TaxTMI 
TaxTMI 
2023 (9) TMI 1021
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.... 2. That the learned CIT(A) NFAC erred in not holding that the assessment order passed by the A.O. was without following rule of natural justice and fair play and was therefore a nullity and the same may be declared null and void. 3. That the learned CIT(A) NFAC erred in passing of an Ex-party Order without allowing any more time. The Appellant Company has changed its Counsel and the mail was not attended by the previous Counsel. Further, the date of hearing was fixed for 27/10/2022 which was during the festival of Deepawali. 4. That the learned CIT(A) erred in maintaining addition of Rs. 34,64,131/- on account of interest paid to Hyundai Motor India Ltd. 2. The assessee is a telecom service provider engaged in providing services in Madhya Pradesh and Chhattisgarh. During the course of its business the assessee appoints the distributors for issuing and sale of pre-paid SIM card and recharge vouchers. The department initiated the proceedings u/s 201 & 201(A) of the Income Tax Act due to failure on the part of the assessee to deduct tax on the amount allowed by the assessee to its distributors/dealers which in the opinion of the department was in the natu....
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....e by the Hon'ble High Courts wherein some of the High Courts have decided this issue in favour of the assessee and some other High Courts have decided against the assessee. This is highly debatable issue and now pending adjudication before the Hon'ble Supreme Court in the SLP filed by the assessee as well as department. Since this is a debatable issue and assessee was under the bona fide belief that there was no obligation to deduct tax on this transaction u/s 194H of the Act. Ld. Sr. Counsel for the assessee has relied upon the judgment of Hon'ble Supreme Court in case of Singapore Airlines Ltd. Vs. CIT, New Delhi 449 ITR 203 (SC) and submitted that the liability of levy of penalty can be fastened only on the person who do not have good and sufficient reason for not deducting tax at source. The Ld. Sr. counsel for the assessee has submitted that since the assessee was having a bona fide belief that it is not required to deduct tax on these transactions u/s 194H of the Act and it is only because of difference of opinion between the assessee and the revenue, the penalty has been levied by the AO. 4. Thus he has contended that in view of the provisions of section 273B, no penalty ....
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....ge vouchers are in the nature of sale and discount allowed by the assessee to the distributors is in the nature of commission attracting the provision of section 194H and consequently, the assessee was rightly held as deemed to be an assessee is in default as per the provision of section 201 of the Act. Similarly, a good number of other decisions have held that transaction in question does not fall in the ambit of section 194H and thereby the assessee was not liable to deduct TDS at source on these transactions. Apart from a series of decisions of this Tribunal there are divergent views of Hon'ble High courts on this issue of liability of the assessee to deduct tax u/s 194H, some of those decisions are as under: In favour of the assessee (i).Bharti Airtel Ltd. Vs. DCIT Bangalore (2015) 372 ITR 33 (Karnataka) (ii). Hindustan Coca Cola Beverage P. Ltd. Vs. CIT (2018) 402 ITR 539 (Rajasthan) (iii). CIT vs. Dex Travel P. Ltd. 172 Taxman 142 (Delhi) In favour of the Revenue (i).Bharti Cellular ltd. Vs. AcIT (2011) 244 ITR 185 (Calcutta) (ii). Vodafone Essar Cellular ltd. Vs. AcIT (2011) 332 ITR 255 (Kerala) 9. It is clear....
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....hole or any part of the tax as required by or under, (i) Subsection (2) of Section 115O; or (ii) Second proviso to Section 194B, 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 or pay as aforesaid. (2) Any penalty imposable under Subsection (1) shall be imposed by the Joint Commissioner. xxx Section 273B: Penalty not to be imposed in Certain Cases: Notwithstanding anything contained in the provisions of clause (b) of Subsection (1) of Section 271, Section 271A, Section 271AA, Section 271B, Section 271BA, Section 271BB, Section 271C, Section 271CA, Section 271D, Section 271E, Section 271F, Section 271FA, Section 271FB, Section 271G, clause (c) or clause (d) of Subsection (1) or Subsection (2) of Section 272A, Sub section (1) of Section 272AA, or Subsection (1) of Section 272BB or Subsection (1A) of Section 272BB or Subsection (1) of Section 272BBB or clause (b) of Sub section (1) or clause (b) or clause (c) of Subsection (2) of Section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisio....
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....hat the Supplementary Commission would come within the ambit of the provisions of the IT Act, another set held the opposite view. The Assessees before us belong to the latter category. Furthermore, as we have highlighted earlier, there were contradictory pronouncements by different High Courts in the ensuing years which clearly highlights the genuine and bona fide legal conundrum that was raised by the prospect of Section 194H being applied to the Supplementary Commission. 62. Hence, there is nothing on record to show that the Assessees have not fulfilled the criteria under Section 273B of the IT Act. Though we are not inclined to accept their contentions, there was clearly an arguable and "nascent" legal issue that required resolution by this Court and, hence, there was "reasonable cause" for the air carriers to have not deducted TDS at the relevant period. The logical deduction from this reasoning is that penalty proceedings against the airlines under Section 271C of the IT Act stand quashed. 12. The Hon'ble Supreme Court after considering an arguable and nascent legal issue that required resolution by the Apex Court has held that there was a reasonable cause for the ....
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....f penalty which was deleted by the CIT(A) has been affirmed by the Tribunal. 6. The appeal filed by the revenue, in these circumstances, will not give rise to any substantial question of law. It is, accordingly, dismissed." 13. Delhi Bench of the Tribunal in case of Vodafone Idea Ltd. New Delhi vs. ACIT-TDS (supra) while considering this issue of levy of penalty u/s 271C has held in para 10 as under: "10. We have heard both the parties and perused all the relevant material available on record. The issue on which the penalty u/s 271C is imposed is debatable as different courts have taken diverse views. Therefore, the fact remains that the assessee has reasonable cause for non deduction of tax at source on the discount allowed to the prepaid distributor as there are decisions of the Hon'ble High Courts and Tribunal taking diverse views. Thus, it is contesting issue and the assessee has reasonable cause not to deduct the tax at source. Therefore, the action of non deduction of tax in the present case will not attract the penalty u/s 271C. Since this issue is decided in case of assessee's own case for earlier assessment years the same will be followed." 14. Simil....