TMI Blog2019 (7) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... irected to be deleted. As far as the decision of the co-ordinate Bench in the case of Syndicate Bank [ 2019 (7) TMI 1163 - ITAT BANGALORE] is concerned, we are of the view that this issue has not been raised nor considered in that case. Since the imposition of penalty u/s.271C fails on this ground, we are of the view that there is no necessity to remand the issue to CIT(A) for consideration afresh, as was done by the Tribunal in the case referred to by the learned DR. We therefore hold that the imposition of penalty in the facts and circumstances of the case cannot be justified and the same is directed to be cancelled. - 651/Bang/2019, 653/Bang/2019, 652/Bang/2019, 655/Bang/2019, 654/Bang/2019, 656/Bang/2019 - - - Dated:- 19-7-2019 - Shri N.V. Vasudevan, Vice President And Shri Jason P. Boaz, Accountant Member For the Appellant : Shri M. Dheeraj, CA For the Respondent : Shri Vikas Suryavamshi, Addl.CIT(DR)(ITAT), Bengaluru. ORDER PER BENCH These are all appeals by three different branches of Syndicate Bank, a nationalised bank, carrying on banking business against di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses actually incurred for the purpose of such travel. Explanation. -For the purposes of this clause, family , in relation to an individual, means- ( i ) the spouse and children of the individual ; and ( ii ) the parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual; 3. Rule 2B of the Income Tax Rules, 1961 lays down the conditions for the purpose of section 10(5) and it reads thus: 2B. (1) The amount exempted under clause ( 5 ) of section 10 in respect of the value of travel concession or assistance received by or due to the individual from his employer or former employer for himself and his family, in connection with his proceeding,- ( a ) on leave to any place in India; ( b ) to any place in India after retirement from service or after the termination of his service, shall be the amount actually incurred on the performance of such travel subject to the following conditions, namely :- (i) where the journey is performed on or after the 1st day of Octobe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the travel con-cession or assistance in relation to the number of journeys under sub-rule (2).] [(4) The exemption referred to in sub-rule (1) shall not be available to more than two surviving children of an individual after 1st October, 1998 : Provided that this sub-rule shall not apply in respect of children born before 1st October, 1998, and also in case of multiple births after one child. 4. The Assessee as an employer was bound to deduct tax at source in cases where the LTA is not exempt i.e. in a case where the conditions laid down in Sec.10(2) read with Rue 2B of the Rules are not satisfied. The Assessee in these appeals reimbursed leave travel allowances to its employees in respect journey undertaken out of India. In respect of such reimbursement it did not deduct tax at source. According to the bank, if the destination is India, irrespective of the en-route journey, it need not deduct tax at source as the reimbursement of LTA was exempt u/s.10(5) of the Act. 5. A survey was conducted u/s.133A of the Act in the business premises of the Assessee and it was noticed that the Assessee did not ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to deduct tax then the penalty under Section 271C is waived off. Sec.273-B reads thus:- Section 273B - Penalty not to be imposed in certain cases, can be read as follows: 273B. Notwithstanding anything contained in the provisions of clause (b) of sub-section (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, section 271H, clause (c) or clause (d) of sub section (1) or sub-section (2) of section 272A, sub-section (1) of section 272AA or section 272B or subsection (1) 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 provisions if he proves that there was reasonable cause for the said failure. 7. There is no definition for the term reasonable cause and it has to be decided upon the facts of each case. The Hon'ble Supreme Court of Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal No. 1778/06 entitled CIT v. The Bank of Tokyo-Mitsubishi Ltd.). 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/HO 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 45 burden of showing reasonable cause for failure to deduct tax at source . 8. The Hon'ble Karnataka High Court made the following observation in the Case of The Commissioner of Income Tax and Others Vs. The Rajajinagar Co-operative bank Limited ITA 86 of 2006, Order Date 20th July, 2011, with regards to reasonable cause for failure to deposit TDS:- 10. In the instant case, the assessee is a Cooperative Bank. Clause 5 of sub-section (3) of Section 194A expressly exempts the Bank from deducting the tax at source on interest payable by the Bank to its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. The Revenue authorities proceeded to impose penalty u/s.271C on the Assessee rejecting the plea of the Assessee that the failure to deduct tax at source was on a reasonable belief that Assessee failed to do so under the impression that if the destination is India, irrespective of the fact that en-route the journey is out of India, the entire LTA is exempt. Aggrieved by the orders of the CIT(A) the Assessee is in appeal before the Tribunal. 11. The learned counsel for the Assessee submitted that when the Hon ble High Court admits an appeal against the order in quantum proceedings, no penalty can be levied on the Assessee. It was submitted that when the High Court admits substantial question of law on an addition, it becomes apparent that the addition is certainly debatable. In such circumstances no penalty can be levied u/s 271C. In this regard the learned counsel for the Assessee placed reliance on the decision of the Hon ble Karnataka High Court in the case of CIT v. Ankita Electronics Pvt. Ltd. 379 ITR 50 (Kar) wherein it was held that the admission of substantial question of law by the High Court lends credence to the bona fides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im in respect of these employees except in respect of 12 employees. These 12 employees, who have travelled to foreign countries as part of their travel itinerary with designated place of travel in India, and in respect of which they have submitted their LFC claim, has been disputed by the Revenue as not eligible for exemption under section 10(5) in respect of amount reimbursed towards foreign leg of their travel. The explanation of the assessee bank is that while calculating the tax liability of its employees, the figure of LFC was always exempted and this rule was being followed since many years, being in a nature of thumb rule and TDS exemption of LFC was thus allowed almost mechanically year after year. To our mind, it is important to be consistent but at the same time, one needs to be mindful of what been submitted by the employees towards their LFC claims. It appears that the assessee bank has looked at these 12 employees claim broadly, as in other cases, in terms of actual travel being undertaken, the designated place being in India and the amount of claim not exceeding the economy fare of the national carrier by the shortest route to the place of destination. However, the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or not deducting tax by the assessee Bank. In the result, the penalty so levied under section 271C is hereby directed to be deleted. 12. The learned DR relied on the order of CIT(A) and further drew our attention to a decision of ITAT Bangalore Bench in the case of another branch of the Assessee in ITA No.532 to 536/Bang/2019 order dated 12.7.2019 , wherein this Tribunal remanded the question of imposition of penalty to the CIT(A) for fresh consideration to see parity of facts between the case of the Assessee and the decision of ITAT Jaipur Bench in the case of State Bank of India (supra) . 13. We have carefully considered the rival submissions. It is undisputed that as against the order of the Tribunal holding the Assessee to be in default for non deduction of tax at source, the Assessee has preferred appeal before the Hon ble Karnataka High Court and the question whether the Assessee is guilty of non deduction of tax at source or not is to be decided in such appellate proceedings. In this background of facts, the question is whether penalty can be imposed on the Assessee u/s.271C of the Act. The Hon ble Karnataka High Court in the case of Anki ..... X X X X Extracts X X X X X X X X Extracts X X X X
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