TMI Blog2019 (9) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... was required to be deducted on such payment but not deducted under a bonafide belief then no penalty shall be leviable under section 271 C of the Act as there was no contumacious conduct by the assessee. - Decided in favour of assessee. - ITA No.5713/Del/2019 - - - Dated:- 11-9-2019 - Shri Amit Shukla, Judicial Member And Dr. B.R.R. Kumar, Accountant Member For the Assessee : Shri Raj Kumar Gupta, CA For the Department : Shri N.K. Bansal, Sr. DR ORDER PER AMIT SHUKLA, J.M.: The aforesaid appeal has been filed by the assessee against impugned order dated 17.6.2019, passed by Ld. CIT(Appeals) 31, in relation to the penalty proceedings u/s 271C for the assessment year 2017-18. Assessee has challenged levy of penalty u/s 271C mainly on the following grounds:- 1. That under the facts and circumstances the levy of penalty of ₹ 39,40,000/- u/s.271C is illegal, without jurisdiction, contrary to law and unsustainable. 1.1 That under the facts and circumstances, there is no such default for which penalty u/s.271 C can be initiated and levied. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired for the payment to the Govt. u/s.196 of the I.T. Act. - It is a case where payments have been made to DTCP, Govt. of Haryana and the A.O. is wrong in assuming that EDC payment has been made to HUDA. - The assessee entered into agreement with Haryana Govt. through Haryana Governor through Director Town Country Planning (DTCP) on 25.01.2008. - Clause-I(a) of the said agreement provided for payment of EDC charges to HUDA through Director Town Country Planning (DTCP), Govt. of Haryana. - Accordingly, the assessee prepared the EDC payment drafts in the name of Chief Administrator HUDA and delivered the same to DTCP, Govt. of Haryana, through covering letter addressed to DTCP which is acknowledged by DTCP. - Hence in substance, the payment has been made to DTCP, Govt. of Haryana and the draft has been issued in the name of HUDA only on the directions and on instructions and on behalf of DTCP Govt. of Haryana. - There is no privity of contract / agreement between assessee and HUDA that such payments are to be made to HUDA. - DTCP, directed to make the paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition of no TDS on EDC was even applicable before 19.06.18. - The letter of CBDT Dtd. 23.12.17 is subsequent to the payments made - In the case of RPS Infrastrucutre Ltd., under similar facts it has been held to be a case of reasonable cause. 5. We find that, precisely similar issue had come up for consideration to the coordinate bench of RPS Infrastructure Ltd. vs. ACIT, wherein Tribunal has observed and held as under :- 11. We have heard the rival submissions, perused the relevant findings given in the orders passed by the authorities below and the various judgments and materials relied upon by both the sides. On going through the facts, we note that dispute is with regard to non-deduction of tax in respect of payment of EDC charges made by the assessee to HUDA. As per the AO, HUDA is neither a local authority nor Government, thus, the payments made to it by the assessee on account of EDC charges were liable for TDS under section 194C of the Act. Since, assessee has failed to deduct the TDS; therefore, it is liable for penalty under section 271C of the Act. On the other hand, the case of the assessee is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Income Tax Appellate Tribunal. The Income Tax Appellate Tribunal vide order dated 31.03.2006 entered the following findings: 11. We have carefully considered the rival submissions. In the instant 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 Delhi High Court have deleted levy of penalty u/s 271-C in the case of Itochu Corporation 268 ITR 172 (Del) and in the case of CIT v. Mitsui Company Ltd. 272 ITR 545. Respectfully following the aforesaid judgments of Hon'ble Delhi High Court and the decision of the ITAT, Delhi in the case of Television Eighteen India Ltd., we allow the assessee's appeal and cancel the penalty as levied u/s 271C. 3. Being aggrieved, the Revenue took up the matter before the High Court of Delhi against the order of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 406, New Delhi No.- ITA No. 3431/ Del/2015 dt. November 28, 2018, the Coordinate Bench of ITAT has deleted the penalty levied under section 271C of the Act. 13. In view of the above facts and the analysis, we hold that there was a reasonable cause for non-deduction of tax at source by the assessee company. Further, in the absence of any findings that the assessee has deliberately avoided the TDS provision and as such there is no contumacious conduct on the part of the assessee. Accordingly, we reverse the findings of the lower authorities and direct the AO to delete the penalty for all the three years. 14. In the result, all the three appeals of the assessee are allowed. 6. The aforesaid reasoning and conclusion by the Tribunal would apply here in this case also because similar facts and issues are permeating in the present appeal also. Accordingly, we hold that no penalty u/s 271C is leviable and same is directed to be deleted. 7. In the result appeal of the assessee is allowed. Order Pronounced in the open court on 11th September, 2019. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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