TMI Blog2019 (2) TMI 1761X X X X Extracts X X X X X X X X Extracts X X X X ..... pense account or by any other name or at the time of payment of such income in cash or by issue of a cheque or draft or by any other mode, whichever is earlier. As per section 195 any person responsible for paying to a non-resident, not being a company or to a foreign company, any interest (not being interest referred to in section 194LB or section 194LC or section 194LD) or any sum chargeable under this Act (other than salary) shall, at the time of credit of such income to the account of the payee or at the time of payment thereon in cash or by issue of a cheque or draft or by any other mode, whichever is earlier deduct income tax thereon at the rates in force. Thus the TDS provisions as mentioned above are applicable in the present case. Whether, there was reasonable ground on the part of the assessee in not deducting tax at source is another matter. Assessee failure to submit the details regarding income tax returns filed by the payees to whom it had made various payments - HELD THAT:- We are of the considered view that the ratio laid down in Hindustan Coca Cola Beverages (P.) Ltd. [ 2007 (8) TMI 12 - SUPREME COURT] has relevance in the instant case. Therefore, we re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961. 4. confirming the above penalty on the ground that there was no reasonable ground for not deducting the lax at source as against the stand of the appellant that it had no business income and hence, it had not claimed any deduction on account of interest paid and hence, no tax was deducted on the same as such, it was a reasonable ground for not deducting the tax at source. 5. not considering the Delhi High Court Judgments in the case of PCIT Vs. Mahesh Wood Product Pvt. Ltd. (2017) 394 ITR 312 and PCIT Vs. JKD Capital and Finlease Ltd. (2015) 378 ITR 614 wherein it was clearly held that the order passed by the Joint Commissioner in that case was time barred since he should have passed the order within 6 months from the date on which he received the letter from the Assessing Officer and that the limitation began from the date of the letter from the assessing officer 6. not appreciating various decisions and judgments wherein it was held that when the parties to whom payments were made had paid full taxes on the same on their own, there was no loss of revenue and hence, penalty u/s. 271C was uncalled for. 7. not appreciating that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e various payments and requested for some more time to present her case. That the assessee failed to file any information, the JCIT further gave time to file those details by 27.10.2014. In response to it the AR of the assessee failed to file those details. After observing that the assessee being an educated person and income tax payee and despite being fully aware of the provisions of the Act, chose to commit default by not making TDS, the JCIT levied a penalty of ₹ 3,59,07,663/- u/s 271C of the Act. 4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). The AR of the assessee submitted in the appellate proceedings that since the penalty proceedings u/s 271C were initiated by the AO on 22.06.2012 by referring the matter to the JCIT, penalty order should have been passed on or before 31.12.2012 i.e. within 6 months from 01.07.2012 and since the penalty order was passed on 30.10.2014, the said penalty order was clearly time barred. To summarize the contentions of the AR before the CIT(A), those were (i) the penalty order dated 30.10.2014 passed u/s 271C was totally time barred, (ii) the assessee had reasonable cause for not d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO on 22.06.2012 by referring the matter to the JCIT, penalty order should have been passed by the JCIT on or before 31.12.2012 i.e. within 6 months from 01.07.2012 and since the penalty order was passed on 30.10.2014, the said order is clearly time-barred. Reliance is placed by him and the decision in MDC University v. ACIT (2014) 161 TTJ 11 (JP-Trib-UO), PCIT v. Mahesh Wood Products Pvt. Ltd. (2017) 394 ITR 312 (Del), PCIT v. JKD Capital Finlees Ltd. (2015) 378 ITR 614 (Del), CIT v. Ikea Trading Hongkong Ltd. (2011) 333 ITR 565 (Del). Referring to the above decisions and relying on them, the Ld. counsel submits that it was only when the JCIT received the letter from the ITO on 22.06.2012 that he became aware of the facts on the basis of which penalty could be imposed u/s 271C. This itself shows that the penalty proceedings were initiated by the ITO in terms of his letter dated 22.06.2012. Stating that section 271C(2) talks about imposition of penalty by the JCIT and the imposition is different than intimation, the Ld. counsel submits that the order passed by the JCIT on 30.10.2014 was clearly time-barred as he should have passed the order within 6 months from 01.07.2012 (i.e. f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eductible in terms of section 195 in the case of non-resident only in respect of other sum chargeable under the Act. In the present case, the sellers had already offered the sale price for taxation by investing the money in capital bonds to the extent allowed and had paid the tax on the balance amount. As such, there was no revenue loss and hence penalty u/s 271C was un-called for having regard to section 273B of the Act. It is stated that the relevant documents of the sellers showing amount paid to them having been offered by them under the head long term gain and