TaxTMI 
TaxTMI 
2018 (4) TMI 308
X X X X Extracts X X X X
X X X X Extracts X X X X
....der consideration. All the grounds challenged in these appeals are common as there was a default on the part of assessee in complying with provisions of section 201 (1) and 201 (1A) of the Act. 2. It has been submitted that assessee is an employee of Post and Telegraph Department government statutory organisation. It has been submitted that assessee was prevented by sufficient and reasonable cause to deduct the requisite tax as it was ignorant about the TDS provision. Ld.AR has submitted that assessee did not receive any intimation regarding the provisions that are applicable for deducting tax from his higher authorities for the years under consideration. It has been submitted that the provisions pertaining to deduction of tax at source ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....peal before Ld. CIT (A) who decided the issue as under: "4.12 Even otherwise, the implicit purpose of the provisions in the statute is to enable the department to enforce the Act effectively. Looking at this, it is clear that non-deduction of correct rate of tax and failure in deducting tax per se cannot become technical of venial. In the facts of the cases under consideration, the default was substantial default for which penalty has to be levied unless ground of reasonable cause is proved. The appellant, however, failed to bring any reasonable cause for its failure in deducting tax at the applicable rate and, hence, the AO rightly levied the penalty." 3. Aggrieved by the order of Ld. CIT (A) assessee is in appeal before us. 3.1. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reach flows from a bona fides belief that the offender is not liable to act in the manner prescribed by the statute." 3.2. Ld.DR supported the order passed by Ld. AO. 4. We have perused the submissions advanced by both the sides in the light of the records placed before us. Before deciding the issue relevant provisions of section 271 A as well as 273B are reproduced hereinbelow: Penalty for failure to deduct tax at source. 271C. [(1) If any person fails to- (a) deduct the whole or any part of the tax as required by or under the provisions of Chapter XVII-B; or (b) pay the whole or any part of the tax as required by or under- (i) sub-section (2) of section 115-O; or (ii) the seco....
X X X X Extracts X X X X
X X X X Extracts X X X X
....educting TDS. Assessee was ignorant of the TDS provisions under Income Tax Act and it was intimated to him in the subsequent assessment years. Under such circumstances as per 273 B, penalty provisions cannot be considered to be automatic if the assessee has been able to establish a reasonable cause for the said failure. 4.2. A similar situation emerged before Hon'ble Delhi High Court in the case of CIT vs Matsushita Electric Industrial Ltd., reported in 278 ITR 162. Hon'ble Delhi High Court held as under: "It is not necessary for us to notice the merit or otherwise of the contentions raised before us in any greater detail. Suffices it to note and which is fairly pointed out by the learned counsel appearing for Revenue Department that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....quently Hon'ble Supreme Court in the case of CIT vs. Bank of Nova Scotia, reported in 380 ITR 550 has upheld the findings of the Tribunal where it was held as under: "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 the following findings: "11. We have carefully considered the rival submissions. In the instant case we are not dealing with collection of tax u/s 201(1) or compensatory interest u/s 201(1A). The case of the assessee is that these amounts have already been paid so as to end dispute with Revenue. In the present appeals we are concerned with levy of penalty u/s 271-C for which it is necessary to establish that there ....