2018 (3) TMI 1582

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....enue and there was no contumacious conduct on the part of the assessee which is necessary for levy of penalty under section 271C. 4. That in the circumstances of the case and in law, the impugned order passed by the learned Commissioner of Income Tax (Appeals) upholding the order of penalty under section 271C passed by the addl. CIT(TDS) is based upon assumptions, presumptions, whims and fancies, conjectures, surmises, preconceived notions and incorrect application of law and therefore liable to. It is therefore, prayed that penalty imposed by the Addl. CIT(TDS) and upheld by learned Commissioner of Income Tax (Appeals) be held to be not in accordance with law and therefore the penalty so levied be kindly deleted and appal of the appellant company be kindly allowed." 2. The brief facts of the case are that the survey u/s 133(A) of the Income Tax Act, 1961 (hereinafter referred to as the "Act".) was conducted on 10.11.2009 to check the correct applicability of TDS Provisions. 3. During the course of survey proceedings it was observed that the assessee is liable for TDS on the payments made to Provogue India Limited 105-106, Dram Square Off Link Road, Andheri ....

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....d. Authorized Representative submitted a written synopsis which is as under :- "The assesse company is engaged in the business of manufacturing and sale of footwear. Survey under section 133A of the Income Tax Act, 1961 was conducted on 10.11.2009 at the premises of the assessee company. TDS on payment of Royalty to M/S Provogue (India) Limited for use of brand name was not deducted under section 194J of the Act. Relevant to assessment year 2010-11 the Assistant Commissioner of Income Tax (TDS), Noida passed an order under section 201(1)/201(1A) of the Act on 22.01.2010 and determined the TDS liability of Rs. 1,46,028/- plus interest amounting to Rs. 5,841/- for the period from April, 2009 to 26.08.2009. The assesse company had deposited the TDS on 7.01.2010 vide challan Serial No.00290 with Punjab National Bank. The total TDS deposited vide this challan on account of royalty payment to Provogue (India) LTD forthe period upto December, 2009 was Rs. 3,23,115/- which includes the payment of TDS ability upto the period 26.08.2009 of Rs. 1,51,869/- including interest of Rs. 5,841/-.The fact of deposit PS of Rs. 1,51 869/- ON 7 Q1.2010 is also mentioned in the order pa....

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....ort deduction of tax and the same comes within the ambit of reasonable cause as has been held in the case of Deputy Commissioner of Income Tax vs SMS India Ltd by the Hon'ble ITAT Mumbai. The case of the assesse is that these amounts have already been paid so as to end dispute with revenue. There was no contumacious conduct on the part of the assessee. There was no stubbornly or wilful disobedience to the Authority on the part of the assesse because when the assessee was confronted with this issue for the first time he immediately acted and rectified the same. Therefore we submit that bona fide belief in sort deduction of tax coupled with voluntary compliance in the term of depositing the same immediately on coming to know the same would constitute reasonable cause. What is important is the fact that the moment a person comes to know that he has committed a mistake and being a person of reasonable intelligence and ordinary prudence if he takes the corrective measures to rectify the same immediately, then it can not be said that he acted deliberately with complete disregard to law. This view has been upheld by the Hon'ble Supreme Court of India in the matter of levying ....

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....see was liable for TDS under the provisions of the Income Tax Act on the payment of royalty to the payee u/s 194(J). Assessee has not deducted TDS. After perusing the documents it was found that the order was passed by the assessing officer u/s 201(1) / 201(1A) on 22.01.2010 and the assessee had paid the entire TDS and interest amount on 07.01.2010, i.e., before passing of the order with the Punjab National Bank Challen no. 00290 which is on paper book at page no. 4. The assessee has also filed TDS return with the National Security Deposits Ltd. on dated 13.01.2010 which too is before the passing of the order by the assessing officer. 10. The case law relied by the assessee are applicable in the present case where the Hon'ble Court has held as under :- "The short issue pertains to the assessment of penalty under Section 271-C of the Income Tax Act, 1961. Against the order of Assessing Officer, the respondent took up the matter in appeal and the Commissioner of Income Tax (Appeals) deleted the levy of penalty. 2. The matter was pursued by the Revenue before the Income Tax Appellate Tribunal. The Income Tax Appellate Tribunal vide order dated 31.03.2006 entered t....