the tax paid thereon in accordance with law were duly filed before the CIT(A). Also reliance is placed by him on the decision in CIT v. Sencma SA, France (2007) 288 ITR 76 (Del), CIT v. Elililly Co. (India) Pvt. Ltd. (2009) 312 ITR 225 (SC). Further, it is stated that in most of the cases, the appellant had not claimed deduction u/s 40(a)(iii) in computation of their business income and it was one more reason for not imposing the penalty u/s 271C because by not claiming deduction u/s 40(a)(iii), higher corporate tax was paid by the appellant. Employees had paid their taxes directly by way of advance tax/sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a result of the contravention of section 269SS and 269T of the Act. A further notice was sent on 25.09.2012 seeking the assessee s reply, which ultimately was submitted on 10.10.2012. In the reply itself, the assessee contended that the penalty proceedings were barred by limitation u/s 275(1)(c) of the Act. The short question before the Hon ble High Court urged by the Revenue was whether the ITAT erred in law by holding that the order imposing the penalty was not passed within the time limit laid down u/s 275(1)(c) of the Act? . The Hon ble High Court held as under: 8. At the outset, the Court observes that no question arose in IKEA Trading Hong Kong Ltd. (supra) as to whether the starting point of limitation could be a date earlier than the issuance of the SCN, viz., the date on which the AO wrote a letter to the ACIT recommending such initiation. No such contention appears to have been raised or dealt with in the said case. Therefore, the said decision is distinguishable on facts. 9. However, this question came up for consideration in JKD Capital Finlease Ltd. (supra). The date on which the AO recommended the initiation of penalty proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E and, therefore, penalty order was passed within time. On further appeal, the Hon ble High Court held : 6. Having heard learned counsel for the parties, we have perused the impugned order. From a perusal of the record, it is clear that the notice for the levy of penalty under section 271E of the Act was issued by the Income-tax Officer on 1-8-2003 and by the Joint Commissioner of Income-tax on 3-9-2004. It means that the proceeding has been initiated in the financial year 2003-04 which ended on 31-3-2004. Thus, the penalty order could be passed by 31-3-2004. If the limitation is calculated on the basis of the second part of clause (c) of section 275(1) of the Act from the date of notice issued by the Income-tax Officer on 1-8-2003 from the end of the month, six month expired on 28-2-2004 and from the date of the notice issued by the Joint Commissioner of Income-tax on 3-9-2003 from the end of this month, six months expired on 31-3-2004. In this way, later period by which the penalty order could be passed was 31-3-2004. In this view of the matter, the order passed on 29-3-2004 by the Joint Commissioner of Income-tax cannot be said to be barred by limitation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te proceedings for levy of penalty. Such initiation of proceedings could not have been done by the Assessing Officer. The statement in the assessment order that the proceedings under Section 271D and E are initiated is inconsequential. On the other hand, if the assessment order is taken as the initiation of penalty proceedings, such initiation is by an authority who is incompetent and the proceedings thereafter would be proceedings without jurisdiction. If that be so, the initiation of the penalty proceedings is only with the issuance of the notice issued by the Joint Commissioner to the assessee to which he has filed his reply. 11. The only case of the assessee is that if the period of limitation prescribed in Section 271(1)(c) is reckoned from the date of the assessment order dated 6.11.2007, the penalty order passed by the Joint Commissioner on 29.7.2008 is beyond the time permitted in the above section. As we have already held, the initiation of the penalty proceedings is not by the Assessing Officer but by the Joint Commissioner and if that be so, the order levying penalty passed by the Joint Commissioner is within the time prescribed in Section 275(1)(c). T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time of credit of such income to the account of the payee or to any account, whether called suspense account or by any other name or at the time of payment of such income in cash or by issue of a cheque or draft or by any other mode, whichever is earlier. As per section 195 any person responsible for paying to a non-resident, not being a company or to a foreign company, any interest (not being interest referred to in section 194LB or section 194LC or section 194LD) or any sum chargeable under this Act (other than salary) shall, at the time of credit of such income to the account of the payee or at the time of payment thereon in cash or by issue of a cheque or draft or by any other mode, whichever is earlier deduct income tax thereon at the rates in force. Thus the TDS provisions as mentioned above are applicable in the present case. Whether, there was reasonable ground on the part of the assessee in not deducting tax at source is another matter. Thus the 4th ground of appeal is dismissed. 7.6 The 1st, 2nd, 6th 7th of appeal It is the contention of the Ld. counsel that the appellant had filed the details of recipients of interest with copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
