TMI Blog2002 (1) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... l. No. 11 that the assessee had deducted tax at source and paid the same to the credit of Central Govt. in accordance with Chapter XVII-B, Sch. C to P L a/c the amount of other interest was shown at Rs. 39,674 only. However, in the detail of outstanding liabilities as on 31st March, 1989, the assessee had shown at Sl. Nos. 5 and 6" yarn parties interest at Rs. 1,34,654 and interest on processing at Rs. 34,332" (Rs. 1,68,986). After considering the reply of the assessee, the Dy. CIT, Udaipur Range imposed the penalty under s. 271C of the IT Act. The CIT(A) referred to Explanation under s. 194A regarding TDS as amended w.e.f. 1st June, 1987 so as to cover the amount of interest credited to interest payable account etc. He observed that not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to note that ultimately the assessee had not to pay the interest and the interest which was provided earlier in the relevant year, i.e., asst. yr. 1988-89, had to be reversed. The assessee accordingly credited the interest relating to these three parties, namely M/s Rajasthan Processors (I) Ltd., Bhilwara, M/s Orient Syntex Ltd. and M/s Shruti Synthetics Ltd., and consequently the entire deduction claimed and allowed earlier stood taxed in a later year. This was duly assessed by the AO in asst. yr. 1991-92 vide order under s. 143(3) dt. 30th Sept., 1992. Thus, the assessee already suffered tax on this part of income and it is clear that the assessee was not responsible for paying interest in asst. yr. 1988-89. 3.4 The assessee thus was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a (1972) 83 ITR 26 (SC). It is also notable that no such penalty has been imposed in the past. 3.7 Ignorance of law reasonable cause: Alternatively and without prejudice to other contentions, it is submitted that Explanation below s. 194A was brought on the statute w.e.f. 1st June, 1987 by the Finance Act, 1987, i.e. mid of the relevant previous year. The assessee, therefore, was not fully and accurately aware of the implications of these amendments and, therefore, there was nothing abnormal if some bona fide mistake was committed on his part. The C.A. himself was under a state of confusion and committed some alleged error. 4. Besides the above arguments, the learned Authorised Representative also contended that Dy. CIT was not authoris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned authorised representative contended that the interest payable was on the trade creditors and it was not settled whether the interest on trade creditors will be payable or not. The assessee was not sure about the interest payable to the persons. After discussion with them, it was decided that the interest was payable only to the six trade creditors and as per discussions subsequently held no interest was paid to three parties, namely M/s Rajasthan Processors (I) Ltd., Bhilwara, (2) M/s Orient Syntex Ltd., and (3) M/s Shri Syntex Ltd. The provisions which had already been made during financial year 1988-89 was transferred to liability no longer required written back, and consequently the entire deduction claimed and allowed ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. We have also considered the contention of the assessee regarding venial breach of law. In this case, Explanation to s. 194A was inserted w.e.f. 1st June, 1987. This Explanation provided that where any income by way of interest is credited to any account whether called "interest payable account" or "suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. In respect of the remaining six parties, the assessee was assisted by a C.A. Even then, the entries were made in such manner as to avoid applicability of the Explanation to s. 194A, inserted w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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