TMI Blog2019 (4) TMI 1371X X X X Extracts X X X X X X X X Extracts X X X X ..... and 20% of course fees with the service provider, the said payment seems to be more in the nature of revenue sharing rather than payment of commission for services rendered by the service provider. Therefore, it cannot be held conclusively that such payments would surely fall in the definition of commission so defined in section 194H It is clearly a debatable issue and on such issue, levy of penalty for non- deduction of TDS cannot be justified. Therefore, the explanation of the assessee that it was under a bonafide belief that such payments doesn t call for TDS thus cannot be disputed. It is also noted that subsequent to TDS verification by the Department when such matter was pointed out to the assessee, the latter has complied with the same by depositing appropriate TDS along with interest. As held by the Hon ble Supreme Court in case of Nova Scotia [ 2016 (1) TMI 583 - SUPREME COURT] , for levy of penalty u/s 271-C what is necessary is to establish that there was contumacious conduct on the part of the assessee which, we find, is not present in the case of the assessee. In light of above discussions and keeping in view the provisions of section 273B of the Act, the penalty s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 99,850/- towards short fall in TDS and interest U/s 201(1A) amounting to ₹ 11,781/- was raised on the assessee vide order dated 31.10.2012. 3. In the above factual background, the first contention raised by the ld. AR is that the order passed by the ld. JCIT, TDS is barred by limitation. It was submitted that as per sub-clause (C) of Section 275, time limit for passing penalty order is end of financial year in which order is passed i.e. 31.03.2013 or 6 months from the end of month in which action for imposition of penalty is initiated whichever period expires later. It was submitted that in the instant case, ld. DCIT, TDS while passing the order U/s 201(1) r.w.s 201(1A) of the Act dated 31.10.2012 has initiated the penalty proceeding and therefore, the penalty order should be passed latest by 30.4.2013 whereas the order has been actually passed on 29.08.2013. Alternatively, it was submitted that JCIT(TDS) issued the show-cause on 11.01.2013 and based on the same, the penalty order can be passed latest by 31.7.2013. It was accordingly submitted that the order so passed U/s 271C of the Act is barred by limitation and deserves to be quashed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court can be sustained on this aspect alone, it is not even necessary to go into other aspects. Leaving the other questions of law open, the appeal is dismissed. There shall be no order as to costs It was submitted that in the present case, the penalty order should be passed either upto 31.03.2013 or 30.04.2012 (whichever is later) whereas order has been passed on 31.08.2013. Hence barred by limitation and deserves to be quashed. 6. Without prejudice to above, it was submitted by the ld AR that as per sub-clause (C), time limit for passing penalty order is end of financial year in which order passed i.e 31.03.2013 (date of passing of order is 31.10.2012) or 6 months from the end of the month in which penalty proceedings were initiated. In the instant case, Ld. AO has made a reference for imposition of penalty to Ld. JCIT (TDS) vide his letter dated 22.01.2013 as mentioned in the penalty order. The reference is the first step of imposition of penalty. Without reference, no penalty can be imposed, therefore, it is a step which start ball moving and hence initiate the penalty proceeding. The power of imposing penalty vested with JCIT and not init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated when during some proceedings such default is noticed, though the final fact finding in this proceeding may not have any bearing on the issues relating to establishing default e.g. penalty for not deducting tax at source while making payment to employees, or contractor, or for that matter not making payment through cheque or demand draft where it is so required to be made. Either of the contingencies does not affect the computation of taxable income and levy of correct tax on chargeable income; if Clause (a) was to be invoked, no necessity of Clause (c) would arise. 8. In the present case, the notice for issuance of the penalty proceedings under Section 271D of the Act for the alleged contravention of provisions of Section 269SS was issued to the assessee, of course by the AO, on 25.03.2003. Even if the matter had otherwise been in appeal before the CIT(A) against the original assessment order and the appeal was decided on 13.02.2004, the same was hardly of relevance so far the penalty proceedings under Section 271D were concerned. As held by this Court in Hissaria Bros. (supra), completion of appellate proceedings arising out of assessment proceedings has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9SS and 269T are being referred to the Additional/Joint CIT. In other words, the AO didn t initiate the penalty proceedings under section 271D and section 271E during the course of assessment proceedings. There is no mention of such proceedings being initiated by the AO in the assessment order. Further, there is no notice under section 271D and section 271E which has been issued by the AO to the assessee by virtue of which such penalty proceedings