TMI Blog2013 (1) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... le to deduct tax at source - uphold the order passed by the CIT(A) in deleting the penalty - in favour of assessee. - ITA No.8751/Mum/2010 & ITA No.7147/Mum/2011 - - - Dated:- 7-11-2012 - Dinesh Kumar Agarwal and N.K. Billaiya, JJ. Appellant Rep by: Shri Om Prakash Meena Respondent Rep by: Ms Indra G Anand ORDER Per: Dinesh Kumar Agarwal: These two appeals preferred by the Revenue are directed against the separate orders dtd. 30-9-2010 and 15-7-2011 passed by the ld. CIT(A)-14, Mumbai for the assessment years 2007-08 and 2008-09 respectively. Since facts are identical and common issue is involved, both these appeals are disposed of by this common order for the sake of convenience. 2. Briefly stated facts of the case extracted from ITA No. 8751/Mum/2010 for A.Y. 2007-08 are that the assessee is a charitable trust running hospital and research centre in the city of Mumbai. A survey u/s 133 A of the Income Tax Act, 1961 (the Act) was carried out at the premises of the assessee on 19-9-2007. The A.O. while passing orders u/s 201(1)/201(1A) held the assessee to be an assessee in default u/s 201(1) and levied interest u/s 201(1A) in respect of the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 10,79,400/- and accordingly imposed the penalty of Rs. 10,79,400/- vide order dtd. 29-3-2010 passed u/s 271-C of the Act. 3. The A.O. for the same reason has imposed penalty u/s 271-C of the Act Rs. 3,35,085/- for the A.Y. 2008-09 vide order dtd. 29-3-2010 passed u/s 271-C of the Act. 4. On appeal for the A.Y. 2007-08 the ld. CIT(A) while relying on the decision in CIT vs. Eli Lilly and Co. (India) Pvt. Ltd. (2009) 312 ITR 225 (SC) and CIT vs. Schell International (2005) 278 ITR 630 (Bom) held that the assessee was having reasonable cause not to deduct tax on the payment as the assessee was not aware of the amendment and on becoming aware, it has immediately started to comply the same and hence the assessee s case is covered under the provisions of section 273- B and accordingly deleted the penalty imposed by the A.O. 5. The ld. CIT(A) for the same reason and following on the appellate order for the A.Y. 2007-08 has also deleted the penalty imposed by the A.O. for the A.Y. 2008-09. 6. Being aggrieved by the order of the ld. CIT(A) the Revenue is in appeal before us. 7. The grounds taken for the A.Y. 2007-08 read as under:- 1. (i) The Ld. CIT(A) has erred on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quipments to the patients for which they are entitled to receive charges. The assessee collected the charges from the patients and has paid the same amount to the doctors, therefore, the payment made to doctors is in the nature of reimbursement not subjected to TDS. She further submits that the ld. CIT(A) after considering the assessee s submission that the doctors have paid due taxes on the said receipts has allowed relief to the assessee on an appeal filed by the assessee against the order passed u/s 201(1)/201(1A) of the Act. She further submits that since the assessee was under a bonafide belief that the assessee is not liable to deduct the TDS, therefore, the ld. CIT(A) was fully justified in deleting the penalty imposed by the A.O. and, hence, the order passed by the ld. CIT(A) be upheld. 11. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that the facts are not in dispute inasmuch as it is also not in dispute that before the A.O. it was submitted that the assessee was under the bonafide belief that in respect of equipment hire charges paid to doctors, the assessee was not liable to deduct TDS as the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t leviable as reasonable cause was shown for not deducting tax at source. The levy of interest under section 201(1A) is mandatory and the absence of liability for tax will not dilute the default. The liability of deducting tax at source is in the nature of a vicarious liability, which presupposes existence of primary liability. Interest under section 201(1A) read with section 201(1) can only be levied when a person is declared an assesseein- default. The period of default starts from the date of deductibility till the date of actual payment. The payment by the concerned employee can be treated as the date of actual payment. [Accordingly, in cases where tax had not been paid, the Assessing Officer was to recover the shortfall in the payment of tax under section 201(1).] The liability to penalty under section 271C can be fastened only on the person who does not have good and sufficient reason for not deducting tax at source. The burden, of course will be on that person to prove such good and sufficient reason . 14. In Hindustan Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC) it has been held (Headnote) : An order imposing penalty for failure to carry o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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