TaxTMI 
TaxTMI 
2024 (5) TMI 596
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....f penalty, we had observed as follows:- "84. However, while this may have conceivably been a valid ground to interdict some of the impugned show-cause notices, we find no justification to invoke our prerogative writ powers on this score since the petitioners have, in the course of these proceedings, been afforded more than an ample and adequate opportunity to establish why section 194C would not be attracted and have been heard at great length on the questions which were raised. The applicability of section 194C also appears to have been expressly raised in the counter affidavits which were filed and thus placing the petitioners on adequate notice. In any case and in view of the above, we are of the firm opinion that the principles of prejudice would not stand attracted. It would thus be inappropriate at this late stage of the day to interfere with the show-cause notices on this ground. 85. That only leaves us to deal with the issue of the petitioners having been treated as an assessee-in-default in terms of section 201 and called upon to pay penalties by virtue of sections 221 and 271C of the Act. Pursuant to the interim orders that were made on these writ petiti....
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....e date of actual payment.... 94. 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 not have good and sufficient reason for not deducting tax at source. Only those persons will be liable to penalty who do not have good and sufficient reason for not deducting the tax. The burden, of course, is on the person to prove such good and sufficient reason. 95. In each of the 104 cases before us, we find that non-deduction of tax at source took place on account of controversial addition. The concept of aggregation or consolidation of the entire income chargeable under the head "Salaries" being exigible to deduction of tax at source under section 192 was a nascent issue. It has not been considered by this court before. Further, in most of these cases, the tax deductor-assessee has not claimed deduction under section 40(a)(iii) in computation of its business income. This is one m....
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.... liability for penalty under section 271C of the Income-tax Act." A similar principle was also advanced in the context of section 192 of the Income-tax Act in CIT v. Eli Lilly and Co. (India) P. Ltd. (page 253 of 312 ITR, SCC page 30, paras 98 to 100): "98.... In our view, therefore, the tax deductor assessee (respondent(s)) were duty bound to deduct tax at source under section 192(1) from the home salary/special allowance(s) paid abroad by the foreign company, particularly when no work stood performed for the foreign company and the total remuneration stood paid only on account of services rendered in India during the period in question. 99. As stated above, in this matter, we have before us 104 civil appeals. We are directing the Assessing Officer to examine each case to ascertain whether the employee-assessee (recipient) has paid the tax due on the home salary/special allowance(s) received from the foreign company. In case taxes due on home salary/special allowance(s) stand paid then the Assessing Officer shall not proceed under section 201(1). In cases where the tax has not been paid, the Assessing Officer shall proceed under section 201(1) to recover....
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....ilure. Therefore, the liability to levy of penalty can be fastened only on the person who do not have good and sufficient reason for not deducting tax at source. Only those persons will be liable to penalty who do not have good and sufficient reason for not deducting the tax. The burden, of course, is on the person to prove such good and sufficient reason. 95. In each of the 104 cases before us, we find that non-deduction of tax at source took place on account of controversial addition. The concept of aggregation or consolidation of the entire income chargeable under the head "Salaries" being exigible to deduction of tax at source under section 192 was a nascent issue... The tax-deductor-assessee was under a genuine and bona fide belief that it was not under any obligation to deduct tax at source from the home salary paid by the foreign company/head office and, consequently, we are of the view that in none of the 104 cases penalty was leviable under section 271C as the respondent in each case has discharged its burden of showing reasonable cause for failure to deduct tax at source." We find some parallels between the facts of the present case and the situation in ....