9911796707
TMI Blog2015 (12) TMI 1537X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act was conducted at the business premises of the assessee on 11-02-2009, during the course of which it was noticed that the assessee had made payments of transmission charges to PGCIL without deducting tax at source. The A.O., after detailed discussion in the assessment order, imposed penalty u/s 271C of the Act, amounting to Rs. 1,36,00,187, 2,48,13,453/-, 2,76,67,625/- and 5,71,017 for F.Y. 2006-07, 2007-08, 2008-09 and 2009-10 after finding that there was no reasonable cause for the deductor assessee not to deduct tax at source. 3. The matter was taken up in appeal before the Ld. CIT(A), where the assessee argued that it had reasonable cause for not deducting the tax at source and that since it was not treated as an assessee in default u/s 201 of the Act, penalty u/s 271C could not be levied. Ld. CIT(A) rejected the contention of the assessee and dismissed the appeal of the assessee, upholding the levy of penalty u/s 271C by holding at para 5.1 to 5.4 of its order as follows : "5.1 The main issue in this case is whether penalty u/s 271C is imposable in the fact and circumstances of the assessee's case. Assessee has taken additional ground during appellate proceedings th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was under honest belief that since the transmission charges are regulated by CERC, the assessee was not to deduct TDS on transmission charges. This argument cannot be accepted as reasonable cause for failure to deduct. Keeping in view, above facts, the contention of assessee is not accepted and appeal is dismissed. 4. Aggrieved by the same the assessee filed the present appeal before us taking the following grounds: 1. That order passed u/s 250(6) of the Income Tax Act, 1961 by the Ld. Commissioner of Income Tax (Appeals), Shimla is against law and facts on the file in as much she was not justified to uphold the action of the Ld. Assessing Officer in imposing penalty u/s 271C at Rs. 1,36,00,187/- as no such penalty was exigible in the facts and circumstances of the case. 2. That the Ld. CIT(A) gravely erred in holding that the penalty levied was not barred by limitation. 5. In Ground No. 1 the assessee has agitated the levy of penalty under section 271C. 6. Before us Ld. AR reiterated the contentions raised before the Ld. CIT(A) and argued that no penalty u/s 271C was leviable since the assessee had not been treated as an assessee in default for the purpose of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the authorities below. 9. The undisputed facts emerging in the present case are that the assessee was liable to deduct tax at source but had failed to do so on payments made to PGCIL during the impugned F.Y. as follows : Financial Year TDS not deducted on payments made to PGCIL 2006-07 1,36,00,187/- 2007-08 2,48,13,453/- 2008-09 2,76,67,625/- 2009-10 5,71,017 Admittedly PGCIL was found to have paid taxes on its income received from the assessee and hence the assessee was not treated as an assessee in default u/s 201 of the Act by the ITO(TDS) vide his order dt. 30/03/2010 and affirmed by the Hon'ble Tribunal in its order dt. 28/02/2012 In the backdrop of the above facts it has now to be seen whether the assesee is liable to penalty u/s 271C of the Income Tax Act. 10. For a better understanding of the issue we hereby reproduce the provision of section 271C of the Income Tax Act, 1961. 271 C. (1) If any person fails to - (a) deduct the whole or any part of the tax as required by or under the provisions of Chapter XVII-B; or (b) pay the whole or any part of the tax as required by or under - (i) sub-section (2) of section 115-O; or (ii) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not in default in respect of the amounts of TDS to be deducted, then there cannot be any scope for levying penalty u/s 271C of the Act. As in this case the amount of tax has been paid by the recipient of the income. Being so, the provision of section 271C cannot be applied to the assessee's case as these provisions clearly state that if any person fails to deduct whole or any part of the tax as required under the provisions of Chapter XVII B , then such person shall be liable to pay by way of penalty an amount equal to the amount of tax which such person failed to deduct or pay as above said. Being so, in the present case the assessee being not in default in respect of the amount of tax itself, there cannot be any levy of penalty u/s 271C, more so, where there was a reasonable cause for not deducting the TDS on the payment made by the assessee. Considering the cumulative effect of all the facts and circumstances of the case, we are inclined to confirm deletion of penalty by the CIT(A)." In view of the same we hold that no penalty u/s 271(C) could be levied in the present case. Moreover the fact that the tax on the impugned sums had been reimbursed to PGCIL has not been controver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son or the assessee for failure to deduct tax at source if such person or the assessee proves that there was a reasonable cause for the said failure. Therefore, the liability to levy of penalty can be fastened only on the person who do not have good and sufficient reason for not deducting tax at source. Only those persons will be liable to penalty who do not have good and sufficient reason for not deducting the tax. In view of the above we hold that the assessee not being in default in respect of the amount of tax itself, there cannot be any levy of penalty u/s 271C, more so where there was a reasonable cause for not deducting the TDS on the payment made. 12. We therefore delete the penalty levied u/s 271C and allow this ground of appeal of the assessee for the respective years. 13. In Ground No. 2 the assessee has raised the plea that the penalty levied was barred by limitation. Since the penalty levied under section 271C has been deleted by us, this ground remains academic in nature and we do not consider it fit to adjudicate upon the same. 14. In the result this ground of appeal of the assessee is dismissed. 15. In the result, all the appeals of the assessee are partly all ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
