TaxTMI 
TaxTMI 
TaxTMI 
2019 (4) TMI 1371
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....hared by the appellant University with M/s AD Educational & Research Society, Allahabad in terms of a MOU signed with them in nature of commission paid to them and consequently liable for deduction of tax at source by the appellant University, further, CIT(A) erred by sustaining the same. 2. Briefly the facts of the case are that TDS verification proceedings was carried out at the assessee's premises on 16.02.2012 and during the course of such verification, it was found the assessee had not deducted TDS while making payment to M/s AD Education & Research Allahabad. Thereafter, during the course of proceedings U/s 201(1) r.w.s. 201(1A) of the IT Act, the matter was examined and the Assessing Officer observed that M/s AD Education & Research is acting as a placement cell for the assessee and is helping in procuring various students for enrolment with the University. Therefore, the amount paid by the assessee is a commission for services provided in procurement of students which is liable for TDS U/s 194H of the Act wherein TDS @ 10% should have been deducted by the assessee. Accordingly, demand of Rs. 99,850/- towards short fall in TDS and interest U/s 201(1A) amounting to Rs. 11,78....
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....ted that the contention so advanced by the ld. AR should be dismissed. 5. In his rejoinder, the ld. AR submitted that the provisions contained U/s 271D & 271E are akin to provisions contained U/s 271C particularly authority who can impose penalty under all these sections are same. Therefore principle laid down in the case related to penalty imposed U/s 271D & 271E shall apply mutatis mutandis in the cases related to 271C. It is relevant to note that the Hon'ble Supreme Court had occasion to deal the point that when the period of limitation prescribed U/s 275 shall commence in the case of Commissioner of Income Tax vs. Hissaria Brothers 386 ITR 0719 (SC) (2016) wherein it was held that, " On perusing the judgment of the High Court, it is found that penalty imposed on the respondent herein was also set aside on the ground that the provisions of Section 271-D and 271-E of the Income Tax Act were invoked after six months of limitation and, therefore, such penalty could not have been imposed. Since the outcome of the judgment of the High Court can be sustained on this aspect alone, it is not even necessary to go into other aspects. Leaving the other questions of law open, the appeal is....
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....t in the case of CIT v. Hissaria Bros. [2007] 291 ITR 244/[2008] 169 Taxman 262, wherein, this Court has specifically held as under:- "38. We are, therefore, of the opinion that since penalty proceedings for default in not having transactions through the bank as required under Sections 269SS and 269T are not related to the assessment proceeding but are independent of it, therefore, the completion of appellate proceedings arising out of the assessment proceedings or the other proceedings during which the penalty proceedings under Sections 271D and 271E may have been initiated has no relevance for sustaining or not sustaining the penalty proceedings and, therefore, Clause (a) of Sub-section (1) of Section 275 cannot be attracted to such proceedings. If that were not so Clause (c) of Section 275(1) would be redundant because otherwise as a matter of fact every penalty proceeding is usually initiated when during some proceedings such default is noticed, though the final fact finding in this proceeding may not have any bearing on the issues relating to establishing default e.g. penalty for not deducting tax at source while making payment to employees, or contractor, or for that matter....
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....t the period of limitation was to be reckoned from the date of issue of first show cause for initiation of such penalty proceedings. For the purpose of present case, as observed hereinabove, for the proceedings having been initiated on 25.03.2003, the order passed by the Joint Commissioner under Section 271D on 28.05.2004 was hit by the bar of limitation. The CIT(A) and the Tribunal have, thus, not committed any error in setting aside the order of penalty." (Emphasis supplied)" "6. In light of above findings of the ld CIT(A) which remain undisputed before us, it is clear that during the course of assessment proceedings, the AO has stated that matter relating to penalty proceedings in respect of violation of section 269SS and 269T are being referred to the Additional/Joint CIT. In other words, the AO didn't initiate the penalty proceedings under section 271D and section 271E during the course of assessment proceedings. There is no mention of such proceedings being initiated by the AO in the assessment order. Further, there is no notice under section 271D and section 271E which has been issued by the AO to the assessee by virtue of which such penalty proceedings can be said to have ....
