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2016 (2) TMI 122 - ITAT AHMEDABAD

2016 (2) TMI 122 - ITAT AHMEDABAD - TMI - Penalty u/s.272A(2)(k) - Tax Collection at Source (TCS) - Held that:- The assessee was not aware of the provisions of TCS deduction and deposit and filing of quarterly returns. The assessee first came to know upon survey on its business premises and thereafter immediately deposited TCS along with interest and thus, it is technical and venial breach of provision causing no loss to Revenue. We are therefore of the considered view that the penalty levied u/ .....

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by allowing the appeal of the assessee.- Decided in favour of assessee - ITA. Nos.2463 to 2467/Ahd/2015 & 2486 to 2492/Ahd/2015 - Dated:- 9-12-2015 - SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER For The Appellant : Appellant : Shri D. K. Parikh, A.R. For The Respondent : Shri James Kurian, Sr. ORDER PER RAJESH KUMAR, A.M: These appeals filed by the assessee are against the orders of CIT(A)-8, Ahmedabad of various dates for all the above assessment years. .....

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in the ground of appeal relates to confirmation of penalty by CIT(A) of ₹ 5,20,400/- levied u/s.272A(2)(k) by Additional Commissioner of Income Tax, TDS Range, Ahmedabad. 3. The brief facts of the case are that the assessee company was engaged in the business of laying of cross country pipelines and operating solar power plants. A survey was carried out at the business premises of assessee on 13.11.2013 and it was found by survey team that assessee was not filing quarterly statement in For .....

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u/s.272A(2)(k) of the Act. The A.O. calculated the defaults 5204 days and imposed penalty @ 100/- per day total amounting to ₹ 5,20,400/- as mentioned in para 3 of the penalty order. 4. Ld. CIT(A) confirmed the penalty by holding that the assessee was rightly declared assessee in default by the A.O.. This view was also confirmed in the case of Indo Nissin Food Ltd. vs. CIT (2004) 3 SOT 495 (Bangalore), wherein it has been held that if taxes were paid voluntarily before detection by the de .....

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isions of the Act with regard to tax collection at source u/s.206C of the Act from the scrap sale. The assessee came to know about this TCS provision only when survey was conducted on the business premises of the assessee. The assessee fully cooperated with the team and paid the TCS due along with interest till the date of deposit from the assessee s own pocket as it was not possible to collect the tax from the scrap buyers. The ld. A.R. while advancing his argument made three fold submissions, .....

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.272A(2)(k) was wrongly levied. The A.R. placed reliance on decision in M/s. Porewal Creative Vision Pvt. Ltd. vs. ACIT in ITA No. 5556 & 5557/Mum/2009, A.Y. 06-07 & 07-08, in which it was held that quarterly statement (similar provision to Section 200(3) for TDS Form No.26Q) can be filed only after payment of tax to the Central Government and for delay or default to collect tax there are other provisions u/s.206C(6A) and 206C(7) and therefore, penalty was not leviable. (ii). Even if, th .....

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CIT 244 ITR 417 (Guj.), which was followed by the Jurisdictional Ahmedabad ITAT in ACIT vs. Lok Prakashan Ltd. in ITA No. 2815/Ahd/2009 by following the judgment of Hon ble Apex Court in the case of Motilal Padampat Sugar Mills 118 ITR 326 & Harsiddh Construction Pvt. Ltd. (Supra) as well as Hindustan Steel Ltd. 83 ITR 26 (SC). & (iii). Ld. A.R. also made alternate submission that the penalty u/s.272A(2)(k) could not exceed the amount of tax collectible on the scrap sale and on this sco .....

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y was conducted on the assessee s business premises on 13.11.2013 and it was found that the assessee had defaulted in not collecting TCS on the scrap sales and depositing the same into the Government Treasury. In the present case, the penalty has been imposed under the provision of Section 272A(2)(k) by the ld. Addl. CIT. The relevant extract of Section 272A(2)(k) is reproduced as under: (2) If any person fails- xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxx .....

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declaration mentioned in section 197A, a certificate as required by section 203 and] returns under sections 206 and 206C [and [statements under sub-section (2A) or sub-section (3) of section 200 or the proviso to sub-section (3) or under sub-section (3A) of section 206C]] shall not exceed the amount of tax deductible or collectible, as the case may be;] The relevant extracts of provision of Section 206C sub-section 3are relevant and referred to Section 272A(2)(k) and therefore are reproduced as .....

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ements for such period as may be prescribed] and deliver or cause to be delivered to the prescribed income-tax authority, or the person authorized by such authority, such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed.] A close perusal of the above provisions of Section 271A(2)(k) reveals that a penalty under this section can only be imposed if a person fails to deliver or cause to be delivered a copy of statement i .....

