9911796707
TMI Blog2025 (2) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... reby the Income-Tax Appellate Tribunal, Bengaluru has negatived Revenue's Appeal in ITA/100/BANG/1999 wherein the CIT (Appeals)- IV order dated 20.01.1999 for the Assessment Years 1996-97 and 1997-98 to the extent levy of penalty u/s.271C of the Income Tax Act, 1961, was set aside, came to be confirmed. We hasten to add that the appeal on taxability against the said order is not subject matter of this appeal. 2. Foundational facts of the case: 2.1 The respondent-company for the Assessment Years in question did not effect TDS from the monies payable to M/s.Raython Ebaseo Overseas Ltd., presumably a foreign entity (USA), under the contract relating to supply & services of off-shore equipments. This it did on the professional advice that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in terms of Sec.273(B) of the Act and therefore penalty ought to have been sustained in terms of Sec.271(C) of the Act. This having not being acceded to by the Tribunal, the Revenue is in appeal before us. 2.4 A Co-ordinate Bench of this court vide order dated 27.07.2007 admitted the appeal on the following substantial question of law: "Whether the Tribunal was correct holding that the assessee's short deduction of TDS and belated transfer of the TDS amount deducted to the department was due to reasonable cause and penalty could not be levied without taking into account that all these clarification regarding legal position was taken by the assessee due to the survey conducted by the department pursuant to which the defect was point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in three distinct though related senses. It means, in the first place, a question which the court is bound to answer in accordance with a rule of law - a question which the law itself has authoritatively answered, to the exclusion of the right of the court to answer the question as it thinks fit in accordance with what is considered to be the truth and justice of the matter. All other questions are questions of fact - using the term fact in its widest possible sense to include everything that is not law. In this sense, every question which was not been predetermined and authoritatively answered by the law is a question of fact - whether it is, or is not, one of fact in any narrower sense which may be possessed by that term. ...". Ordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under sub-section (1) shall be imposed by the [Joint Commissioner]." The text of this section is plain. It makes failure to deduct tax liable for penalty. The Joint Commissioner can impose penalty in a sum equal to the amount of tax not deducted or paid. Sec.273B which begins with a non obstante clause as amended by Act 46 of 1986 w.e.f. 10.09.1986 provides that no penalty is imposable for any failure to deduct or pay tax deducted, if the Assessee proves that there was a reasonable cause for that. The Apex Court in CIT vs. ELI LILLY & CO. (INDIA) (P) LTD. (2009) 15 SCC 1 has at para 94 observed as under: "Section 273B states that notwithstanding anything contained in Section 271C, no penalty shall be imposed on the person or the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied to human action is that which would constrain a person of average intelligence and ordinary prudence". 3.4 Learned Sr. Advocate appearing for the respondent is more than justified in contending that whether a set of circumstances which an entity furnishes for failure to deduct or pay tax in terms of Sec.271C amounts to a reasonable cause u/s.273B of the Act does not amount to any question of law, the focus being the truthfulness & plausibility of pleaded circumstances, the former being a matter of evidence and the later being of prudence. Following Woodward, another Division Bench of the same court in COMMISSIONER OF INCOME TAX v. ITOCHU CORPORATION 2004(75) DRJ 337 (DB) at paragraph 7, has observed as under: "The Division Bench a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l question of law, let us examine whether the explanation offered by the respondent constitutes a reasonable cause: The respondent in its reply to the notice in question specifically stated that the non-deduction of tax for the subject period was due to the bona fide belief formed on the basis of the legal opinion obtained at the hands of M/s.Singhania & Co., a Law Firm of repute; and the opinion of a Chartered Accountant's Firm namely Lovelock & Lewis. This apart, the regular Assessee had applied on 11.09.1997 seeking advance ruling and that the Chairman of the Advance Ruling Authority did not process the same for personal reasons. Added, what benefit the respondent could derive by not deducting the tax at source, is also a factor. All the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
