Income Tax Appellate Tribunal - Jodhpur
Uday Bhowmick, Udaipur vs Addl. Cit-Tds,, Udaipur on 14 June, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
JODHPUR BENCH, JODHPUR.
BEFORE: DR. S. SEETHALAKSHMI, JUDICIAL MEMBER &
SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER
I.T.A. No. 194/Jodh/2023
Assessment Year: 2015-16
Sh. Uday Bhowmick Vs. Addl. Commissioner of
A-2/G-2 Geetanjali University Income Tax,
Campus Doctors Quarters, Nr. TDS-Range,
Eklingpura Choraha, Udaipur. Udaipur.
[PAN: ADYPB9635K]
(Appellant) (Respondent)
Appellant by Sh. Rakesh Lodha, C.A.
Respondent by Sh. A.S. Nehra, Sr. DR
Date of Hearing 21.03.2024
Date of Pronouncement 14.06.2024
ORDER
Per:DR. S. Seethalakshmi, JM:
This appeal filed by assessee is arising out of the order of the National Faceless Appeal Centre, Delhi dated 27.03.2023 [here in after "ld.CIT(A)(NFAC)"] for assessment year 2015-16 which in turn arise from the order dated 27.01.2022 passed under section 271C of the Income Tax Act, by the Addl. CIT, Range-TDS, Udaipur
2. In this appeal, the assessee has raised following grounds: -
" 1. On the facts and circumstances of the case and in law the Ld. CIT(Appeals), NFAC, Delhi erred in confirming the penalty u/s 271C, on the finding of Addl. CIT I.T.A. No.194/Jodh/2023 Sh. Uday Bhowmick 2 that assessee " failed to deduct and deposit tax within stipulated time" contrary to the provisions of section 271C of the Act.
2. . On the facts and circumstances of the case and in law the Ld. CIT(Appeals), NFAC, Delhi erred in confirming penalty of Rs. 103,296/- u/s 271C levied by the Addl. CIT, TDS, Udaipur for delayed deposit of tax without considering the reasonable cause u/s 273B of the Act.
3. The appellant craves leave to add, alter, amend, modify and/or delete all or any of the grounds of appeal on or before the final hearing, if necessary."
3. Brief fact of the case is that in this case, that the ITO (TDS), Udaipur referred vide letter no. ITO/TDS/UDR/2020-21/663 dated 26.03.2021 that order u/s 201(1)/201(1A) of the I. T. Act, 1961 was passed by the ITO (TDS), Udaipur on 26.03.2021. The copy of same was endorsed for initiating penalty proceedings u/s 271C of the I. T. Act, 1961. Further, the ITO (TDS), Udaipur referred vide letter no. ITO/TDS/UDR/2020-21/99 dated 22.07.2021 that order us 154/201(1)/201(1A) of the I. T. Act, 1961 was passed by the ITO(TDS), Udaipur on 22.07.2021.
3.1 It was also noted that deductor assessee is an individual who purchased an immovable property of the value of Rs. 1,03,29,600/- during the F.Y. 2014- 15 on 09.08.2014 i.e. after 01.06.2013. The deductor assessee has made the payment of Rs.1,03,29,600/- on 27.06.2014 and deducted the TDS of Rs.1,03,296/- on the aforesaid immovable property on 23.02.2017. But the deductor assessee has failed to deduct tax at source within stipulated time on payment of Rs.1,03,29,600/-for the purchase of aforesaid immovable property I.T.A. No.194/Jodh/2023 Sh. Uday Bhowmick 3 made to the transferor of property. On the aforesaid amount of Rs.1,03,29,600/-, the assessee was liable to deduct TDS of the aforesaid property on 27.06.2014 and required to deposit the same in the Central Govt. Account in the stipulated period but he failed to do so.
