Income Tax Appellate Tribunal - Ahmedabad
Rajkot Nagrik Sahakari Bank Ltd.,, ... vs Assessee on 22 May, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL " C " BENCH, AHMEDABAD
(BEFORE SHRI RAJPAL YADAV, J.M. & SHRI ANIL CHATURVEDI, A.M.)
I.T. A. Nos. 2291 to 2294 /AHD/2011
(Assessment Years: 2003-04 to 2006-07)
Rajkot Nagarik Sahakari V/S Joint Commissioner of
Bank Ltd. Sanghavi & Co., Income Tax, TDS Range,
112, Aditya Centre, Surat
Phulchhab Chowk, Rajkot
(Appellant) (Respondent)
PAN: AAAAR2912F
Appellant by : None
Respondent by : Shri Nimesh Yadav, Sr. D.R.
(आदे श)/ORDER
Date of hearing : 20-05-2015 Date of Pronouncement : 22 -05-2015 PER BENCH.
1. These 4 appeals are filed by the Assessee against the order of CIT(A)-I, Surat dated 30.06.2011 for A.Ys. 2003-04 to 2006-07.
2. On the date of hearing i.e. on 20.05.2015 none appeared on behalf of Assessee though from the records, it is seen that the notice of hearing was served to the Assessee. We therefore proceed to decide the issue ex parte qua the Assessee and on the basis of material available on record.
2 ITA Nos. 2291 to 2294/AHD/2011. A.Ys. 2003-04 to 2006-07
3. Before us, at the outset the ld. D.R. submitted that though the appeals of Assessee relate to 4 assessment years but the facts and circumstances of all the cases are similar except for the assessment years and amounts and the submissions are also common for all the appeals and therefore all the appeals can be heard together. We therefore proceed to dispose of all the appeals together for the sake of convenience and thus proceed with the facts in A.Y. 2003-04.
4. The relevant facts as culled out from the material on record are as under.
5. Assessee is a Co-operative Bank. In this case, ITO TDS (1), Surat noticed that Assessee had made payment of MICR charges to State Bank of India but had not deducted TDS before making the payment. A.O was of the view that Assessee should have deducted TDS u/s. 194J of the Act since the payment of MICR charges were towards "fees for technical charges". He also relied on the decision of ITAT, Ahmedabad Bench in the case of Canara Bank vs. ITO 117 ITD 207. The Assessee was asked to show cause as to why penalty u/s. 271C be not levied to which Assessee interalia submitted that it was under a bona fide belief that MICR charges were not covered under the " professional fees" as described u/s. 194J of the Act, the payee had paid the tax and there was no loss to the Revenue. The submissions of the Assessee were not found acceptable to the A.O. He was of the view that Assessee has not been able to substantiate the circumstances beyond its control which prevented it from complying with the provisions of the Act. He therefore vide order dated 09.09.2010 levied a penalty of Rs. 7,287/- u/s. 271C of the Act. Aggrieved by the order of A.O., Assessee carried the 3 ITA Nos. 2291 to 2294/AHD/2011 . A.Ys. 2003-04 to 2006-07 matter before CIT(A) who dismissed the appeal of the Assessee by holding as under:-
The arguments of the A.O as well as appellant have been considered. There is considerable force in the arguments of the A.O. Having regard to the strong arguments put forth by the A.O and the decision of the Hon'ble ITAT, B Bench, Ahmedabad, the penalty imposed u/s. 271(1)(C) of the I.T. Act is confirmed.
6. Aggrieved by the order of CIT(A), Assessee is now in appeal before us and has raised the following grounds:-
1. That the Learned C.I.T., Appeals-I, Surat has grievously erred in confirming the penalty levied by the J.C.I.T.- TDS Range, Surat under section 271C amounting to Rs.7,287/-.
