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Showing contexts for: human errors in State Bank Of India, Vrindavan vs Cit Appeals 1, Agra on 25 January, 2018Matching Fragments
Copies of these decisions have been placed on record.
5. I have heard the parties and have perused the material on record. The ld. CIT(A), while confirming the penalty, has observed as follows:
"During the proceedings under section 271C, a show cause notice was issued to the appellant on 31.07.2014 and it was I.T.A Nos. 65& 66/Agra/2017 followed by two letters/notices dated 29.08.2014 and 03.03.2015. The only compliance made by the appellant to the three notices/letters was in the form of a letter dated 16.09.2014 duly signed by the Chief Manager, SBI, Mathura received by the A.O. apparently by post. The A.O., after considering the appellant's submission given in the aforementioned letter dated 16.09.2014, completed the proceedings and levied the impugned penalty on 30.03.2015. Before me, the appellant has given more than one arguments in support of its contention against the imposition of the penalty under section 271C. The first argument is that there was no willful default on its part in not deducting or in short- deducting the TDS from the payments of interest to some of its customers. It has explained that due to an updation error in its software, caused, in turn, by some human errors, PANs of some of its customers remained to be considered for deduction of TDS and that was the reason for the default. The provisions of section 273B of the Act have been referred to by it stating that it had a reasonable cause for not deducting the TDS and so the impugned penalty should be deleted. The second argument of the appellant is that it should be absolved of the penal liability because it had voluntarily deposited the shortfall in TDS as soon as this fact was brought to its notice by the department. The third argument of the appellant is that majority of the customers, in whose case TDS not deducted, or deducted at a lower rate, are charitable organization having section 12AA and section 80G registration and hence not liable to pay tax, and so it should not be treated as an assessee in default. Many I.T.A Nos. 65& 66/Agra/2017 judicial precedents have been cited by the appellant in support of each of the above arguments. It is important to note that the appellant's default of not complying with the provisions of section 194A is undisputed. Keeping in mind the language of the provisions of section 271C of the Act, I am of the opinion that under such circumstances, the only way the appellant can escape the penal provisions laid down under that section, is to prove that it had a reasonable cause for the default. It is not only important but also interesting to note that despite getting three distinct opportunities given to it by the A.O., the appellant did not point out even one reasonable cause of its failure to deduct TDS. Its only submission dated 16.09.2014 does not talk about the alleged updation error in its software, caused in turn by some human errors, which allowed PANs of some of its customers escape consideration for the purpose of deduction of TDS. Also, I find that no evidence whatsoever has been produced even during the present proceedings which could prove that the alleged reasonable cause indeed existed and contributed to its failure to deduct TDS as per the provisions of section 194A of the Act. In my opinion, the appellant has grossly failed to prove that there existed a reasonable cause for its failure to comply with the provisions of section 194A. The alleged reasonable cause for its failure to deduct TDS as per law, appears to be an afterthought and not genuine. Therefore, with due respect to the cited judicial precedents, I hold that the appellant's case is distinguishable on facts, the provisions of section 273B are not attracted to it, and the appellant is liable to be penalized under section 271C of the Act. Penalty of Rs.
I.T.A Nos. 65& 66/Agra/2017 4,25,420/- is accordingly confirmed. Grounds no. 1 to 5 are dismissed.
7. In the result, the appeal is dismissed."
6. Thus, as per the ld. CIT(A), the assessee did not produce any evidence that these occurred some error in the assessee's software, caused by any human error, which resulted in the PANs of some of the assessee's customers to escape consideration for the purpose of TDS. These existed, therefore, according to the ld. CIT(A), no reasonable cause for the assessee not to have deducted and deposited the TDS.
I.T.A Nos. 65& 66/Agra/2017 271C, more so, where there was a reasonable cause for not deducting the TDS on the payment made by the assessee. Considering the cumulative effect of all the facts and circumstances of the case, we are inclined to confirm deletion of penalty by the CIT(A).
9. Now, undoubtedly, as contended, in reply dated 16.09.2014 (page no. 38-39 of the paper book), as also mentioned by the CIT(A) in his order, it was stated that the appellant had clarified the reasons of such errors to the Assessing Officer and then the assessing officer accepted the justifications and accordingly dropped the tax liabilities on such non- deductions and found that there was no concealment of income and the mistake was bonafide and there was no loss to the Government. The appellant was referring to the letters/explanations which it had submitted before the ITO (TDS), Agra, wherein it had explained all the reasons due to which the non deduction of TDS happened in a few cases (copies enclosed at page 40-44 of the paper book). On page no 43 of paper book, at point nos. 3 and 4 of the reply to AO, it was stated about the updation error in its software caused in turn by some human errors, which allowed PANs of some of its customers to escape consideration for the purpose of deduction of TDS.