Tribunal rules in favor of assessee, orders under sections 201(1) & 201(1A) void. Invalid demands for travel tax.

The Tribunal ruled in favor of the assessee, holding that the orders under section 201(1) and 201(1A) were barred by limitation and void-ab-initio. The Tribunal found that the demands raised under section 201 r.w.s. 192 for not deducting tax at source on Leave Fare Concession involving en-route foreign travel and domestic travel by a circuitous route were not valid. The Tribunal emphasized the assessee's bona fide belief and reasonable estimation of income, directing the deletion of the demands for the assessment years 2010-11 and 2011-12.

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Issues Involved:
1. Limitation of orders under section 201(1) and 201(1A).
2. Leave fare concession (LFC) involving en-route foreign travel.
3. Leave fare concession (LFC) involving domestic travel by circuitous route.
4. Bona fide belief regarding non-deduction of tax at source.

Detailed Analysis:

1. Limitation of Orders under Section 201(1) and 201(1A):
The assessee contended that the orders under section 201(1) and 201(1A) were barred by limitation and therefore void-ab-initio. The CIT(A) held that the provisions of section 201(3), as amended by the Finance Act, 2014, are retrospective and apply to the assessment years in question. The CIT(A) also noted that for the purpose of the time limit mentioned in section 201(3), the date of filing the original TDS returns is relevant and not the correction statement. The CIT(A) concluded that once a correction statement is filed, it partakes the character of a statement filed under section 200(3) and is subject to scrutiny. The Tribunal found that these observations by the CIT(A) were without basis and contrary to the facts of the case.

2. Leave Fare Concession (LFC) Involving En-route Foreign Travel:
The CIT(A) held the assessee as an assessee in default for not deducting tax at source on LFC provided to employees involving en-route foreign travel. The CIT(A) relied on Circular No. 8/2012 for the purpose of tax deduction on salary payments for the financial year 2012-13. The assessee argued that the exemption under section 10(5) is available even if the journey involves a foreign leg, provided the designated place is in India and the employee actually visits the place. The Tribunal observed that the statutory provisions under section 10(5) and Rule 2B do not indicate any requirement of taking the shortest route for traveling to any place in India or any restrictions on the route. The Tribunal concluded that the employer's estimation of income was bona fide and reasonable, and thus, the demands raised under section 201 r.w.s. 192 were vacated.

3. Leave Fare Concession (LFC) Involving Domestic Travel by Circuitous Route:
The CIT(A) enhanced the assessment under section 251(1)(a) and held the assessee as an assessee in default regarding the exemption of LFC paid to employees who undertook domestic travel by a circuitous route. The CIT(A) noted that the exemption provided under section 10(5) is after considering the shortest route to the designated destination. The Tribunal followed the principle laid down by the coordinate Bench in the assessee's own case and found that the employer's estimation of income was bona fide and reasonable. Therefore, the demands raised under section 201 r.w.s. 192 were vacated.

4. Bona Fide Belief:
The assessee argued that it had a bona fide belief that it was not liable to deduct tax at source on LFC provided to employees, and therefore, it could not be held as an assessee in default under section 201 and 201(1A). The Tribunal agreed with the assessee's contention, emphasizing that the employer's estimation of income was bona fide and reasonable. The Tribunal noted that the employer cannot be faulted for not deducting tax at source if the conduct was honest and fair.

Conclusion:
The Tribunal deleted the demands raised by the AO and sustained by the CIT(A) for the assessment years 2010-11 and 2011-12. The Tribunal upheld the plea of the assessee and directed the AO to delete the impugned demands raised under section 201 r.w.s. 192. The appeals were allowed, and the orders pronounced on 12th October 2021.

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