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hority on or before 15th day of next month after the close of the quarter for the first three quarter ending on 30th June, 30th September, 31st December and 15th May for the last quarter ending on 31st March. We find that the assessee was not aware of the provision of TCS on sale of scrap and came to know only upon survey by the department. We also note that immediately thereafter the assessee deposited amount of TCS alongwith interest. We are of the considered view that the penalty cannot be le .....

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was also held in the said decision that if the assessee fails to deduct and deposit TDS, there are other provisions for ensuring compliance i.e. if the assessee fails to deduct tax at source or after deducting fails to pay to the Central Government, the assessee is deemed to be in default u/s.201(1) and is liable of penalty and the assessee is also liable to pay interest for the period of default, till the payment of tax u/s.201(1A). Since, the TCS alongwith interest was paid to the Central Gove .....

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of the provision of Section 273B of the Act, the penalty was rightly deleted. The delay in filing the quarterly statement was certainly a default on the part of assessee which attracted penalty u/s.272A(2)(k) of the Act, unless the assessee shows a reasonable cause within the meaning of Section 273B of the Act. Thus, we are required to adjudicate whether on facts of the instant case the cause which has been shown by the assessee constitutes a reasonable cause u/s273B of the Act or not. The find .....

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rial before us to controvert the above finding of the Learned Commissioner of Income -tax (Appeals) and to show that the assessee was earlier aware of this requirement of law. Further, on the facts of the case that the assessee has paid the tax within the prescribed time, itself shows that ordinarlily there would not be any benefit to the assessee for which it would deliberately delay the submission of the quarterly statements. Further, the contention of the Revenue that ignorance of law cannot .....

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ras High Court in the case of CIT vs. K P V S Mohammad Rowther & Co. 232 ITR 176 (Mad) held as under: Ignorance of law can be a reasonable cause for the failure and deletion of penalty was justified. Further, it is observed that the Revenue could not bring any material before us to show that any loss to the Revenue was caused because of the aforesaid delay in furnishing of the quarterly statements by the assessee. On the above facts, we do not find any error in the findings of the Learned Co .....

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earned Commissioner of Income -tax (Appeals). Therefore, the appeal of the Revenue is dismissed. In the case before us, the assessee was not aware of the provisions of TCS deduction and deposit and filing of quarterly returns. The assessee first came to know upon survey on its business premises and thereafter immediately deposited TCS along with interest and thus, it is technical and venial breach of provision causing no loss to Revenue. We are therefore of the considered view in the light of ab .....

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as a result, the appeals of the assessee are allowed by deleting the penalty for A.Y. 2010- 11 ₹ 3,74,400/-, for A.Y. 2011-12 ₹ 2,28,400/- and for A.Y. 2012-13 ₹ 82,300/-. The A.O. is directed accordingly. ITA No.2466/Mum/2015 for A.Y. 2011-12 9. The issue raised in the ground of appeal in ITA No. 2466/Ahd/15 for A.Y. 2011-12 is regarding TDS whereas the issue as decided by us in ITA No.2463/Ahd/2015 for A.Y. 2009-10 is regarding TCS and therefore, our decision in the said ITA .....

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ppeal is against confirmation of penalty by CIT(A) levied u/s.271CA. 12. During the course of survey, it was found that TCS was not collected on the sale of scrap of ₹ 25,27,204/- and therefore, the DCIT, TDS Circle, Ahmedabad vide order dated 20.11.2013 passed u/s.206C(1) of the Act determined the demand at ₹ 25,272/- on account of default of TCS and proposed levy of penalty u/s.271CA vide letter dated 20.11.2013. The assessee was issued show cause notices dated 21.01.2014 and 08.07 .....

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IT(A) by holding that this view was also confirmed in the case of Indo Nissin Food Ltd. vs. CIT (2004) 3 SOT 495 (Bangalore), wherein it has been held that if taxes were paid voluntarily before detection by the department, the same would constitute reasonable cause. In the case of the appellant, the TCS was deposited after default was detected during the survey. Accordingly, penalty levied by the Addl. CIT was confirmed. 14. The ld. A.R. submitted that the assessee was unaware of the provisions .....

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f the assessee was a technical and venial breach which resulted in to the no loss to the Revenue as the TCS was paid along with interest thereon till the date of deposit and therefore, penalty could not be imposed. The ld. Counsel placed reliance on the decision in the case of Khodidas Family Trust vs. ACIT in ITA No.1478/Ahd/2009 , DCIT vs. Nuclear Power Corporation Of India Ltd. in ITA Nos. 625 to 627/Ahd/2013 Harsiddh Construction Pvt. Ltd. vs. CIT 244 ITR 417 (Guj.), 15. The ld. D.R., on the .....

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