (RESPONDENT)
PAN No. AAALN0102G
Assessee by : Sh. M. P. Rastogi, Adv.
Revenue by : Sh. Amit Shukla, Sr. DR
Date of Hearing: 30.11.2022 Date of Pronouncement: 07.12.2022
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
These appeals have been filed by the assessee against the orders of ld. CIT(A), Ghaziabad dated 28.06.2019.
2. Since, the issues involved in all these appeals are identical, they were heard together and being adjudicated by a common order.
3. In ITA No. 7399/Del/2019, following grounds have been raised by the assessee:
"1. That the provision of Section 271CA of the Income-tax Act, 1961 (the Act) in terms is not applicable to assessee's case and consequently the 2 ITA Nos. 7399 to 7403/Del/2019 Nagar Palika Parishad penalty of Rs. 1,07,570/- as levied by the Assessing Officer and sustained by CIT (Appeals) is arbitrary, unjust and illegal.
2) That in the absence of any allegation that the assessee fails to collect/deduct the TCS/TDS, the provision of Section 271CA of the Act in terms is not applicable and consequently the penalty as levied by the Assessing Officer and sustained by CIT (Appeals) is invalid and bad in law."
4. Owing to the legal issue involved, the additional grounds filed by the assessee are admitted.
5. In this case, the ITO (TDS), Ghaziabad has submitted a proposal dated 14.06.2018 for levy of penalty u/s 271CA of the Income Tax Act, 1961 as the assessee collector has not collected tax as required u/s 206C of the Income Tax Act, 1961. During the survey, the revenue noticed that the collector has not collected tax from source from the receipts on contract of parking u/s 206 of the Income Tax Act, 1961. Consequently, the Addl. CIT levied penalty u/s 271CA of the Income Tax Act. The ld. CIT(A) confirmed the action of the ld. Addl. CIT.
6. Heard the arguments of both the parties and perused the material available on record.
7. We find that the notice of penalty has been issued for levy of penalty u/s 271C and the penalty has been levied u/s 271CA. After listening to the argument of the ld. DR who passionately tried to convince the Bench that in fact the notice has been issued u/s 271CA but due to typographical error, the letter "A" stands omitted and hence the penalty notice must be treated as issued properly. However, we find that owing to the details in 3 ITA Nos. 7399 to 7403/Del/2019 Nagar Palika Parishad the penalty notice which mentions that there has been a "total short deduction of TDS" which proves that the penalty notice has been issued for default of TDS but not TCS.
8. Section 271C reads as under:
"Penalty fo r failure to deduct tax at source .
271C. (1) If any person fails to--
(a) deduct the whole o r any part o f the tax as required by o r unde r the pro visions of Chapter XVII-B; o r
(b) pay the who le or any part of the tax as required by or unde r--
(i) sub-section ( 2) o f sectio n 115- O; or
(ii) the seco nd proviso to section 194B, then, such pe rson shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such perso n faile d to deduct or pay as aforesaid.
(2) Any penalty imposable under sub-section (1) shall be imposed by the Jo int Commissioner."
9. Section 271CA reads as under:
"Penalty fo r failure to collect tax at source .
271CA . ( 1) I f any person fails to co llect the who le or any part of the tax as re quire d by or under the provisions o f Chapte r XVII-BB, the n, such pe rson shall be liable to pay, by way o f penalty, a sum equal to the amount of tax which such person faile d to collect as aforesaid.
