TMI Blog2022 (8) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of EDC are being deposited in the Consolidated Fund of the State, accordingly directions were issued to colonizer like present assessee, to not deduct TDS. Once the fact of receipt of amounts received by HUDA being deposited in Consolidated Fund of State is established, there can be no second opinion that Assessee was rightly directed by DTCP, Haryana to not deduct the TDS. Even otherwise no intentional default is attributed to assessee and the default, if any, was on account of ambiguity which had arisen out of a direction contained in a statutory document, so no penalty can be justified u/s 271C of the Act, which is meant to address contumacious conduct. Levy of penalty u/s 271C of the Act cannot be sustained. - Decided in favour of assessee. - ITA No. 4940/Del/2019 And ITA No. 4941/Del/2019 And ITA No. 4942/Del/2019 - - - Dated:- 12-7-2022 - Sh. Anil Chaturvedi, Accountant Member And Sh. Anubhav Sharma, Judicial Member For the Assessee : Sh. R.S. Ahuja, CA For the Revenue : Sh. M. Baranwal, Sr. DR ORDER PER ANUBHAV SHARMA, JM: The assessee has filed the two appeals against orders dated 30.04.2019 for the assessment year 2014-15 2017-18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the submission of assessee and mentioned that in the present case, the assessee has paid EDC to HUDA for carrying out civil works, construction work and other related works. The Ld. AO noticed that demand drafts for EDC payment were issued in the name Chief Administrator, HUDA. The Ld. AO further mentioned that HUDA Develops Urban Infrastructure for which it was receiving EDC charges from various parties. Although EDC was shown as Current liability in the balance sheet by the HUDA, but in the Notes to the accounts forming part of balance sheet shows that EDC are received for execution for various External Development works and as and when development work is carried out, the EDC liabilities are reduced accordingly. Then the Ld. AO examined business model of HUDA and on the basis of statement recorded during the course of survey of Sh. Ram Kumar, Senior Ld. AO, HUDA, he noticed that HUDA was engaged in acquiring land, developing it and finally handing over to the customers for a price. The lands were developed by HUDA though the same were identified and acquired by Urban Estate Department, Haryana Government, but the ownership and possession was transferred to HUDA for payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not necessary. Since there was no reasonable cause within the meaning of section 273B for non deduction of TDS on EDC, the Ld. AO imposed penalty and aggrieved assessee had filed appeal before the Ld. CIT(A) which was dismissed. 3. Now before the Tribunal the assessee has come in appeal raising following grounds :- (A) That on the facts circumstances of the case the learned ITO the CIT(A) erred in : a) Levying a penalty of Rs.7,27,400/- on the facts and circumstances of the case. b) Imposing a penalty in spite of the fact that the Assessee has paid EDC to HUDA treating it as Development Authority of Haryana Govt, being an exempt entity u/s 196 of the Income tax Act. c) Imposing penalty on the basis of Office Memorandum issued by CBDT dated 23rd December 2017 vide F. No.370133/37/2017-TPL wherein the payment to HUDA is a payment to a development authority of a State Government of Haryana and not to the Govt. Therefore, the provisions of TDS would be applicable on EDC paid. d) In applying the Office Memorandum dated 23.12.2017 on payments made in preceding years retrospectively. e) Department circulars and notifications are not binding on the Assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Haryana. It was submitted that when the payments are made to the Government or local authority, no tax is required to be deducted. He also referred to judgment of ITAT Delhi Bench in ITA no. 6907/Del/2019 M/s. Perfect Constech (P) Ltd. vs. Additional Commissioner of Income Tax, M/s Sarv Estate Pvt. Ltd. V JCIT, Range 77ITA no 5337 and 5338/Del/2019 and M/s Santur Infrastructure Pvt Ltd V ACIT Range 77 ITA no 6844/Del/2019 to contend that in regard to similar matter the co-ordinate Benchs have held that there was no default of non-deduction of TDS in regard to payments made to HUDA on account of EDC charges. 5.1 On the other hand, Ld. DR relied the Circular of CBDT whereby directions have been issued for deduction of TDS in payments made to authorities like HUDA. It was submitted that HUDA was neither Government department nor a local authority. Therefore any payment being made to it was to be subjected to TDS u/s 194C of the Act. 6. Giving thoughtful consideration to the matter on record, the Co-ordinate Bench orders in M/s. Perfect Constech P. Ltd. case and in RPS Infrastructure Ltd. vs. ACIT ITA No. 5805, 5806, 5349/Del/2019 , which is also relied in M/s Santur I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me was not out of any statutory or contractual liability towards HUDA and, therefore, the impugned penalty was not leviable. We note that similar view has been taken by the Coordinate Benches of ITAT Delhi in the cases of Santur Infrastructure Pvt. Ltd. vs. ACIT in ITA 6844/Del/2019 vide order dated 18.12.2019, Sarv Estate Pvt. Ltd. vs. JCIT in ITA No.5337 5338/Del/2019 vide order dated 13.09.2019 and Shiv Sai Infrastructure (Pvt.) Ltd. vs. ACIT in ITA No.5713/Del/2019 vide order dated 11.09.2019. A similar view was also taken by the Co 8 ordinate Bench of ITAT Delhi in case of R.P.S Infrastructure Ltd. vs. ACIT in 5805, 5806 5349/Del/2019 vide order dated 23.07.2019. Therefore, on an identical facts and respectfully following the orders of the Co-ordinate Benches as aforesaid, we hold that the impugned penalty u/s 271C of the Act is not sustainable. The order of the Ld. CIT (A) is set aside and the penalty is directed to be deleted. 7.2 Similarly para no. 11 in the case RPS Infrastructure Ltd ( Supra) is also reproduced below where in the question of justification of penalty under Section 271C of the Act was also examined; 11 . We have heard the rival submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st and future as the words used are was/is. This shows that Governmental authority itself has demanded not to deduct TDS. In case even if tax was required to be deducted on such payment but not deducted under a bonafide belief then no penalty shall be leviable under section 271C of the Act as there was no contumacious conduct by the assessee. Our view is fully supported from the judgment of the Hon ble Supreme Court in the case of Commissioner of income tax vs. Bank of Nova Scotia, 380 ITR 550, wherein the Hon ble Court has held as under : 2 . The matter was pursued by the Revenue before 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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