TaxTMI 
TaxTMI 
2025 (6) TMI 1528
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....bmissions made before the Ld. CIT (A) and without appreciating the facts of the case and judicial precedents, bad in law and is liable to be quashed. 2. That on the facts and in the circumstance of the case and in law, the Ld. CIT (A) failed to appreciate the fact that the order of penalty passed by the Ld. Additional Commissioner of Income Tax (TDS) dated 19-09-2023 U/s 271C of the Act is bad in law and void ab initio, since the penalty proceedings have been initiated after almost 7 years from the end of the financial year which cannot be considered reasonable time period for initiating proceedings as held by various authorities. 3. That on the facts and circumstance of the case and in law, the Ld. CIT (A) erred in confirming penalty levied by the Ld. AO u/s 271C of the Act 1961, disallowance of LTC/LTA under section 10(5) of the Act, without appreciating that no tax was deductible on the provisions created by the Appellant. 4. That on the facts and circumstances of the case and in law, the Ld. CIT (A) erred in confirming penalty levied by the Ld. AO u/s 271C of the Act, disallowance of LTC/LTA under section 10(5) of IT Act 1961, without appreciating tha....
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....rily and in utter disregard of the submission made before him. 7. That the above grounds are independent and without prejudice to each other." I.T.A. No.489/Lkw/2024 1. That on the facts and circumstance of the case and in the law, the order passed u/s 250 r. w. s 271C of the Act dated 10/06/2024 dismissing the appeal filed by the Appellant and confirming the levy of penalty of Rs. 1,46,775/- by the Ld. CIT(A), without giving any justifiable reasoning and ignoring the submissions made before the Ld. CIT (A) and without appreciating the facts of the case and judicial precedents, bad in law and is liable to be quashed. 2. That the order dated 25-05-2023 passed by the Additional Commissioner of Income Tax (TDS) imposing the penalty of Rs. 1,46,775/- is bad in law for the reason that said order under section 271C of the IT Act 1961 dated 25-05-2023 vide DIN No- KNP/95/25-05-2023/00099 and said notice of demand u/s 156 of the IT Act 1961 dated 25-05-2023 vide DIN number :- KNP/95/25-05-2023/00099 has been issued with the same Document Identification Number ("DIN"), which is wrong and against as per Board Circular, which is mandatory in term of circula....
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....25-05-2023/100 and said notice of demand u/s 156 of the IT Act 1961 dated 25-05-2023 vide DIN number :- KNP/95/25-05-2023/100 has been issued with the same Document Identification Number ("DIN"), which is wrong and against as per Board Circular, which is mandatory in term of circular No.19 of 2019 dated 14-08-2019 issued by the Central Board of Direct Taxes ("CBDT"). 3. That on the facts and in the circumstance of the case and in law, the Ld. CIT (A) failed to appreciate the fact that the order of penalty passed by the Ld. Additional Commissioner of Income Tax (TDS) dated 25-05-2023 U/s 271C of the Act is bad in law and void ab initio, since the penalty proceedings have been initiated after almost 7 years from the end of the financial year which cannot be considered reasonable time period for initiating proceedings as held by various authorities. 4. That on the facts and circumstance of the case and in law, the Ld. CIT (A) erred in confirming penalty levied by the Ld. AO u/s 271C of the Act 1961, disallowance of LTC/LTA under section 10(5) of the Act, without appreciating that no tax was deductible on the provisions created by the Appellant. 5. That on th....
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....e of the case and in law, the Ld. CIT (A) erred in confirming penalty levied by the Ld. AO u/s 271C of the Act 1961, disallowance of LTC/LTA under section 10(5) of the Act, without appreciating that no tax was deductible on the provisions created by the Appellant. 5. That on the facts and circumstances of the case and in law, the Ld. CIT (A) erred in confirming penalty levied by the Ld. AO u/s 271C of the Act, disallowance of LTC/LTA under section 10(5) of IT Act 1961, without appreciating that there was 'reasonable cause' for the said failure as per the provisions of Section 273B of the Act 1961. 6. That the grounds of appeal as pleaded before the Learned CIT(Appeal) are relied upon the appeal before the Hon'ble Member, ITAT. 7. That the Learned CIT (Appeal) has erred in law in rejecting the appeal arbitrarily and in utter disregard of the submission made before him. 8. That the above grounds are independent and without prejudice to each other." (A.1) For the sake convenience, these five appeals are hereby disposed of through this consolidated order. (B) First of all appeal vide I.T.A. No.488/Lkw/2024 is taken up. Vide order da....
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....f such travel read with condition as per rule 2B of the Income Tax Rule, 1962. The provision of section 10(5) read with rule 2B were introduced in order to motivate the employees and also to encourage tourism in India and therefore the reimbursement of LTC/LFC was exempted, but there was no intention on the legislature to allow the employee to travel abroad under the garb of benefit of LTC/LFC available by virtue of section 10(5) The reimbursement has been allowed by the assessee to the employee in respect of the journey performed by her outside India. Therefore, such reimbursement was not exempt u/s 10(5) of I.T. Act and was liable for TDS. 5. In view of the aforementioned facts and circumstances it is held that the deductor is liable for penalty u/s. 271C of the I.T.Act, 1961. Therefore, a penalty of Rs. 1,59,596/- u/s. 271C of the Income Tax Act, 1961 for is imposed F.Y. 2016-17 and direct the assessee to pay the same. Issue demand notice/challans accordingly. ((B.1) The assessee filed against the aforesaid order dated 19/09/2023 levying the penalty u/s 271C of the Act, in the office of the learned CIT(A). Vide impugned appellate order dated 10/06/2024, the ....
