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The I.T.O, New Delhi Versus M/s Cincom Systems India (P) Ltd.

2016 (4) TMI 1044 - ITAT DELHI

Penalty levied u/s 271C - non TDS u/s 194H on commission/discount/handling charges paid to sub agents - Held that:- . CIT(A) considered the submissions, reasons and the explanation of the assessee and then noted that the sale in respect of which commission was payable did not materialize and the commissions was also written back. The ld. CIT(A) also observed this fact that the assessee has already paid the TDS and interest thereon and respective party accounts were debited by the said amounts as .....

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ri Ved Jain, CA For the Respondent : Ms. Rakhi Vimal, Sr. DR ORDER Per Chandra Mohan Garg, Judicial Member This appeal filed by the revenue is directed against the order of the CIT(A)-XXX, Delhi, dated 20/11/2009 for AY 2001-02. 2. The grounds raised by the Revenue read as under: On the facts and circumstances of the case as well as the in law, the ld. CIT(A) has erred in : 1. deleting the penalty levied u/s 271C of I. T. Act, 1961 amounting to ₹ 27,78,033/- being 100% of tax not deducted .....

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ground for such relief. 3. holding that the imposition of penalty u/s 271C is not justified as it would amount to penalizing the assessee for an omission which did not cause any loss of revenue. 3. We have heard the rival submissions and have perused the relevant material on record before us, inter alia, quantum assessment order and first appellate order, penalty order and the impugned order in this appeal paper book and the assessee spread over 190 pages. The ld. DR supporting the action of the .....

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justified basis. The ld. DR has drawn our attention para 3 at page 3 of the penalty order and submitted that while the assessee is crediting the respective account of sub agents, then it was obligatory on the part of the assessee to deduct TDS and deposit the same to the exchequer, otherwise the assessee should have made provisions of expenses instead of crediting the same to the accounts of the subagents/ bookers. The ld. CIT-DR contended that the ignorance of legal provisions are not an excus .....

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ee had paid short fall of TDS and interest thereon thus penalty cannot be imposed merely on technical issues. The ld. AR further submitted that the assessee was under bonafide belief that TDS was to be made at the time of payment of commission and not at the time of booking and crediting the expenditure to the respective recipients accounts. The ld. AR also pointed out the A.Y 2001-02 was the first year of TDS provisions and the assessee was a bit confused hence some bonafide omissions happened .....

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mises of the assessee company and it was found that the assessee company had shown expenditure of ₹ 9.30 crores as agency commission for financial years 01-02 but in its TDS return the assessee company was showing commission payment amounting to ₹ 26,37,000/- only on which TDS u/s. 194H of the IT Act was made. In respect of the remaining commission due to the agents no TDS was made. The AO held that TDS should have been deducted on the total expenditure of ₹ 9.30 crores booked .....

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e of booking/crediting the expenditure. He has given the following reasons to support his plea of bonafide belief (i) That it was the first year of the inactment of the relevant provision and the assessee was a bit confused, (ii) That it was a policy of the company in the past that TDS was deducted when payment of commission was made because normally there were huge bad debts in sales and it was felt that if TDS is made at the time of crediting the commission expenses and TDS certificates are al .....

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was pointed out to the assessee during the survey the assessee made the payment of TDS as well as interest and it is only the penalty which is being contested by the appellant. I find that the above mentioned facts prove the bonafide credentials of the appellant. In fact, at this point of time, it stands established that the sale in respect of which commission was payable did not materialize and the commission was also written back. There cannot be any tax liability in respect of such commission .....

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stances of the case and the subsequent events, I am of the view that imposition of penalty u/s.271C is not justified in this case as it will amount to penalizing the assessee for an omission which did not cause any loss of revenue. I therefore cancel the penalty. 6. On logical analysis of the operative part of the first appellate order, we observe that the ld. CIT(A) considered the submissions, reasons and the explanation of the assessee and then noted that the sale in respect of which commissio .....

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