TMI Blog2018 (12) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... issed. - I.T.A. No. 5233/DEL/2016 - - - Dated:- 29-11-2018 - Shri N. K. Billaiya, Accountant Member And Ms Suchitra Kamble, Judicial Member For the Appellant : Sh. P. S. Kashyap, CA For the Respondent : Sh. S. M. Pandey Sr (DR) ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by the assessee against the order dated 20/7/2016 passed by CIT(A)-41, New Delhi for Assessment Year 2008-09. 2. The grounds of appeal are as under:- 1. That on facts and in law imposition of penalty under section 271C for ₹ 10,58,313/- is totally wrong, unjustified and illegal. The appellant company is not liable to penalty u/s 271C on the following grounds: i) That the Ld CIT (A) has not considered the various facts b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which public are substantially interested. The assessee Company is a Sick Industrial Unit duly registered with BIFR. The Ld. AR further submitted that non deduction of TDS on cane commission was on account of the issue being litigated by the assessee and the Indian Sugar Manufacturers Association by way of SLP in the Hon'ble Supreme Court. The amount was of contingent nature. The amount was reversed in subsequent years which are on record. The Ld. AR further submitted that non deduction of TDS on account of interest payable to Moderate Leasing and Capital Services Ltd. was on account of bonafide belief that no TDS is to be deducted in view of certificate u/s 197(1) of the Income Tax Act for NIL deduction. The Ld. AR submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee was under bonafide belief that no TDS is to be deducted on interest paid to NDFC s as paid to banks. The Tribunal held that the assessee was not bonafide belief that no TDS is to be deducted on interest payment to NBFC as in case of banks, hence penalty order u/s 271C is not to be levied. Thus, the Ld. AR submitted that the assessee s case is identical as the assessee was under bonafide belief that due to the certificate obtained u/s 197 (1) of the Act, which was for NIL deduction for opening balance, no TDS is to be deducted during the year. The Ld. AR further relied upon the decision in case of Wipro GE Medical Systems Ltd. Vs. ITO (2005) 3 SOT 627 (Bang) wherein it is held that where tax has already been paid by the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late the amount of penalty imposable u/s 271C accordingly. 5.8.3 The explanation that the deductee has paid tax on the receipt and that there is no loss of revenue is not acceptable. 5.8 Claim of the appellant that it is sick company, and that it had suo moto added back the amounts on which tax had not been deducted cannot come to the defense of the appellant company. The appellant is a loss making company declaring net loss. Even after adding back the amount u/s 40a(ia) it had shown net loss and there was no tax payable by the appellant. Hence, this action cannot absolve the appellant form the responsibility of deduction of tax. The appellant has claimed that no order u/s 201(1) has been passed in its case, holding it assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er accordingly. The provisions of Section 271C is as under:- 271C. (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 second proviso to section 194B, Then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay as aforesaid. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner. From the perusal of the Section 271C, if there is a failure to deduct tax at source then such person is l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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