TMI Blog2012 (9) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest u/s 201(1A) is automatic, however it is not so in case of imposition of penalty u/s 271C. Section 273B provides a discretion to the AO towards imposition of penalty u/s 271C considering the reasonableness of the cause shown by the assessee for failure on its part to deduct tax at source. It is seen from the penalty order u/s 271C that the AO has accepted the fact that the recipient of the printing and processing charges i.e., M/s. Prasad Productions Pvt. Ltd., has declared income received in its return of income filed and has paid taxes. Therefore, no order u/s 201 was passed against the assessee treating it as an assessee in default - in favour of assessee. - ITA Nos. 1691-1693/ Hyd/2011 - - - Dated:- 22-6-2012 - SHRI CHANDRA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant's case is against levying of penalty u/s. 271C. e) The CIT(A) erred in sustaining the penalty of Rs. 49,413/- u/s. 271C stating that reasonable cause is not there to the appellant in not remitting TDS ignoring the submissions of the appellant that there is reasonable cause for non remitting TDS on the job work charges paid to Prasad Productions Pvt. Ltd. 3. For all of the above and such other grounds that may be raised at the time of hearing, it is respectfully submitted that the appeal be allowed and suitable directions be given to the Assessing Officer to cancel the penalty levied. 3. Briefly the facts are that the assessee is a company engaged in the business of processing cinematographic films, running a dubbing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax at source. The assessee was also under the impression that since the holding company is paying advance tax and filing return of income there was no need to deduct tax at source on the job work charges paid to the holding company. The assessee further contented that since the recipient has already declared the income and paid tax thereon there is no loss of revenue to the department. Hence penalty u/s. 271C should not be imposed. The Assessing Officer, however, rejecting the explanation submitted by the assessee passed an order imposing penalty of Rs. 49,413 u/s. 271C of the Act. The assessee being aggrieved of the order of penalty filed an appeal before the CIT (A). 4. During the course of hearing before the CIT (A), it was contende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of the Act. The CIT (A) observed that there are only two options available to the assessee, one is to apply to the department for a certificate u/s 195(2) for non-deduction of TDS and the other is to deduct tax at source when the amount in question is chargeable to tax under the provisions of the Act. The CIT (A) relying upon the decision of Hon ble Kerala High Court in the case of CIT vs. Dhanalakshmi Weaving Works (2000) 245 ITR 013, upheld the imposition of penalty u/s 271C. The CIT (A) also rejected the contentions raised by the assessee that the service charges paid to M/s. Prasad Productions Pvt. Ltd., is not for technical services but for a contract of work, hence it will not come within the ambit of section 194J. 5. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due to a technical default of the assessee. 6. We have heard rival contentions and perused material available on record. Section 201 of the Act provides that in case a person who is required to deduct tax at source under the provisions of the Act does not deduct or after deduction does not pay to the department, then such person shall be treated as an assessee in default. In respect of such tax and tax shall be recovered from him apart from levy of interest under subsection (1A) of section 201 and other consequences as provided under the Act. It is seen from the penalty order u/s 2371C that the AO has accepted the fact that the recipient of the printing and processing charges i.e., M/s. Prasad Productions Pvt. Ltd., has declared income re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt to deduct tax at source. Therefore, penalty cannot be imposed in a routine manner. The explanation submitted by the assessee has to be considered in a objective manner. If the assessee is able to prove that there is reasonable cause on its part in not deducting tax at source, then penalty cannot be imposed u/s 271C.As has been held by the Hon ble Supreme Court in the case of Hindustan Steel vs. State of Orissa (83 ITR 26), penalty should not be imposed only because it is provided under the Statute or it is lawful to do so. Unless there is malafide intention and deliberate defiance of law, penalty cannot be imposed. 7. In the present appeal before us admittedly the assessee has been able to demonstrate the fact that the recipient of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