3.2 The assessee has not deducted tax at source of Rs.1,03,296/- u/s 194IA of the IT. Act, 1961 @1% on Rs. 1,03,29,600/- on payment of the aforesaid immovable property in the stipulated period. Therefore, A show cause notice under section 274 read with section 271C of the I.T. Act, 1961 for non- deduction or/and non-deposition of TDS of Rs. 1,03,296/- was issued on 02.12.2021 to the deductor assessee, requesting to show cause as to why penalty should not be levied for the default fixing the hearing of the case on 14.12.2021 and the same was duly served on him by speed post. In response to above, on 07.12.2021, the assessee filed written submission by E-mail. Further, in this regard, on 14.12.2021, the ld. AR of the assessee filed written submission in AO. Further opportunity was provided to the assessee vide notice u/s 274 read with section 271C of the Act dated 12.01.2022 fixing the date of hearing on 24.01.2022 and same was duly served on him by speed post. In response to above, on 24.01.2022, assessee filed the written submission by e-mail. 3.3 The ld. AO [ Addl. CIT ] noted that the reply filed by the assessee as well as circumstance of the case, does not find force to accept this reason/explanation furnished by the assessee for non-deduction of tax at source I.T.A. No.194/Jodh/2023 Sh. Uday Bhowmick 4 on payment for the purchase of aforesaid immovable property immovable property in the stipulated period. The ignorance of the law is not an excuse for contravention of law. Deductor assessee was not volunteer in deduction of tax. The ld. AO noted that the reason of the assessee is not tenable as the same is general in nature and it is an afterthought of the deductor. The contention of the assessee that "The reason for late deduction was that the UIT officials told them that they have filed a S.B. civil writ petition no. 2417/2015 in The Hon'ble High Court, Rajasthan and taken a stay in this type of cases and no TDS shall be deducted from UIT against purchase of immovable property. These reasons are not tenable in law because as per section 10(20) of the Income Tax Act, 1961, UIT is not covered for exemption under local authority. It is noticed that Property was purchased after 01/06/2013 i.e. on 09.08.2014. The deductor assessee has made the payment of Rs.1,03,29,600/- on 27.06.2014 and deducted the TDS of Rs.1,03,296/- on the aforesaid immovable property on 23.02.2017. But the deductor assessee has failed to deduct tax at source within stipulated time on payment of Rs. 1,03,29,600/- for the purchase of aforesaid immovable property made to the transferor of property. The ITO (TDS), Udaipur issued notice u/s 201(1) to the deductor. The deductor assessee submitted reply along the copy of Form no. 26QB, Form 16B and copy of challan from which it is seen that the assessee has made the payment of Rs.1,03,29,600/- on 27.04.2014 and deducted the TDS of Rs.1,03,296/- on the aforesaid immovable property on I.T.A. No.194/Jodh/2023 Sh. Uday Bhowmick 5 23.02.2017. The ITO (TDS), Udaipur passed an order u/s 201(1)/201(1A) of the
1. T. Act, 1961 on 26.03.2021 for F.Y. 2014-15.
3.4 Later on, the ITO (TDS), Udaipur passed an order u/s 151/201(1)/201(1A) of the I. T. Act, 1961 on 22.07.2021 for F.Y. 2014-15 whereby the demand of interest u/s 201(1A) of the I.T. Act, 1961 has been assessed as nil as the assessee has already paid the interest Rs.34,056/-on 06.03.2017. From the above, it is clear that the deductor assessee has failed to deduct and deposit the TDS of Rs. 1,03,296/- on the payment for the purchase of aforesaid immovable property within stipulated time. Further, ld. AO relying on the decision of Commissioner of Income Tax, thiruvannathapuram vs Muthoot banker of the Kerala High Court, IT Appeal No. 57 of 2015 dated 06 June, 2016, wherein it is held that on failure to establish reasonable cause for failure to deduct tax at source, penalty was to be levied. It is also held in that decision in ITA 139/2013 that the burden under section 273B is entirely on with the assessee and that case which is beyond the control of the assessee and which prevents a reasonable man of ordinary prudence acting under normal circumstances without negligence or in action or want of bonafides, alone make out a reasonable cause. Therefore, the reasons submitted by the deductor do not fall under the definition of reasonable cause for non-compliance of the provisions of Income Tax Act, 1961.