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.... AO to JCIT(TDS) cannot again be accepted as the initiation of such proceedings have to be by way of issuance of a notice to the assessee and not by mere reference from the AO to JCIT(TDS). The decision of the Hon'ble Supreme Court in case of Hissaria Brothers is in context of applicability of clause (c) to sub-section (1) to section 275 which is not in dispute as far as present case is concerned. Further, the decision of Coordinate Bench in case of Subhash Pareta doesn't support the case of the assessee as in that case also, the AO didn't initiate the penalty proceedings and the first notice was issued by Add. CIT only initiating the penalty proceedings and thereafter, the order was passed within the prescribed limitation period. In light of above discussions, we are of the considered view that the impunged order is not barred by limitation and the contentions so advanced by the ld AR in this regard are not found acceptable. 10. Now coming to the contention of the ld. AR on merits. It was submitted by the ld AR that the assessee is a University which is engaged in the field of education and runs various educational and professional courses. As part of its educational activities, ....
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.... the assessee has not disputed the tax demand and has paid TDS alongwith interest on 09.01.2013, therefore, at the time of issuance of the show cause notice for penalty by JCIT(TDS), there was no failure in compliance of Chapter XVII and even all the facts were disclosed and found documented even during the survey. In support reliance was placed on the Coordinate Bench decision in case of M/s M.D.S. University, Ajmer (Rajasthan) vs. ACIT(TDS) order dated 23.01.2014. It was further submitted that except this transaction, other transactions undertaken by the assessee have been found to in due compliance with the provisions of the Act, however, because of bonafide belief that the subject transaction was not subject to TDS, the assessee has not deducted TDS on the said transaction. However, the fact remains that the assessee is a law abiding corporate citizen and the transaction was not considered liable for TDS on reasonable belief and not because of any contumacious conduct. In support, reliance was placed on the decision of the Hon'ble Supreme Court in case of CIT vs. Bank of Nova Scotia (Civil Appeal No. 1704 of 2008 order dated 07.01.2016) wherein it was held as under:- "11. We h....
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....of understanding entered into by the assessee with M/s AD Educational & Research Society (referred to as Service provider). In the preamble to the said MOU, it is provided that the assessee is desirous of taking the expert services of the service provider to run certain academic courses of study under distance education mode. Thereafter, the financial terms are stated in Para 2 of the said MOU which reads as under:- "2. Financial terms The Jaipur National University, Jaipur, Rajasthan, shall collect Association fee from the newly established 'Information-Cum-Admission Counseling Cell' (IACC) and course fee from the students enrolled in different academic courses. a. The Association Fee collected from the newly established IACC shall be shared as under: University 50% Service provider 50% b. The university shall collect the course fee (including examination fee) and Misc. fee from each student per year: - 50% of course fee shall be paid by University to the IACC for providing adequate and necessary infrastructure and facilities. - 20% of course fee shall be paid to the service provider by university for rendering services as mentioned in this MOU. - 30% of the course fee sh....
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....e any financial commitment on behalf of or in the name of the university nor will take loans or create any other financial liability binding on the University this MoU. i. Help monitor the functioning of IACC. j. Carry out functions such as, processing of IACC establishment applications, distribution of study material etc. k. Undertake to maintain the secrecy and confidentiality of the programmes offered by the University, mode of instructions and its methods, syllabi and programme curricula etc. l. Shall provide and put serious efforts for the suitable job placement of successful course participants." 15. We therefore find that services so specified in the MOU ranges from selection of IAAC Centres, promotion of academic courses, co- ordination in supply and dispatch of course material, other study material, maintenance of records of students which have bought the prospectus and subsequently enrolled for the various courses. For such services, the service provider is entitled to share of "association fees" to the extent of 50% and 20% of course fees. Therefore, it cannot be disputed that there is sharing of revenues by the assessee with the service provider to the extent of 50....