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....e employees had visited a foreign city/ country. e) That the assessee Bank, while calculating the estimated tax liability of its employees, always consider LFC claim as exempted under section 10(5) of Income Tax Act 1961 and the same position, being followed and accepted consistently in the past years, was followed in the relevant financial year as well. f) Without prejudice to the position that the Bank has correctly granted exemption under section 10(5) of Income Tax Act 1961 to its employees at the time of deduction of tax at source, it is humbly submitted that the Bank is under bona-fide belief that even where the journey undertaken by an employee involves a foreign leg, the employee is entitled to exemption u/s 10(5) of IT Act 1961 when the employee's designated place is in India and he actually visits the place so designated. (g) That there was neither any intention nor any motive either to defy the positions of law or to evade any tax. (h) That the assesses bank has committed an inadvertent and bona fide error and had not intended to conceal its income. (i) It is reiterated that it was the bona -fide of the Bank that it was no....
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....the assessee as in default u/s 201 and 201(1A) of the Act. Further, the Assessing Officer had also levied penalty u/s 271C of the Act for the appellant bank's failure to deduct taxes at source. Aggrieved by this order levy of Penalty u/s 271C of the Act, the appellant has filed the instant appeal. 6. Section 192 of the Act requires any person responsible for paying any income chargeable under the head salaries to deduct tax thereon at the rates in force. The appellant bank had defaulted in deduction of tax at source on the Leave Travel Concession/reimbursement made to its employees. It is a fact admitted that no tax has been deducted on Leave Travel Concession/reimbursement. The appellant had contended that such Leave Travel Concession/reimbursement was exempt from tax u/s 10(5) of the Act. However, this issue has been now been settled against the assessee by the Hon'ble Supreme Court in the appellant's own case reported in [2022] 144 taxmann.com 131 (SC) / [2023] 290 Taxman 129 (SC), wherein it has been held that the appellant ought to have deducted taxes on the Leave Fare concession granted to its employees which involved toreign travel. It has dismissed the ....
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....le on the person or the assessee, as the case may be, for any failure referred to in the Section, if he proves that there was reasonable cause for such failure. 6.3 The burden to show that there was reasonable cause for non-deduction of taxes rests on the assessee. It is entirely on the assessee to show the default in deduction of tax was beyond the control of the assessee. However, in this case, the appellant has not advanced any reasonable cause for default in deduction of tax at source other than stating that it was under a bonafide belief that tax was not deductible. A closer look of the statutory provisions show that if an individual who is liable to deduct tax at source under Section 192/commits default in doing so, automatically, Section 271C is attracted and he is liable to be levied penalty as provided therein. However, that absolute llability to be penalized is softened by section 273B by providing such a person an opportunity to prove that his failure to comply with Section 192 was for a reasonable cause. It is, therefore, evident that in order to escape from the levy of penalty, it is for the assessee to prove that he had reasonable cause for his non-compliance....
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....applied to human action is that which would constrain a person of average intelligence and ordinary prudence. It can be described as probable cause. It means an honest belief founded upon reasonable grounds, of the existence of a state of circumstances, which assuming them to be true, would reasonably lead any ordinarily prudent and cautions man, placed in the position of the person concerned, to come to the conclusion that the same was the right thing to do. The cause shown has to be considered and only if it is found to be frivolous, without substance or foundation, the prescribed consequences follow.' 6.7 In the case of Commissioner of Income Tax (TDS), Cochin v. Muthoot Banker [2017] 86 taxmann.com 34 (Kerala), the Hon'ble High Court of Kerela has held the assessee is liable for penalty unless he could plead and prove that he was prevented from deducting tax at source by reasonable cause. The relevant portion of the decision is reproduced below: "We are of the opinion that in view of the clear language of Section 271C of the Act, the assessee was liable to pay the penalty unless he could plead and prove that he was prevented from deducting the tax at s....
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....ct in the above case. The relevant portion of the decision is reproduced below: "With respect to the contentions raised as regards the finding that contumacious conduct is necessary before a penalty can be imposed, we are of the opinion that the position has been clarified by the Bench decision of the Apex Court in Dharamendra Textile Processors' case (supra). At paragraph 33 of the judgment, the Apex Court held, relying on precedents that mens rea is not an essential element for imposing penalty for breach of civil obligations. Considering the nature of penalty under the scheme of the Act, it was held that the penalty leviable in cases of default or failure of statutory obligation or in other words for breach of civil obligation is not a criminal offence and there is no question of proof of intention or mens rea by the assessee for imposing penalty." 6.10 Thus, it becomes clear that the only escape route from the mischief of penalty u/s 271C of the Act is the pleading of reasonable cause under 273B of the Act. However, the appellant, other than stating that it was under a bonafide belief that tax was not deductible, pleaded no other cause that prevented it fr....