I.T.A. No.194/Jodh/2023
Sh. Uday Bhowmick 6
4. Aggrieved from the order of the Addl. CIT levying the penalty, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds of the appeal so raised by the assessee, the relevant finding of the ld. CIT(A) is reiterated here in below:-
"7.9 The reason as given by the appellant for failure to deduct tax at source on the payment made for purchase of land is that he had purchased the property vide auction from UIT (Urban Improvement Trust, Udaipur) and the UIT officials had demanded payment of the full amount of Rs. 10329600/- (without TDS) and further had informed him that TDS is not applicable on UIT Udaipur because it is Government Body. The appellant also submitted that and if he deducted TDS or was unable to pay whole amount then allotment of plot would be cancelled. Further he added that the UIT informed that they had filed a S.B. civil writ petition no. 2417/2015 in the Hon'ble High Court, Rajasthan and taken a stay for such cases and no TDS was to be deducted from Urban Improvement Trust (UIT) Udaipur against purchase of immovable property.
7.10 In this context the appellant submitted Letter of Confirmation of auction of Plot and Copy of Writ filed before The High Court of Rajasthan. On perusal of the above documents it is seen that the letter of confirmation only mentions the details of payments to be made and the due date for payment. There is no mention of any conditions as stated by the appellant regarding TDS or the consequences of effecting the same. Further it is seen the writ against applicability of TDS on payments to UIT was filed on 12-03-2015, i.e. much after the transactions under discussion.
7.11 In view of the above, it can only be concluded that at the time of making the payment for purchase of land, Section 1941A was applicable, the payee was not exempt from these provisions, and no writ against the applicability of these provisions had been filed, and hence no stay could have been in place at such point in time. Thus, the appellant's explanation cannot be accepted and it cannot be said that there was any reasonable cause for failure to comply with S. 1941A. Consequently, the default committed was liable for penalty under the provisions of Section 271C, and the action of the Addl. CIT(TDS) in so levying the penalty is upheld. Accordingly. appellant's Ground of appeal is dismissed.
8. In the result, the appeal filed by the appellant is dismissed."
I.T.A. No.194/Jodh/2023 Sh. Uday Bhowmick 7
5. As the assessee did not receive any favour from the appeal filed before ld. NFAC/ CIT(A). The present appeal filed against the said order of the ld. NFAC before us on the grounds as reiterated in para 2 above. To support the grounds so raised the ld. AR appearing on behalf of the assessee has placed reliance on the written submission which is extracted herein below:-
"MAY IT PLEASE YOUR HONOURS, The appellant, above named, respectfully submits as under-
That appellant preferred an appeal before this Hon'ble Tribunal having appeal No. 194/JODH/2023 The brief facts thereof and appellant's brief synopsis of submissions are submitted herewith for necessary consideration please.
(A) FACTS OF THE CASE The appellant purchased immovable property on 09-08-2014 from UIT, Udaipur for Rs 103,29,600/- and delayed deposited TDS @1% u/s 1941A on 06-03-2017 advise of UIT, Udaipur that it is Govt of Rajasthan Institution so not liable for tax liability.
Relied upon that he has delayed deposited TDS of Rs 103.296/-on 23-02-2017 and Interest of Rs 34,056/- on 06-03-2017. On reference, Id ADdI CIT, Range TDS. Udaipur rejecting reply and levied penalty of Rs 103,296/- u/s 271C of the Act and same was upheld by CIT(A), NFAC vide order dated 27-03-2023 Aggrieved by that appellant is in appeal before this Hon'ble Bench Grounds of appeals:
1. On the facts and circumstances of the case and in law the Ld CIT (Appeals), NFAC, Delhi erred in confirming the penalty u/s 271C, on the finding of Addi CIT that assessee "failed to deduct and deposit Tax within stipulated time" contrary to the provisions of section 271C of the Act.
1.1 The penalty u/s 271C of the Act can invoke for failure to Deduct Tax at Source or payment of TDS in terms of clause (a) and (b) of 271C(1) of the Act.
