TMI Blog2010 (2) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... . 568 of 2007 and 558 of 2007 pertain to the assessment year 1992-93, I. T. A. Nos. 567 of 2007 and 565 of 2007 pertain to the assessment year 1993-94, I. T. A. Nos. 566 of 2007 and 562 of 2007 pertain to the assessment year 1994-95, I. T. A. Nos. 564 of 2007 and 555 of 2007 pertain to the assessment year 1995-96, I.T. A. Nos. 556 of 2007 and 563 of 2007 pertain to the assessment year 1996-97, I. T. A. Nos. 559 of 2007 and 557 of 2007 pertain to the assessment year 1997-98 and I. T. A. Nos. 569 of 2007 and 561 of 2007 pertain to the assessment year 1998-99. 2. For the sake of convenience all these appeals are taken up together and common order is passed. 3. The facts leading to the filing of these appeals are as under : 4. The R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for closure of the proceedings. The explanation offered by the respondent-company was not accepted by the Assessing Officer, who accordingly, passed an order to levy penalty. Being aggrieved by the same, the assessee filed an appeal before the Commissioner of Income-tax (Appeals), which came to be dismissed. 6. As against the same, the assessee filed an appeal before the Income-tax Appellate Tribunal, Bangalore which allowed the appeal granting relief to the assessee. Simultaneously, proceedings were also initiated under section 272A(2)(c) of the Act on the ground that the return of income was not furnished in due time, accordingly, an order was also passed. Being aggrieved by the said two orders, the appeal was also preferred which e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -consideration of the facts by the Tribunal, he contends that it was not justified to set aside the order passed by the Assessing Officer and the Commissioner of Income-tax (Appeals). 10. Per contra, learned counsel for the respondent submits that the amount paid by the assessee in Japan to its employees was not salary. Therefore, the said amount could not have been considered as a salary as required under section 192(1) of the Act and that, it was not required for the respondent to deduct the tax at source. It is also contended by the respondent that the respondent-company being a foreign company was of the opinion that it was not required to deduct tax at source and having come to the conclusion that the tax was required to be paid th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. Ltd. [2009] 312 ITR 225 (SC), their Lordships at paragraph 35 of the judgment have held as hereunder (page 251) : "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 impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d.). In some of the cases, it is undisputed that each of the expatriate employees have paid directly the taxes due on the foreign salary by way of advance tax/self-assessment tax. 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." 13. As we have come to the conclusion that the Assessing Officer has failed to consider the cause shown by the assessee, we are of the opinion tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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