TaxTMI 
TaxTMI 
2019 (11) TMI 325
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....R") IS BARRED BY LIMITATION U/S. 275 OF THE ACT: 1.On the facts and circumstances of the case and in law, the Hon'ble Commissioner of Income Tax - Appeals, ["the Hon'ble CIT(A)"], erred in upholding the order passed by the TDS Officer u/s. 271C of the Act which was barred by limitation u/s. 275 of the Act. 2.In doing so, the Hon'ble CIT(A) further erred in not adjudicating alternate legal without prejudice ground raised for the first time before the CIT(A). 3.The Appellant prays that the order passed under section 271C of the Act be annulled set aside as being bad in law. WITHOUT PREJUDICE TO GROUND I: GROUND II: LEVY OF PENALTY UNDER SECTION 271C OF THE ACT AMOUNTING TO Rs. 3,06,72,500/-: 1.On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the order passed by the TDS Officer in levying a penalty of Rs. 3,06,72,5001- under section 271 C of the Act on the alleged ground that Appellant has failed to deduct TDS under section 194H of the Act in respect of discount allowed to prepaid distributors and there was no reasonable cause for such non deduction. 2. He failed ....
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....hat: a)The Appellant had acted under a honest and bona-fide belief that tax was not deductible under section 194H of the Act on 'discount allowed to the prepaid distributors' . b)Without prejudice, in absence of payment or credit, the Appellant not being a person responsible for paying income by way of commission to the prepaid distributors and amount on which tax ought to be deducted, the mechanism to deduct TDS fails. c) There was 'reasonable cause' for non-deduction of TDS in view of failure of machinery provisions as also fact that contrary views have been taken by High Courts and ITAT. 3. The Appellant therefore prays Ld. TDS Officer be directed to delete the aforesaid penalty of Rs. 7,28,75,033/-levied under section 271C of the Income Tax Act. GROUND III: GENERAL The Appellant craves leave to add to, amends and/ or alter the above ground of appeal at the time of hearing. 5. The assessee has raised following grounds of appeal in ITA No.264/Ind/2018: GROUND I: LEVY OF PENALTY UNDER SECTION 271C OF THE ACT AMOUNTING TO Rs. 6,71,51,801/-: 1. On the facts and circumstances of the case and in....
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....ed by the assessee. PMAs had to comply with all the requirements of the assessee in respect of invoicing and accounts, maintenance of brand image and to provide monthly sale reports and other information relating to the business. The assessee's representative could inspect the things or materials of the business which were the subjectmatter of the agreement. Further, minimum performance targets for the distributors were also set by the assessee-company which reserved the right to terminate the agreement unilaterally. 7. On the basis of these facts and the types of control exercised by the assessee on its pre-paid distributors, the Assessing Officer came to the conclusion that these transactions between the assessee and pre-paid distributors were that of a principal and an agent at all times and, consequently, amount of discount offered to pre-paid distributors was in the nature of commission liable to tax deduction at source under section 194H. As the assessee was not deducting tax at source from the amount offered to its distributors, the Assessing officer treated it as a defaulter under section 201(1) consequently imposed penalty u/s 271C. 8. Against the levy of penalty....
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....ed. Thus the order under section 271C ought to have been passed by March 31, 2011 for AY 2007-08, March 31,2011 for AY 2008-09, and march 31 2013 for AY 2009-10. However in the Appellant's case the order under 271C was passed only on August 20, 2013 for AY 2007-08, August 20, 2013 for AY 2008-09, and august 20 2013 for AY 2009- 10, and thus it is time barred. In this connection, the Appellant would like to invite Your Honours attention to the decision of Mumbai Tribunal in case of Hongkong & Shanghai Banking Corpn. Ltd. Vs DDIT (136 ITD 3S7) (TMum) (Rejer page no. 1 to 13 of legal Paper book (LPB)) wherein the Hon'ble Tribunal has held as under: "Under section 275(1) the Assessing Officer will get time for finalizing the penalty proceedings if an appeal under section 253 was preferred by assessee or the revenue. As per section 275(1)( a) the time-limit for completion of the proceedings are six months from the end of the month in which the order of the Commissioner (Appeals), or as the case may be of Appellate Tribunal is received by the Chief Commissioner or Commissioner. As per the record, the Tribunal order was dated 15-2-2007 and assessee received the o....