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2016 (6) TMI 888 - ITAT CHANDIGARH

2016 (6) TMI 888 - ITAT CHANDIGARH - TMI - Penalty u/s 271CA - waiver of penatly u/s 273B - failure with respect to TCS liability - Held that:- Levy of penalty under section 271C of the Income-tax Act, 1961, for failure To deduct tax at source, is not automatic. In order to bring in application of Section 271C, in the backdrop of the overriding non obstante clause in section 273B, absence of reasonable cause, existence of which has to be established, is A sine qua non. Before levying penalty, th .....

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- DELHI High Court ] - Decided in favour of assessee - ITA Nos. 337 & 338/Chd/2016, C.O.Nos.10 & 11/Chd/2016 - Dated:- 21-6-2016 - Shri George George K. Judicial Member For the Assessee : Shri N. K. Shahi For the Department : Shri Manjit Singh, DR ORDER These appeals at the instance of the Revenue and the Cross Objections preferred by the assessee arise out of the consolidated order of the Commissioner of Income Tax (Appeals), Patiala dated 28.1.2016 relating to assessment years 2011-2012 and 20 .....

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stablishes that the assessee is not in default as far as TCS is concerned. 2. The Ld.CIT (A) has erred in deleting penalty imposed u/s 271 CA r.w.s 274 of the I.T. Act, 1961 as he himself held that goods sold by the assessee are covered in the definition of 'Scrap' in the terms of the Explanation (b) to the Section 206C of the I.T. Act, 1961 and its sale is liable for TCS not only at the first stage but also at each stage of sale as provided in section 206C of the IT. Act, 1961. 3. The L .....

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ase pertaining to the grounds raised by the Revenue are as follows : 3.1) The assessee is an individual. He is running the business of purchase and sale of iron scrap. When the assessee makes purchase of iron scrap , the tax was collected by the parties from whom the assessee made purchases. Further, when the iron scrap was sold by the assessee, no tax was collected at source under section 206(1) of the Income Tax Act, 1961 (in short 'the Act'). Therefore, penalty proceedings under secti .....

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at penalty cannot be levied under section 271CA of the Act. For the above provision, the assessee relied on the order of the Bangalore Bench of the Tribunal in the case of Wipro GE Medical Systems Ltd. (2005) 24CCH 1 (Bang Trib) dated 14.10.2013. 3.3) However, the JCIT(TDS) rejected the objection raised by the assessee and imposed the penalty amounting to ₹ 9,36,953/- for assessment year 2011-12 and ₹ 10,55,430/- for assessment year 2012-13. 4) Against the imposition of penalty under .....

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ds no 5, 6, 7 and 9 raised by the appellant, as far assessment order is concerned there is no doubt that the assessing officer has stated all the necessary facts along with explanations and reasons for non acceptance of appellant's plea. It is an admitted fact that the appellant has furnished complete details of sales of scrap made to various traders along with copies of their income tax returns of the relevant assessment year evidencing the payment of due taxes on their income by the respec .....

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ction clearly establishes that she has not treated the appellant as assessee in default as far TCS is concerned It is an accepted legal position that where the purchaser has paid the tax on his income, the revenue can only charge interest on the tax not so collected u/s 206(7) of the Act, till the filling of ITR by him. I have considered the case laws referred by the appellant and am of firm view that the judgment of Hon'ble Income Tax Appellate tribunal delivered in the case of WIPRO GE Med .....

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. (supra), wherein a number of decisions were relied upon by the Tribunal on this issue. In the case of the Azadi Bachao Andolan (supra), the Hon'ble Delhi High Court has held that levy of penalty under s. 271C for failure to deduct tax at source is not automatic. Absence of reasonable cause has to be established before levy of such penalty." As aforesaid, the facts of the present case are covered by the above judgment. The JOT (TDS), Chandigarh has not followed it on the ground that th .....

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es vs CIT (2011) 202 Taxman 62Q {Karn) which held that in case appellant has not collected the tax u/s 206C from buyers, it is held that to impose penalty for non collection of tax at source, it is necessary to find out whether buyer has paid tax in accordance with the provisions of the Act and only when the buyer has not paid the tax then the authorities can proceed against the appellant, who was under obligation to collect tax at source and remit the same to Govt. account. Accordingly, I accep .....

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sed off the same as non-est. 5) The Revenue being aggrieved is in appeal before us. At the very outset, the learned counsel for the assessee submitted that the issue in question has been heard by the Tribunal in the case of ITO (TDS), Patiala Vs. Shri Om Parksh Gupta (HUF), Mandi Gobindgarh in ITA Nos.341 & 342/Chd/2016 vide order dated 20.6.2016. 5.1) The learned D.R. agreed that identical issue has been heard by the Tribunal in the case of ITO (TDS), Patiala Vs. Shri Om Parksh Gupta (HUF), .....

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dings of the Tribunal in the above case read as under : 5. After considering rival submissions, I am not inclined to interfere with the order of the ld. CIT( Appeals) in canceling the penalty. The ld. CIT( Appeals) has recorded specific finding off act that assessee furnished complete details of sales of scrap made to various traders alongwith copies of their Income Tax returns of relevant assessment year proving that payment of due taxes have been made by the respective purchasers. It was also .....

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enalty when sufficient compliance was made because of the tax demand had already been paid. Since taxes have already been paid by the buyers and there was no tax demand remained. Therefore, ld. CIT( Appeals) correctly held that there was reasonable cause for failure to comply with provisions of law. Further, the assessee since beginning has been claiming that assessee is not covered by the definition of scrap in terms of Section 206 C of the Act. The explanation of the assessee was supported by .....

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the assessee. Hon'ble Delhi High Court in the case of Wood ward Governor India P. Ltd. Vs CIT 253 ITR 745 held as under : Levy of penalty under section 271C of the Income-tax Act, 1961, for failure To deduct tax at source, is not automatic. In order to bring in application of Section 271C, in the backdrop of the overriding non obstante clause in section 273B, absence of reasonable cause, existence of which has to be established, is A sine qua non. Before levying penalty, the concerned offic .....

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