TaxTMI 
TaxTMI 
2025 (6) TMI 1528
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....ating 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 that there was 'reasonable cause' for the said failure as per the provisi....
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.....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 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) fa....
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....cular, 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 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' f....
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....e 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 dated 19/09/2023, penalty amounting to Rs. 1,59,596/- was imposed by Addl CIT (TDS) on the ground that the assessee had failed to deduct tax at source in respect of reimbursements of LTC/LFC paid to the employees for travelling abroad. As the reimbursements of LTC/LFC in respect of foreign travel of the employee is not exempt u/s 10(5) of the Act, ....
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....f 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 learned CIT(A) confirmed the aforesaid penalty and dismissed assessee's appeal. The relevant portion of the impugned order of the learned CIT(A) is reproduced as under: 3. Notice was issued from this office on 01-11-2023 requesting the appellant to File written submission and documents electronically through website of the department. Further notices were issued on 17-05-2024 and 27-05-2024. The appellant has responded to th....
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....come 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 not liable to deduct tax at source in respect of LFC provided to employees. In other words, the Bank had deducted appropriate tax at source on the basis of the prevalent law and there was no default on the part of the Bank in deducting tax at source. There was reasonable cause in term of section 273 of the Act for not deducting tax by the assessee Bank, Accordingly, no penalty is liable to be imposed in the facts and circumstances of the case within meaning of section 271C of Income Tax Act. (j) In ....
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....ce 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 appeal of the assessee and held as below: "A foreign travel also frustrate's the basic purpose of LTC. The basic objective of the LTC scheme was to familiarise a civil servant or a Government employee to gain some perspective of/Indian culture by travelling in this vast country. It is for this reason that the 6th Pay Commission rejected the demand of paying cash compensation in lieu of LTC and also rejected the demand of foreign travel. In para 4.3.4 of the 6th Pay Commission Report dated March 2008 this is what was said....
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....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 with section 192 and the burden of proving the reasonable cause is entirely on the assessee. The Act does not define the term 'reasonable cause'. It is a standard of proof which is applied to a set of facts or actions to prove whether a reasonable person have come to the same conclusion or acted in the same way given the totality of the circumstances. 6.4 In this context, it is also relevant to note that in CIT v. Jagdish Prasad Choudhary [1995] 211 ITR 472, a Full Bench of the Patna High Court has interpreted the expression "reasonable cause", as fo....
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.... 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 source with reasonable cause. In the absence of any such pleading of proof, the penalty under Section 271C is liable to be imposed on the assessee." 6.8 Further in the case of CIT Thiruvananthapuram v. Muthoot Bankers (Aryasala) [2016] 71 taxmann.com 110 (Kerala), the Hon'ble High Court of Kerela has held that the burden u/s 273B is entirely on the assessee to show that the non- deduction of tax was beyond the control of the assessee. The relevant portion of the decision is reproduced below: "Referring to various precedents this Court had occasion to deal with a similar case in the judgment in ITA 139/2013 where it ....
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....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 from TDS. In the above circumstances, the levy of penalty u/s 271C of the Act by the Assessing Officer is upheld. (B.2) The present appeal vide I.T.A. No.488/Lkw/2024 has been filed by the assessee against the aforesaid impugned appellate order. In the course of appellate proceedings in Income Tax Appellate Tribunal, hearings fixed on 12/11/2024 and 17/02/2024 were not attended by anyone on behalf of the assessee. Once again the hearing was fixed on 22/04/2025 however, there was no representation from the assessee's side again. In the absence of any representation from assessee's side, we heard the learned D.R. for Revenue. He relied on the aforesaid....