7. Before us, ld. D.R. supported the order of A.O and ld. CIT(A).
8. We have heard the ld. D.R. and perused the material on record. The issue in the present case is about the levy of penalty u/s. 271C on account of non deduction of TDS u/s. 194J on the MICR charges paid by the Assessee to State Bank of India. We find that a similar issue in the case of Prime Co.- Op. Bank Ltd. vs. JCIT (in ITA No. 2040 to 2043/A/2011 order dated 09.01.2015) was decided by the Tribunal in favour of the Assessee. The relevant portion of the aforesaid order reads as under:-
9. We have heard the ld. D.R. and perused the material on record. In the present case it is an undisputed fact that Assessee has paid MICR charges to SBI and it is submitted that the MICR charges were recovered by SBI at regular intervals by debiting the account of the Assessee. It is also submitted that the MICR charges has been offered as income by S.B.I. and the default 4 ITA Nos. 2291 to 2294/AHD/2011 . A.Ys. 2003-04 to 2006-07 of non deduction of tax was not intentional but only due to accounting adopted by S.B.I. Before us, no material has been placed on record by Revenue to controvert the submissions of the Assessee. We find that in the case of Woodward Governors India Pvt. Ltd. (supra), the Hon'ble High Court has held that before levying penalty u/s. 271C, the concerned officer is required to find out that even if there was any failure to deduct tax at source, the same was without reasonable cause. The initial burden is on the Assessee to shown that there exists reasonable cause which was the reason for the failure, thereafter the officer has to consider whether the explanation offered by the Assessee was on account of reasonable cause. It has further held that "reasonable cause" is that which would mean an honest belief founded upon reasonable grounds of the existence of a state of circumstances, which assuming them to be true, would reasonably lead ordinary, prudent and cautious man, placed in the position of the persons concerned, to come to the conclusion that the same was right thing to do so.
The cause shown has to be considered and only if it is found to be frivolous, without substance or foundation would the prescribed consequences follow.
10.In the case of Muthoot Bankers (supra), the co-ordinate Bench of Tribunal has held that when payment is disclosed in the return, there is no concealment of facts and further when recipients have shown the receipts in the returns and had paid taxes thereon, there was no loss to the Government and therefore penalty cannot be levied.
11.In the case of ITO vs. Dishergarh Power Supply Company Ltd. (supra) , the co-ordinate Bench of Tribunal has held that penalty u/s/ 271C is not an automatic consequence of non deduction or short deduction of tax at source and penalty cannot be imposed in case the person concerned can 5 ITA Nos. 2291 to 2294/AHD/2011 . A.Ys. 2003-04 to 2006-07 demonstrate that there was a reasonable cause for his failure referred to in Section 271C. It further held that when an explanation is offered, it is the duty of the officer to objectively consider the same.
12.In the present case, Revenue has not brought any material on record to demonstrate that the reasons given by Assessee for non deduction of tax was not bona fide or to be false. We further find that CIT(A) by a very cryptic order has upheld the action of A.O. Considering the totality of the facts and in view of the decisions relied by the Assessee, we are of the view that in the present case the reasons given by Assessee for non deduction of TDS appears to be bona fide and therefore the provisions for penalty u/s. 271C of the Act are not attracted. We accordingly direct its deletion.
13. In the present case, we find that in the submissions before ld. CIT(A), it was contended that Assessee was under the belief that no TDS was deductible on the MICR charges paid by Assessee, Assessee considering the amount of interest levied u/s. 201(1) & 201(1A) took a decision of not filing appeal against its levy, and the payee, namely SBI, has already paid the tax on the MICR charges collected by it. The aforesaid submissions of Assessee made before ld. CIT(A) have not been controverted by ld. D.R. We further find that the issue raised in the present appeals are identical to the case of Prime Co-Op. Bank Ltd. (supra) which has been decided earlier by the Co- ordinate Bench. Before us, Revenue has also not pointed out any distinguishable features of the case with that of Prime Co-Op. Bank (supra). We therefore considering the totality of the aforesaid facts and relying on the aforesaid decision of the Co-ordinate Bench of Tribunal, are of the view that in the present case no penalty is leviable. We therefore direct the deletion of penalty in all the years under appeal.
6 ITA Nos. 2291 to 2294/AHD/2011. A.Ys. 2003-04 to 2006-07
14. In the result, all the appeals of Assessee are allowed.
Order pronounced in Open Court on 22 - 05 - 2015.
Sd/- Sd/-
(RAJPAL YADAV) (ANIL CHATURVEDI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad. TRUE COPY
Rajesh
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,Ahmedabad