TMI Blog2014 (12) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax, New Delhi Versus Eli Lilly & Company (India) Pvt. Ltd. [2009 (3) TMI 33 - SUPREME COURT] – it cannot be held that the provision to be mandatory or compensatory or automatic because u/s 273B Parliament has enacted that penalty shall not be imposed in cases falling - section 271C falls in the category of such cases - the liability to levy of penalty can be fastened only on persons who do not have good and sufficient reason for not deducting tax at source - the assessee has proved that there was reasonable cause for failure to deduct tax at source – thus, the order of the Tribunal in upholding the deletion of penalty u/s 271C is upheld – Decided against revenue. - TAX APPEAL NO. 918 of 2014 TO TAX APPEAL NO. 920 of 2014 - - - Dated:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee was giving ₹ 600/- per month on account of canteen reimbursement to incur the expenses for food and beverages and this payment was made on the strength of a onetime certificate furnished by the employees. This reimbursement of ₹ 600/- was given to all the employees irrespective of the cadre. The Assessing Officer held that in the case of a deductor assessee, the issue was related to non-deduction of tax under section 192 of the Act on the reimbursement of food expenses paid to its employees. It had neither deducted the tax on reimbursement of food expenses nor did the deductees (employees) disclose such income in the form of perquisite in their return of income. The Assessing Officer made an order under section 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that there was no reason for the assessee to assume that reimbursement of canteen subsidy was exempt. It was submitted that it was prevalent practice in public sector undertakings wherein many types of monetary or non-monetary benefits, reimbursements, perquisites, profits in lieu of salary are treated as wage agreements and that do not fall within the exempted income of the salaried employees under section 192 of the Act and, hence, the assessee independently kept on availing benefits on such items for indefinite period on the basis of its own assumption, which is contrary to the provision of law. Under the circumstances, the evasion of tax deducted at source on the part of the assessee cannot be said to be a bona fide mistake on it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that before levying penalty the concerned officer should prove that the failure referred to in the said provision was without a reasonable or sufficient cause and that the assessee deliberately defied the provision of law. The Commissioner (Appeals) found as a matter of fact that this was neither a case of mala fide intention nor that of negligent intention or want of bona fide, but a case of misconcerned belief regarding applicability of provision of section 192 of the Act. That it cannot be said judiciously that the assessee failed to deduct tax without a reasonable cause. The Commissioner (Appeals) was of the view that under section 271C penalty cannot be imposed if there was a bona fide belief for non deduction of tax and that penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 imposed in cases falling thereunder. Section 271C falls in the category of such cases. Section 273B states that notwithstanding anything c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 8. Examining the facts of the present case in the light of the principles enunciated in the above decision, the assessee has proved that there was reasonable cause for failure to deduct tax at source. Under the circumstances, in the light of the provisions of section 273B of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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