(2) Any penalty imposable under sub-section (1) shall be imposed by the Jo int Commissioner."4 ITA Nos. 7399 to 7403/Del/2019
Nagar Palika Parishad
10. On the issue, we are guided by the judgment of Hon'ble High Court of Kerala in the case of Lakshadweep Development Corporation Ltd. Vs Addl. CIT (TDS) (411 ITR 213) held as under:
Head note S e ct i on 2 7 1 C o f t h e In co m e- t ax A ct , 1 9 6 1 - P en al t y - F or f ai l u re t o d ed u ct t ax at so u r c e ( S u b - s e ct i on s ( 1 ) ( a) a n d ( 1 ) ( b ) ) - Wh e t h e r t h e r e b ei n g sp e ci fi c e xt en t an d ap p l i cat i on st i p u l at ed u n d er s ect i on 2 7 1 C ( 1 ) ( a) an d 2 7 1 C ( 1 ) ( b ) fo r i m p o si t i on o f p en al t y f or o m i s si on (i ) t o d e d u c t t a x a t s ou rc e an d ( i i ) i n not r e m i t t i n g t ax d ed u ct ed at s ou r c e s ep ar at el y, i t c ou l d n ot b e sai d t h at s e c t i on 2 7 1 C( 1 ) ( b ) wi l l t ak e i n s ec t i on 2 7 1 C( 1 ) ( a) a s w el l , t o a t t ra ct p en al t y f o r n on - p ay m en t o f t ax d e d u c t ed at s ou r c e - H el d , y es -
Wh et h e r n o n - p a ym e n t of t a x wh i ch w a s d ed u ct ed i n t er m s o f su b - s e ct i o n ( 2 ) o f s ec t i on 1 1 5 - 0 o r co v e r ed b y 's e c on d p r o vi so ' t o s e ct i on 1 9 4 B al on e wo u l d con st i t u t e an i n st an c e wh e r e p e n al t y can b e i m p o s ed i n t e rm s of s ec t i on 2 7 1 C( 1 ) ( b ) - H el d , y es - Wh et h e r t h er e f o r e, n on - r e m i t t an c e o f t a x d ed u ct e d u n d e r s e c t i on 1 9 4 C o f Ch a p t e r XV IIB i s n ot c o v e r ed b y s e ct i on 2 7 1 C ( 1 ) ( b ) t o at t ra ct p en al t y - H el d , y e s [ P ar a s 3 7, 4 3 an d 4 4 ] "37. Section 271C o f the Income Tax Act is quite categoric. Its scope and extent of application is discernible from the provision itself, in unambiguous terms. Whe n the non- deduction of the whole or any part of the tax, as required by or under the various instances/ pro visio ns of Chapte r XVII-B would invite penalty under Clause 271C( 1)(a) ; only to a limite d extent, involving sub-se ctio n (2) of Sec.115-O (coming unde r Chapter XIID) or covered by the 'second pro viso' to Sectio n 194B (co ming unde r Chapter XVIIB) alo ne would constitute an instance where penalty can be im posed in terms of Section 271C( 1)(b) of the Act. Since there is no o bscurity in the above pro vision, it is not fo r the Co urt to read something more into it, contrary to the intent and le gislative wisdom, which stands to be a forbidden fie ld for the Court. It is settled law that the rule o f 'strict inte rpretation' is the rele vant one in so far as the fiscal 5 ITA Nos. 7399 to 7403/Del/2019 Nagar Palika Parishad statute is concerned. We find support from the ruling rende red by the Apex Co urt in Sneh Ente rprises v. Commissio ner of Customs, 2006 taxmann.co m 1512 (SC) .
38. The Division Bench of this Court in U.S Te chnolo gies International ( P.) Ltd. ( 195 taxm ann 323) , despite the specific extent and applicatio n stipulated unde r Section 271C( 1)(a) and 271C( 1)(b) fo r im position o f penalty for omission (i) to deduct tax at source and (ii) in no t remitting the tax de ducted at source separate ly, to the specified exte nt and within the boundaries mentione d there in held that the circumstances unde r Sectio n 271C( 1)(a) can be read into Se ction 271C(1)( b). Whethe r such 'reading into' the pro vision is possible or pe rmissible in a 'fiscal statute' is an impo rtant que stio n.
................
42. Coming back to the case in hand, despite the fact that Sectio n 271C( 1)(b) is quite clear and unambiguous, the le arne d Judges, while declaring law in U.S . Techno logies International ( P.) Ltd. case (cited supra) simply read 271C ( 1)(a) into Sectio n 271C(1)(b) , which is not correct and stands co ntrary to the dictum laid down by the Apex Court.
43. In the light of the abo ve discussion, the Refere nce is answe red as follows:
1. The finding of the Division Bench in U.S. Technologies International Pvt. Ltd. (supra) and Classic Concepts Home India Pvt. Ltd. (supra) to the e ffect that Section 271C(1)(b) will take in Section 271C( 1)(a) as well, to attract penalty for non- payment of the tax de ducted at source, doe s not reflect the correct provisio n o f law. T hey stand ove rrule d.6 ITA Nos. 7399 to 7403/Del/2019
Nagar Palika Parishad
2. The finding and reasoning in U.S . Techno logies International Pvt. Ltd (supra) and Classic Concepts Home India Pvt. Ltd. (supra) that the be nefit o f waive r/re duction of pe nalty [once good and sufficient reason is established in terms of Sectio n 273B of the Income Tax Act] is not attracted in a case covere d Section 271C( 1)(b) (invo lving failure as to non- deposit of the tax deducte d at source) is not co rrect. It also stands ove rruled."
11. In the instant case, it is hereby reiterated that owing to the judgment of the penalty notice has been in the case of Lakshadweep Development Corporation Ltd. Vs Addl. CIT (TDS) which has over ruled the finding of the Division Bench in the case of U.S Technologies International (P.) Ltd. case (supra), penalty levied u/s 271CA after issuing notice u/s 271C cannot be held to be legally valid.
12. In the result, the appeals of the assessee are allowed. Order Pronounced in the Open Court on 07/12/2022.
Sd/- Sd/-
(Yogesh Kumar US) (Dr. B. R. R. Kumar)
Judicial Member Accountant Member
Dated: 07/12/2022
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR