TMI Blog2016 (4) TMI 1044X X X X Extracts X X X X X X X X Extracts X X X X ..... bove mentioned facts, on careful consideration of submissions of the assessee the ld. CIT(A) rightly held that imposition of penalty u/s 271(C) of the Act is not justified. - Decided in favour of assessee - ITA No. 634/Del /2010 - - - Dated:- 18-3-2016 - Shri Chandra Mohan Garg, Judicial Member And Shri O. P. Kant, Accountant Member For the Petitioner : Shri 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst proviso to section 275(1)(a) of the Act penalty is leviable. The ld. DR vehemently argued that the ld. CIT(A) granted relief to the assessee without any legal and 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 excuse. To support this contention, the ld. DR placed reliance on the judgment of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad 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 in the accounts as commission and worked out the shortfall of TDS at ₹ 27,78,033/- and interest thereon at ₹ 14,89,631/- raising a demand of ₹ 42,67,664/- u/s 201(1)/ 201(1A) of the IT Act. Penalty proceedings u/s. 271(1)(C) were also initiated. The demand was paid by the assessee, however, the imposition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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. In spite of this fact, the assessee has already paid TDS and interest and the respective party accounts were debited by the said amounts as no commission was paid to them and the TDS refund received by them was undue benefit received by them. The amount of TDS by the assessee being a benefit to the agents was debited to their respective accounts and other liabilities due to them were reduced to the extent of TDS deposited on their account with Government. After considering the facts and circumstances of the case and the subsequent event ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to show that there was a number of reasonable causes before the assessee for alleged failure on which penalty has been imposed. 7. The ld. CIT-DR could not controvert the aforementioned finding and facts and appreciation of explanation of the assessee. On the basis of the foregoing discussions we are inclined to hold that there was no valid reason before the AO for imposing penalty on the payments which were received back when the sales could not be materialized and the assessee was in loss as the TDS certificates issued to the respective payees fetched tax credit to the sub agents/brokers for which they were not entitled. The ld. CIT(A) was quite justified and correct in deleting the baseless penalty and thus we are unable to see any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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