TMI Blog2015 (7) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... in a belief that they were not liable to deduct tax at source on the interest paid to the firm. This, therefore, means that the alleged belief of the assessees is certainly not one a reasonable person would have entertained nor such persons would have acted in the same way given the totality of circumstances. Therefore, we cannot accept the plea that the belief allegedly entertained by the assessees was a bonafide one or could be accepted as a reasonable cause as provided under Section 273B. In effect, the defence put forward by the assessees is one of ignorance of law. Ignorance of law, it is trite, is no excuse in law and if that be so, ignorance of law cannot also be a reasonable cause as contemplated under Section 273B. As contended by assessee it may be true that penalty levied under section 201 read with Section 221 has been set aside by the Tribunal accepting the plea of "good and sufficient" reasons urged by the assessees. However, the object of these provisions being different from section 194A read with Section 271C, such an order passed by the Tribunal cannot come to the rescue of the assessees. In any case, principles of res-judicata and estoppel are alien to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income and that since the firm had declared loss, it was not liable to pay any tax and hence there was no revenue loss. It was on these grounds the Tribunal set aside the order passed, deleted the penalty levied under Section 271C of the Act and allowed the appeals. It is this order, which is challenged by the Revenue in these appeals and the questions of law formulated are: 1. Whether, on the facts and in the circumstances of the case, the tribunal is right in law and fact in cancelling the penalty levied under Sec.271C? 2. Whether, on the facts and in the circumstances of the case and also in the light of the specific exemption provided in section 194A (3)(iv) to such income credited or paid by a firm to a partner of the firm, the assessee is reasonably entitled to entertain the belief that payment of interest by the partners to the firm is similar or similarly placed? 3. Whether, on the facts and in the circumstances of the case and in the absence of an issue of debate being raised by the assessee, the Tribunal is right in law and fact in introducing the concept of debate in the order and is not the order based on a debatable issue extraneous and perverse? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench of the Patna High Court has interpreted the expression reasonable cause , as follows: The word reasonable cause has not been defined under the Act but it could receive the same interpretation which is given to the expression sufficient cause . Therefore, in the context of the penalty provisions, the word reasonable cause would mean a cause which is beyond the control of the assessee. Reasonable cause obviously means a cause which prevents a reasonable man of ordinary prudence acting under normal circumstances, without negligence or inaction or want of bona fides, from furnishing the return in time . 7.Subsequently, A Division Bench of the Delhi High Court in its judgment in Deputy Commissioner of Income-Tax v. Adinath Industries [(252) ITR 471] held thus: Reasonable cause, as applied to human actions is that which would constrain a person of average intelligence and ordinary prudence. The expression reasonable is not susceptible of a clear and precise definition; for an attempt to give a specific mean ing to the word reasonable is trying to count what is not number and measure what is not space. It can be described as rational according to the dictates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , could entertain a belief that they were not liable to deduct tax at source on the interest paid to the firm. This, therefore, means that the alleged belief of the assessees is certainly not one a reasonable person would have entertained nor such persons would have acted in the same way given the totality of circumstances. 10.Therefore, we cannot accept the plea that the belief allegedly entertained by the assessees was a bonafide one or could be accepted as a reasonable cause as provided under Section 273B. 11.In effect, the defence put forward by the assessees is one of ignorance of law. Ignorance of law, it is trite, is no excuse in law and if that be so, ignorance of law cannot also be a reasonable cause as contemplated under Section 273B. This view has been taken by the Apex Court in Sitaram Ramcharan v. M.N.Nagrashana [AIR 1960 SC 260]. 12.The learned counsel for the assessees contended that Section 194A excludes Rsperson' from the liability to deduct tax at source. Therefore, according to the learned counsel, the very proceedings against the assessees is untenable. We are unable to accept this contention. First of all, this contention was not raised before any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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