TMI Blog2010 (4) TMI 1103X X X X Extracts X X X X X X X X Extracts X X X X ..... law in relying on the decision of the Supreme Court, in the case of Hindustan Voca Cola Beverages (P) Ltd. (293 ITR 226) which is not relevant to the facts and circumstances of the case. 5. The CIT(A) has failed to follow the ratio of the decision of the Supreme Court in the case of Hindustan Steel Ltd. Vs. State of Orissa (83 ITR 26). 6. The CIT(A) has erred in holding that initiation of penalty proceedings are not barred by limitation. He ignored the judicial decisions in this regard. He has not noticed the decision of the Special Bench of the ITAT in the case of Mahindra Mahindra Ltd. 7. The CIT(A) is not correct in applying the provisions of sec. 292BB to the facts of the case. Those provisions are applicable only for assessment proceedings and not penalty proceedings. 8. For these and any other grounds that may be urged at before the date of hearing it is prayed that the penalty u/s 271 C be deleted. 3. Brief facts of the case are that the assessee is in appeal against the confirmation of penalty by CIT(A) levied u/s 271C Income Tax Act at ₹ 3,36,085/- and ₹ 6,94,733/- for the assessment year 2001-02 and 2002-03 respectively for not deducting incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling the return and not after discovery by the department and the payee is a sister concern of the assessee. It was submitted by the assesee s counsel that the Addl. CIT was not right in levying penalty in view of the facts stated by the assessing officer in his order u/s 201(1A) that interest income was admitted in the returns filed by the payee. Learned counsel for the assessee submitted that the learned CIT(A) erred in placing reliance on the judgement of the Supreme Court in the case of Hindustan Coca Cola Beverages Pvt. Ltd. (293 ITR 226) and he submitted that judgement in the case of ITO Vs. Muttoot Financiers (286 ITR 71) (AT) (Cochin) is applicable to the facts of the case. He submitted that this decision of Cochin Bench is directly on 271C while the Supreme Court decision is on non-chargeability of the amount of deducted tax u/s 201, where the recipient had paid the tax in regular assessment proceedings. The Supreme Court adverted to CBDT s Circular which enjoined that demand u/s 201 be not raised, in support of their decision reusing to pronounce on whether demand u/s 201 could be made where the tax had been paid by the recipient. He submitted that, the decision had nothi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax and interest thereon. c) The tax and interest were paid in the usual course under the provisions of the Act by the payees, sister-concerns, without and before any demand for TDS u/s 201(1) of 201(1A) as made. Wipro GE Medical System Ltd. V. ITO (30 SOT 627) (Bang) and India Nissin Foods Ltd. V. JCIT 3 sot 495 (Bang) are applicable. d) This is the first year of existence of the assessee-company and the omission to effect TDS was inadvertent but no intentional (Mahadeswara Movies v. CIT (144 ITR 127)(Kar). e) Without prejudice to the above submission, initiation of 201(1A) proceedings and the consequential penalty proceedings are time-barred in view of the judgement of the Delhi Bench of Tribunal in the case of Mistubishi Corporation Vs. DCIT (86 TTJ 139) and also he relied judgement in the case of Sahara Airlines Ltd. Vs. DCIT (79 TTJ 268). 5. On the other hand, the learned departmental representative submitted that the learned CIT(A) was right in observing that the default on the part of the asessee for failure to deduct tax u/s 194A on the interest payments to its sister concerns came to light only after survey operations u/s 133A of the Act. That the default is sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the six months of date of initiation. Further, he submitted that the assessee has not challenged order passed u/s 201(1) and 201(1A) and which were duly accepted by the assessee. As such, it cannot challenge the validity of the penalty order on time limit. He relied on the order of the Tribunal Delhi Bench in the case of Thai Airways International Public Company Ltd. Vs. ACIT (2 SOT 389) wherein it was held that there is no time limit laid down under the provisions of the IT Act passing order u/s 201(1) and 201(1A) of the IT Act. 6. We have heard both the parties and perused the material on record. We have carefully gone through the provisions of section 194A, 201(1), 201(1A), 271C and 273B of the IT Act. The assessee not disputed its liability to deduct tax u/s 194A of the IT Act. The only argument of the assessee counsel is that the penalty cannot be levied because the tax liability in the meantime has been discharged by the deductee. In this connection, a reference to a judgement of Hon ble Supreme Court in the case of Coca Cola Beverages (P) Ltd. Vs. CIT (293 ITR 226). In support of the contention that when the liability of the tax on the part of the deductee has been disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t source once the amounty of tax has already been paid by the assessee deductee. The decision of the Coordinate Bench in the case of Wipro GE Medical Systems Ltd. Vs. ITO (2005) 3 SOT 627 (Bangalore) and Indo Nissain Foods Ltd. Vs. JCIT 3 SOT 495 (Bangalore) would not be relevant in the light of the decision of the Hon ble Supreme Court in the case of Hindustan Coca Cola Beverages (P) Ltd. (supra). Therefore, the assessee s contention that no penalty u/s 271C should be imposed for the assessee s alleged default in not deducting the tax at source since the tax liability has already been discharged by the assessee deductee is rejected. 8. The assessee also taken a plea that assessee failure to effect TDS was inadvertent and not intentional and that there were no mala fides in not deducting the TDS. It was also stated by the Authorized Representative of the assessee that the existence of reasonable cause can also be noticed from the fact that the payee paid the tax due which covers interest income received from the assessee in due time while filing the return and not after discovery by the Department. And the payee is a sister concern of the assessee. Further it was submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
