TMI Blog2017 (9) TMI 1233X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that in view of the clear language of Section 271C of the Act, the assessee was liable to pay the penalty unless he could plead and prove that he was prevented from deducting the tax at source with reasonable cause. In the absence of any such pleading of proof, the penalty under Section 271C is liable to be imposed on the assessee. We find that the order of the Tribunal cancelling the penalty imposed on the assessee is unsustainable. The questions of law are answered in favour of the Revenue - ITA No. 27 of 2012 - - - Dated:- 30-8-2017 - Antony Dominic And Anu Sivaraman, JJ. For the Petitioner : Sri. Jose Joseph For the Respondent : Sri. T. M. Sreedharan JUDGMENT Anu Sivaraman, J. This appeal is preferred by the Revenue against the order of Income Tax Appellate Tribnunal, Cochin Bench dated 28.2.2011 in ITA.No.280/Coch/2011. The matter arises from an order of penalty under Section 271C of the Income Tax Act (for short, 'the Act') for non deduction of TDS on interest paid to sister concerns in terms of Section 194A of the Act. The assessment year in question was 2014-2015. The Income Tax Officer, by order dated 25.2.2009, had found that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side the orders imposing penalty and the appellate order confirming the same. 3. The Revenue is in appeal raising the following substantial questions of law: 1. Whether, on the facts and in the circumstances of the case and penalty being a civil liability (306 ITR 277) the Tribunal is right in law in deleting the penalty for the inconsistent and militating reasons stated in the order? 2. Whether, on the facts and in the circumstances of the case is not the submission before or the ITAT (Annexure D) the recipient concerns have already included this interest amount and paid tax on the same militating and inconsistent with the submission: we were aware that the recipient sister concern will be declaring such interest income in their return of income and is not the conclusion of reasonableness based on such and other surmises and baseless facts perverse and unbecoming of a quasi judicial fact finding authority? Whether on the facts and in the circumstances of the case- (i)Are not the above inconsistent explanations including no loss of revenue against the statute and the decision of the Supreme Court in 261 ITR 367 wherein Supreme Court observed that failure t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question of loss to the Revenue would not arise for consideration in a case of this nature, since the liability to deduct tax under Section 194A of the Act is a strict liability. A reading of the wordings of Section 271C would make it clear that there is no discretion vested in the Assessing Officer when a finding that tax has not been deducted at source as provided in Section 194A of the Act is entered. The only way out available to the assessee in the case of an admitted failure to deduct tax at source would be to prove a reasonable cause for such failure under Section 273B of the Act. Unless the assessee had pleaded and proven a reasonable cause for not deducting tax at source, the liability for penalty would be the inescapable consequence, it is contended. The learned Senior Counsel places reliance on the judgments of this Court in ITA 51 of 2013 and ITA.Nos.139 and 177 of 2013 and the decisions of the Apex Court in Chairman, SEBI v. Shriram Mutual Fund and another [(2006) 5 SCC 361] and Union of India v. Dharamendra Textiles Processors and others [(2008) 13 SCC 369] in support of his contention. It is contended that the decision of the Apex Court in Hindustan Steel's cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... celled the penalty levied under Section 271C on the specific finding that it is necessary to establish that there was contumacious conduct on the part of the assessee for the imposition of penalty under Section 271(1)(c) of the Act. Referring to the decisions reported in Income Tax Commissioner v. Itochu Corporation [268 ITR 172 (Del)] and CIT v. Mitsui Company Ltd. [272 ITR 545] and a decision of the ITAT, Delhi Bench, the appeal was allowed and the penalty was cancelled. The further appeal by the Revenue was rejected by the High Court on the ground that no substantial question of law was raised. The Apex Court also dismissed the Civil Appeal finding that there is no substantial question of law and that the facts and law had been properly assessed by the Commissioner of Income Tax. This decision of the Apex Court is relied upon to contend that the position that contumacious conduct is necessary before a penalty can be imposed has been upheld by the Apex Court referring to the self same provision of law. 7. Having considered the contentions advanced in depth, we are of the opinion that the issue raised has been held in favour of the Revenue in ITA.No.57 of 2007. With respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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