can be said to have been initiated. In light of the same, we are unable to accede to the contention of the assessee that the date of passing of the assessment order should be reckoned as the date of initiation of penalty proceedings under section 271D and section 271E of the Act. The said view is in consonance with the decision of the Hon ble Rajasthan High Court in case of Hissaria Bros (supra) and subsequent decision in case of Jitendra Singh Rathore (supra). We accordingly affirm both the order of the ld CIT(A) on this ground and hold that the penalty orders passed under section 271D and section 271E were not barred by limitation. The cross objections filed by the assessee are accordingly dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly initiating the penalty proceedings and thereafter, the order was passed within the prescribed limitation period. In light of above discussions, we are of the considered view that the impunged order is not barred by limitation and the contentions so advanced by the ld AR in this regard are not found acceptable. 10. Now coming to the contention of the ld. AR on merits. It was submitted by the ld AR that the assessee is a University which is engaged in the field of education and runs various educational and professional courses. As part of its educational activities, the assessee has entered into a memorandum of understanding with M/s AD Education Research as per which broadly following services are provided: a. Search and recommend suitable institutions with required infrastructure and facilities to be established as IACC for consideration by the University. Application for the appointment of Information Admission Counseling Centre shall be forwarded by the SERVICE PROVIDER along with a demand draft of Association Fee payable to Directorate of Distance Education, Jaipur National University, Jaipur, Rajasthan, payable at Jaipur. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat except this transaction, other transactions undertaken by the assessee have been found to in due compliance with the provisions of the Act, however, because of bonafide belief that the subject transaction was not subject to TDS, the assessee has not deducted TDS on the said transaction. However, the fact remains that the assessee is a law abiding corporate citizen and the transaction was not considered liable for TDS on reasonable belief and not because of any contumacious conduct. In support, reliance was placed on the decision of the Hon ble Supreme Court in case of CIT vs. Bank of Nova Scotia (Civil Appeal No. 1704 of 2008 order dated 07.01.2016) wherein it was held as under:- 11. We have carefully considered the rival submissions. In the instance case we are not dealing with collection of tax u/s 201(1) or compensatory interest u/s 201(1A). The case of the assessee is that these amounts have already been paid so as to end dispute with Revenue. In the present appeals we are concerned with levy of penalty u/s 271-C for which it is necessary to establish that there was contumacious conduct on the part of the assessee. We find that on similar facts Hon ble De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er:- 2. Financial terms The Jaipur National University, Jaipur, Rajasthan, shall collect Association fee from the newly established Information-Cum-Admission Counseling Cell (IACC) and course fee from the students enrolled in different academic courses. a. The Association Fee collected from the newly established IACC shall be shared as under: University 50% Service provider 50% b. The university shall collect the course fee (including examination fee) and Misc. fee from each student per year: - 50% of course fee shall be paid by University to the IACC for providing adequate and necessary infrastructure and facilities. - 20% of course fee shall be paid to the service provider by university for rendering services as mentioned in this MOU. - 30% of the course fee shall be retained by the university at its end. - The service provider shall furnish a security deposit of ₹ 1.00 lakh and shall not claim any interest thereon. - The security amount shall be adjusted against any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake any financial commitment on behalf of or in the name of the university nor will take loans or create any other financial liability binding on the University this MoU. i. Help monitor the functioning of IACC. j. Carry out functions such as, processing of IACC establishment applications, distribution of study material etc. k. Undertake to maintain the secrecy and confidentiality of the programmes offered by the University, mode of instructions and its methods, syllabi and programme curricula etc. l. Shall provide and put serious efforts for the suitable job placement of successful course participants. 15. We therefore find that services so specified in the MOU ranges from selection of IAAC Centres, promotion of academic courses, co- ordination in supply and dispatch of course material, other study material, maintenance of records of students which have bought the prospectus and subsequently enrolled for the various courses. For such services, the service provider is entitled to share of association fees to the extent of 50% and 20% of course fees. Therefore, it cannot be disputed that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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