1.2 In the instant case it is an admitted fact TDS u/s 1941A was deposited on 23-02-
2017 and Interest u/s 201(1A) is also deposited on 06-03-2017. So, there is none of specified default u/s 271C(1) was committed by appellant. 1.3 The Hon'ble SC in case of US TECHNOLOGIES INTERNATIONAL PVT. LTD. vs. COMMISSIONER OF INCOME TAX, Civil Appeal No. 7934 of 2011, Civil Appeal Nos. 1258-1260 of 2019 vide judgment dated Apr 10, 2023 held that "8.2 I.T.A. No.194/Jodh/2023 Sh. Uday Bhowmick 8 Therefore, on true interpretation of Section 271C, there shall not be any penalty leviable under Section 271C on mere delay in remittance of the TDS after deducting the same by the concerned assessee. As observed hereinabove, the consequences on non-payment/belated remittance of the TDS would be under Section 201(1A) and Section 276B of the Act, 1961."
1.4 The judgment of Hon'ble Apex Court is squarely applicable in the facts of present case, and relying upon that, humbly prays your honours to delete the penalty of Rs 103,296/- levied u/s 271C and allow the ground of appeal.
2. On the facts and circumstances of the case and in law the Ld CIT (Appeals), NFAC, Delhi erred in confirming penalty of Rs. 103,296/- u/s 271C levied by the Addi CIT, TDS, Udaipur for delayed deposit of tax without considering the reasonable cause u/s 273B of the Act.
2.1 The appellant has not deducted TDS u/s 1941A on purchase of immovable property on 09-08-2014 from UIT, Udaipur (a Govt of Rajasthan Institution) on advise of their officials that they being Govt of Rajasthan Institution not liable for payment of tax and TDS. The appellant relied upon advise of State Govt Officials not made TDS, later on also he tried to made payment of TDS, but, UIT, Udaipur has stated that they have filed SB Civil WRIT petition No. 2417/2015 before Hon'ble Rajasthan High Court.
2.2 Appellant being medical doctor is not well versed with technicalities of the TDS provisions, under bonafide belief relied upon UIT officials and not paid TDS on 23- 02-2017 and also paid Interest on 06-03-2017.
2.3 There was no deliberate action of appellant to not deposit TDS, but being an ordinary person relied on advise of Govt Institution, he has not payment of TDS in time.
2.4 The Hon'ble Jaipur Tribunal in case of ISYS SOFTECH PVT. LTD. vs. INCOME TAX OFFICER, ITA No. 528/JP/2023, Nov 22, 2023 relying upon Hon'ble SC judgment and held that "7.2........... Therefore, in view of the Hon'ble Apex Court decision in the case of CIT vs. Bank of Nova Scotia, wherein the Hon'ble Apex Court hold that the assessee has deliberately not avoided TDS and there is no contumacious conduct on the part of the assessee. Therefore, considering that aspect of the fact in this case. The bench feels that in this case levy of penalty is not correct as the assessee has reasonable cause for such failure and the revenue has already disregarded and disallowed the claim of the assessee on account of non deduction of tax Thus, based on that set of facts, we hold that the levy of penalty is deleted on the ground that there was bona fide and reasonable cause in not deducting TDS. Thus the ground of appeal taken by the assessee on the reasonableness is considered and accordingly, the penalty is deleted." 2.5 The revenue relied upon case of CIT vs Muthoot Banker ITA 57 of 2015 Kerala High Court for failure in establish reasonable cause for failure to deduct tax at source, I.T.A. No.194/Jodh/2023 Sh. Uday Bhowmick 9 the facts of present case different, herein the case appellant is not alleged to failure to deduct tax at source, herein the case delayed deposit of TDS. So, that is not applicable in instant case.
2.6 In the instant case, in view of facts and circumstances he could not deposited TDS within prescribed time was sufficient, bona fide & reasonable cause u/s 273B for delayed therein for delayed in payment of TDS may kindly consider and delete the penalty.
Therefore, it is requested to kindly delete penalty and allow the appeal."
6. To support the various grounds so raised by the ld. AR of the assessee has relied upon the following evidences in support of the contentions so raised:-
S. No. Particulars of document Page No.
01. Copy of form No. 26QB, TDS return 1-2
02. Copy of Challan for payment of interest Rs. 34056/- 03
03. SB Civil Writ Petition No. 2417/2015 in case of UIT, Udaipur vs. 04
UOI and Anr.
