2023 (8) TMI 1184

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.... opportunity of being heard. 4. The learned CIT (A), NFAC has erred in not considering the first proviso to section 201(1) of the Income tax Act, 1961. 5. The learned CIT (A), NFAC has erred in upheld in the imposition of penalty u/s. 271C even though no order u/s. 201 (1) has been passed by the Joint Commissioner of Income-tax, TDS Range, Rajkot before initiation of proceedings u/s. 271C of the Income-tax Act 1961. 6. The learned CIT(A), NFAC has erred in not considering the replies filed in response to the show cause notice issued by The Joint Commissioner of Income-tax, TDS Range, Rajkot. 7. The learned CIT (A), NFAC has erred in not considering the Adjournment sought by the Appellant for the hearing was fixed on 21.07.2021 by the notice u/s. 250 dated 09.07.2021. 8. The order of the learned CIT (A), NFAC is illegal, unjustified and against the principles of natural justice. 9. Without prejudice to the above your appellant craves to add, amend, alter, vary or withdraw all or any of the grounds on or before the hearing of appeal." 3. The brief facts of the case are that the assessee purchased two immovable properties amount....

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....t within the time limit prescribed. Section 271C of the Act provides for the levy of penalty in cases where the appellant has failed to comply with provisions as required u/s 201(1) of the IT Act i.e. deduct the whole or any part of the tax as required by or under the provisions of Chapter VXII-B unless there is a reasonable cause for failure as stipulated in Sec 273B. In this case the assessee failed to deduct and deposit the tax as per section 194IA and is therefore liable for penalty u/s 271C. No satisfactory explanation has been offered for the default. The appellant was provided sufficient opportunity of being heard. However, he had failed to avail the opportunities provided and to put forth justification for non levy of penalty. In view of the above facts I hold that since the appellant has failed to show any reasonable cause for coming within the purview of 273B the imposition of penalty is upheld. 4. In the result, appeal is dismissed." 5. Before us, the Counsel for the assessee submitted that in the instant facts, the assessee which is a partnership firm is engaged in the business of ceramics. The assessee purchased two immovable properties on 01.07.20....

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....rce in the instant facts. In the case of Bank of Nova Scotia 66 taxmann.com 175 (SC)/[2016] 237 Taxman 594 (SC), the Hon'ble Supreme Court held that when the assessee's conduct is not contumacious, then penalty under Section 271C of the Act is liable to be vacated. The Supreme Court made the following observations: "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 was contumacious conduct on the part of the assessee. We find that on similar facts Hon'ble Delhi High Court have deleted levy of penalty u/s 271-C in the case of Itochu Corporation 268 ITR 172 (Del) and in the case of CIT v. Mitsui & Company Ltd. 272 ITR 545. Respectfully following the aforesaid judgments of Hon'ble Delhi High Court and the decision of the ITAT, Delhi in the case of Television Eighteen India Ltd., we allow the assessee's appeal and cancel the....

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....'ble Supreme Court made the following relevant observations: "(iv) On the Scope of Section 271C read with Section 273B: 35. Section 271C inter alia states that if any person fails to deduct the whole or any part of the tax as required by the provisions of Chapter XVII-B then such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct. In these cases we are concerned with Section 271C(1)(a). Thus Section 271C(1)(a) makes it clear that the penalty leviable shall be equal to the amount of tax which such person failed to deduct. We cannot hold this provision to be mandatory or compensatory or automatic because under Section 273B Parliament has enacted that penalty shall not be imposed in cases falling there under. Section 271C falls in the category of such cases. Section 273B states that notwithstanding anything contained in Section 271C, no penalty shall be imposed on the person or the assessee for failure to deduct tax at source if such person or the assessee proves that there was a reasonable cause for the said failure. Therefore, the liability to levy of penalty can be fastened only on the person who does n....

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....ns of Section 194IA, nor the seller as well the registering stamp authorities brought to his knowledge about the provisions of Section 194IA of the 1961 Act. The assessee has also demonstrated that no prejudice is caused to Revenue, as the sellers had declared capital gains in return of income filed with Revenue and paid due taxes to the credit of government. The Revenue is not able to controvert this submission of the assessee. The assessee is the Prop. of New Manish Medical Agencies, and it could not be shown that the assessee is in the business of real estate or is regularly indulging in sale and purchase of properties. This is the solitary property purchased by the assessee, during the year under consideration, which was covered under the ambit of Section 194IA, consideration being not lower than Rs. 50,00,000/-. There is a latin maxim "ignorantia legis neminem excusat" which means that ignorance of law shall not excuse a person. But at the same time there is no presumption in law that all persons know all the laws, and more so complex fiscal laws concerning taxing statutes. Reference is drawn to the judgment and order of Hon'ble Supreme Court in the case of Motilal Padampat Su....