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1. This is an application under Articles 226 and 227 of the Constitution of India, 1950 (in short "the Constitution"), questioning the correctness of an order passed under Section 264 of the Income-tax Act, 1961 (in short "the Act"), by the Commissioner of Income-tax, Delhi-VI (in short "the Commissioner"). By the said impugned order dated November 3, 2000, penalty imposed under Section 271C of the Act by the Additional Commissioner of Income-tax, TDS Range : 28 (hereinafter described as "the Assessing Officer") was upheld.

A brief reference to the factual aspect would be necessary before we deal with the petitioner's main stand that no penalty was imposable. The petitioner filed its salary tax deducted at source (in short "IDS") return in Form No. 24. On verification of the same, the Assessing Officer found that IDS in respect of one expatriate employee was not deducted properly. Orders under Section 201/201(1A) of the Act were passed working out short deduction of tax at Rs. 27,68,844. Proceedings under Section 271C for short deduction were initiated and penalty amounting to Rs. 27,68,844 was imposed. The same was assailed before the Commissioner under Section 264 of the Act. The petitioner's stand was that the deeming provision contained in Section 9(1)(ii) of the Act cannot be extended to have any nexus with an obligation for deduction of tax at source as contained in Section 192 of the Act. It was further pleaded that payment of remuneration was made by a non-resident company and therefore proceedings under Section 271C of the Act were not available to be taken. In any event, it was pleaded that it was prevented by reasonable cause for non-deduction of tax at source. The Commissioner by the impugned order held that the petitioner had failed in its liability to deduct tax at source under Section 192 on salaries paid to its expatriate employee for services rendered in India.

We feel that the stand of the petitioner is on terra firma. So far as the consideration of the question of existence of reasonable cause is concerned, the two pivotal provisions, i.e., Section 271C and Section 273B, read as follows :

"271C. Penalty for failure to deduct tax at source.--If any person fails to deduct the whole or any part of the tax as required by or under the provisions of Chapter XVII-B, he shall be liable to pay, by way of penalty, a sum equal to the amount of the tax which he failed to deduct as aforesaid.

Section 273B starts with a non obstante clause and provides that notwithstanding anything contained in several provisions enumerated therein including Section 271C, no penalty shall be imposable on the person or the assessed, as the case may be, for any failure referred to in the said provisions, if he proves that there was reasonable cause for the said failure. A clause beginning with "notwithstanding anything" is sometimes appended to a section in the beginning with a view to give the enacting part of the section in case of conflict an overriding effect over the provision of Act mentioned in the non obstante clause (see Orient Paper and Industries Ltd. v. State of Orissa, ). A non obstante clause may be used as a legislative device, to modify the ambit of the provision of law mentioned in the non obstante clause, or to override it in specified circumstances, (see T.R. Thandur v. Union of India, ). The true effect of the non obstante clause is that in spite of the provision or Act mentioned in the non obstante clause, the enactment following it will have its full operation or that the provisions embraced in the non obstante clause will not be an impediment for the operation of the enactment (see Smt. Parayankandiyal Eravath Kanapravan Kalliani Amma v. K. Devi, ). Therefore, in order to bring in application of Section 271C in the backdrop of Section 273B, absence of reasonable cause, existence of which has to be established by the assessed, is the sine qua non.