4. US Technologies International Pvt. Ltd. vs. CIT, (2023) 453 ITR 0644 (SC)
7. Per contra, the ld. DR supported the order of the ld. CIT(A).
8. We have heard the rival contentions, perused the material placed on record and order of the lower authorities. We note from this submission made by the ld. AR of the assessee that the assessee purchased immovable property on 09.08.2014 from UIT, Udaipur for Rs. 103,29,600/- and delayed deposited TDS @ 1% u/s 194IA on 06.03.2017 on presumption of UIT, Udaipur that it is a Government of Rajasthan Institution so not liable for tax liability. Further, we note that the assessee has delayed in the deposit TDS at Rs. 103,296/- on 23.02.2017 and interest of Rs. 34,056/- on 06.03.2017. We observe that ld. AO I.T.A. No.194/Jodh/2023 Sh. Uday Bhowmick 10 has rejected the reply filed by the assessee during the assessment proceedings and levied penalty of Rs. 103,296/- u/s 271C of the Act that the assessee has failed to deduct and deposit of Rs. 103,296/- on the payment for the purchase of immovable property in stipulated time as prescribed and before the ld. CIT(A) that the ld. AR of the assessee submitted that the reasons given by the assessee for failure to deduct the tax at source on payment made by the purchase of land is that he purchased the property while auction from UIT, Udaipur and the UIT Officers has demanded payment of the full amount and informed that the TDS is not applicable on UIT, Udaipur because it is government body. To support his submissions, the ld. AR for the assessee has relied upon the decision of Hon'ble Supreme Court in US Technologies International Pvt. Ltd. vs. CIT (2023) 453 ITR 0644 (SC) which is as under:-
"8.2 Therefore, on true interpretation of Section 271C, there shall not be any penalty leviable under Section 271C on mere delay in remittance of the TDS after deducting the same by the concerned assessee. As observed hereinabove, the consequences on non-payment/belated remittance of the TDS would be under Section 201(1A) and Section 276B of the Act, 1961."
8.1 Further he also relied upon the Co-ordinate Bench in the case of ISYS SOFTECH PVT. LTD. vs. INCOME TAX OFFICER, ITA No. 528/JP/2023, Nov 22, 2023 which is as under:-
"7.2........... Therefore, in view of the Hon'ble Apex Court decision in the case of CIT vs. Bank of Nova Scotia, wherein the Hon'ble Apex Court hold that the assessee has deliberately not avoided TDS and there is no contumacious conduct on the part of the assessee. Therefore, considering that aspect of the fact in this case. The bench feels that in this case levy of penalty is not correct as the assessee has reasonable cause for such failure and the revenue has already disregarded and disallowed the claim of the I.T.A. No.194/Jodh/2023 Sh. Uday Bhowmick 11 assessee on account of non deduction of tax Thus, based on that set of facts, we hold that the levy of penalty is deleted on the ground that there was bona fide and reasonable cause in not deducting TDS. Thus the ground of appeal taken by the assessee on the reasonableness is considered and accordingly, the penalty is deleted."
8.2 Further, we observe that the assessee has not deducted TDS u/s 194IA on purchase of immovable property on 09.08.2014 from the UIT, Udaipur and where the assessee has relied upon the State Government of Officials for not making TDS. Taking into consideration, the above facts and circumstances of the case and the judgment of the Hon'ble Apex Court which squarely covered the facts and circumstances of the present case, there was no deliberate action of the assessee not to deposit TDS within the prescribed time. There was a bona fide reason u/s 273B for delay payment of TDS and accordingly, the penalty is directed to be deleted.
In the result, the appeal of the assessee is allowed.
Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board.
Sd/- Sd/-
(Rathod Kamlesh Jayantbhai) (DR. S. Seethalakshmi)
Accountant Member Judicial Member
Dated 14/06/2024
*Ganesh Kumar, Sr. PS
(On Tour)
Copy of the order forwarded to:
I.T.A. No.194/Jodh/2023
Sh. Uday Bhowmick 12
(1)The Appellant
(2) The Respondent
(3) The CIT
(4) The CIT (Appeals)
(5) The DR, I.T.A.T.
True Copy
By order