Madhya Pradesh High Court
Commissioner Of Income-Tax vs Senior Accounts Officer, Madhya ... on 9 December, 2004
Equivalent citations: (2005)197CTR(MP)276, [2005]276ITR84(MP)
Author: A.M. Sapre
Bench: A.M. Sapre
JUDGMENT
A.M. Sapre J.
1. The decision rendered in this appeal shall also govern disposal of the other two appeals being I. T. A. Nos. 146 and 148 of 1999 because all the three appeals are between the same assessee except the difference is that they relate to different assessment years involving common point.
2. This is an appeal filed by the Revenue (Commissioner of Income-tax) under Section 260A of the Income-tax Act, 1961, against the order dated July 5, 1999, passed by the Tribunal (the ITAT) in I. T. A. No. 751/Ind of 1998. It was admitted for final hearing on the following substantial questions of law :
"1. Whether, on the facts and in the circumstances of the case and in law the Tribunal was justified in deleting the penalty levied under Section 271C of the Income-tax Act ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that Senior Accounts Officer, MPEB, Indore, cannot be treated as principal officer for want of notice as per Clause (b) of Section 2(35) of the Income-tax Act even though senior accounts officer falls under Clause (a) of Section 2(35) of the Income-tax Act being a 'manager' or 'treasurer' in the matter of accounts ?
3. Whether, on the facts and in the circumstances of the case and in law the Tribunal was justified in holding that penalty can be imposed either on the MPEB or its principal officer even though senior accounts officer is the person responsible for deducting the tax at source within the meaning of Section 201(1) of the Income-tax Act and hence, liable to penalty under Section 271C of the Act ?"
3. Heard Shri R.L. Jain, learned senior counsel with Kumari V. Mandlik, learned counsel for the Revenue, and Shri S. K. Jain, learned counsel for the respondent/assessee.
4. The dispute in these appeals relates to imposition of penalty under Section 271C of the Act on the assessee for committing breach of Section 194 read with Section 201 ibid.
5. The respondent is an assessee--M. P. Electricity Board. In substance, the charge against the Board, i.e., the assessee was that the Board deducted less amount of tax deducted at source from their particular class of consumer (High Tension Transmission Lines). According to the Department, the Board should have deducted at source 23 per cent. whereas they recovered at the rate of 10 per cent. during the relevant assessment years in question and hence, a case for imposing a penalty under the aforementioned sections making the principal officer liable for the same. It is not in dispute that the Board/assessee on being noticed, deposited the entire money and complied with the requirement. The Assessing Officer and the Commissioner of Income-tax (Appeals) did not accept the explanation offered by the assessee and imposed penalty under Section 271C of the Act. However, it was set aside by the Tribunal by the impugned order, giving rise to filing of this appeal by the Revenue.
6. Having heard learned counsel for the parties and having perused the record of the case, we are of the view that appeal has no substance and hence, it is liable to be dismissed.
7. In our opinion, the Tribunal rightly accepted the explanation offered by the Board/assessee. It was not a case of deliberate attempt on the part of the assessee to avoid payment by way of deduction for being deposited. The assessee is not a private businessman but it is a Government statutory organisation. Moreover there was some confusion as regards the extent of percentage to be deducted from the different class of customers. No sooner it was clarified, the Board made compliance from their own funds. In a case of this nature, the law laid down by the Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 (SC) ; [1970] 25 STC 211 (SC), when their Lordships held (page 29) :
"Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by statute."
8. In our opinion, the aforesaid principle of law squarely apply to the facts of this case, if we examine the explanation offered by the Board/assessee for not depositing/deducting the tax deducted at source from the particular class of consumers. In our view, the explanation was bona fide and deserves to be accepted. In no case, was it a case of deliberate concealment or was done with a view to evade payment of tax and putting the Revenue to loss.
9. In view of the aforesaid discussion, while concurring with the view taken by the Tribunal, we dismiss the appeal and uphold the order of the Tribunal.
10. No costs.