TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 601
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....the penalty order, being time barred be annulled/set aside as being ab-initio void and bad in law. WITHOUT PREJUDICE TO GROUND I GROUND NO. II : 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the action of the TDS Officer in levying penalty amounting to Rs. 10,73,990/- u/s 271C of the Act on the alleged ground that the Appellant has failed to deduct tax at source u/s 194H of the Act. 2. He failed to appreciate and ought to have held : a) the Appellant had acted under an honest and bona fide belief that tax was not deductible u/s 194H of the Act on "discount" (alleged by the department as "commission") given to distributors; b) Appellant's stand was also approved by the Hon'ble Tribunal before the Hon'ble High Court reversed those decisions and therefore there was a "reasonable cause". c) There was a "reasonable cause" for non-deduction of TDS and in view of section 273B of the Act, no penalty can be levied. d) Without Prejudice, if the mechanism to deduct TDS fails in absence of 'payment' or 'credit', there is a 'reasonable cause' for non-deduction of TDS u/s 194H of the Act. 3. The Appellant prays that the penalty a....
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...."the TDS Officer") in levying penalty amounting to Rs. 62,00,145/- u/s 271C of the Income Tax Act, 1961 ("the Act") on the alleged ground that the Appellant has failed to deduct tax at source u/s. 194H of the Act. 2. He failed to appreciate and ought to have held : a) the Appellant had acted under an honest and bona fide belief that tax was not deductible u/s. 194H of the Act on "discount" (alleged by the department as "commission") given to distributors; b) Appellant's stand was also approved by the Hon'ble Tribunal before the Hon'ble High Court reversed those decisions and therefore there was a "reasonable cause". c) There was a "reasonable cause" for non-deduction of TDS and in view of section 273B of the Act, no penalty can be levied. d) Without Prejudice, if the mechanism to deduct TDS fails in absence of 'payment' or 'credit', there is a 'reasonable cause' for non-deduction of TDS u/s 194H of the Act. 3. The Appellant prays that the penalty amounting to 62,00,145/- levied u/s 271C of the Act be deleted. GROUND No. II : The appellant craves leave to add, to alter and / or amend, withdraw all or any of the foregoing grounds of appeal." 3. During the hearing the....
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....ed appeal before the CIT(A) and CIT(A) vide order dated 31.03.2005 uphold the order of the Assessing Officer. Accordingly the assessee filed appeal to the Tribunal which was allowed in favour of assessee vide order dated 28th March, 2008. Against this order the revenue filed appeal in the Hon'ble High Court, New Delhi and the Hon'ble High Court vide order dated 19.02.2010 decided the issues in favour of the revenue and against the assessee. Accordingly necessary appeal effect was given the order of the Hon'ble High Court for both financial years and the notice for penalty u/s 271C was accordingly revised on 20.01.2011. The Assessing Officer passed penalty order at a section 271C read with section 274(1) of the Act. 6. Being aggrieved by the penalty order the assessee filed appeal before the CIT(A) which was dismissed by the CIT(A). 7. The Ld. AR submitted that it is a settled position in law that penalty u/s 271C of the Act cannot be imposed if there is a reasonable cause for any failure on the part of the assessee as referred to various provisions of the Act. Section 273B of the Act clearly states that no penalty shall be imposed on the person or assessee, as the case may be, f....
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....; iv. SRL Ranbaxy Ltd. Vs. ACIT (2011) (50 SOT 173) (TDel) * Lastly, the Department stand is that the Appellant should have collected say Rs. 82 (Rs. 80 discounted price and Rs. 2. being 10% TDS on Rs. 20 i.e MRP Rs. 100 Less Discounted Price). Appellant humbly submits that this argument would import TCS provisions u/s.206C into I94H 8. The Ld. AR further relied upon the decision of Delhi Tribunal in the case of ITO vs. G. B. Morrison Travels (P.) Limited (99 TTJ 117). In that case, penalty was imposed on the assessee (carrying on the business as travel agents for various airlines) under section 271C of the Act for not deducting tax under section 194H on discount given by it to its sub-agents. Further, the Ld. AR relied upon the decision of Hon'ble Allahabad High Court in the case of CIT (TDS) Vs GM Telecom, BSNL (ITA No. 39 of 2014) where on similar facts the High Court held in favour of the Assessee confirming the Tribunal's action of deletion of levy of penalty u/s 271C of the Act on the ground that the reasonable cause within the meaning of section 273B of the Act had been shown by the assessee by relying on the decision of Delhi ITAT in case of Idea Cellular Ltd vs. D....