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TMI Blog2025 (5) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... Dtd. 28.02.2018 and the order passed u/s 271C Dtd. 01.05.2018 are barred by limitation. In case where no specific limitation period is provided, it is settled that the same should be passed within a reasonable period of maximum 2/4 years and as such the impugned proceedings initiated after 9 years is baseless and uncalled for. As such, the order passed U/s 271C imposing penalty and confirmed by Ld. CIT(A) is fit to be set aside. 2. For that Ld. CIT(A) erred in not appreciating that since disallowance u/s 40(a)(ia) has been made by Assessing Officer, in assessment proceedings, the same amount could not be considered as an amount covered by provisions of section 194A so as to raise TDS demand under section 201 or to impose penalty u/s 271C for default of non-deduction of TDS. 3. For that Ld. CIT(A) erred in not appreciating that even no order u/s 201 or any other section of the IT Act has been passed to hold the appellant as "Assessee in default" for non deduction of TDS. As such, the impugned penalty order passed U/s 271C cannot be sustained to the extent that the revenue department has nowhere ever alleged the assessee to be in default for non deduction of TDS. 4. For that L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ggrieved by the order of the Assessing Officer, the assessee filed appeal before the ld. CIT(A), who decided the appeal vide impugned order dated 30/01/2024 and confirmed the penalty imposed by the Assessing Officer under Section 271C of the Act. The ld. CIT(A) did consider the grounds taken by the assessee that the order appealed against the assessee was barred by limitation as it was passed after nine years from the relevant financial year and also that despite there is no limitation provided in the statute, the period of nine years is not a reasonable period. In support of its claim, the appellant also placed reliance on the decision of various Courts and Tribunals, details of which are given in the body of the impugned appeal order. The ld. CIT(A) finally held that the order under Section 201(1) of the Act was passed on 20/02/2018 and the penalty notice under Section 271C was issued on 28/02/2018 with the prior approval of the JCIT, that is within eight days of the passing order under Section 201(1) of the Act. Thus, it cannot be considered as time barred. The ld. CIT(A) also held that the case laws cited by the appellant were also distinguishable to the extent that in the inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of accounts. Subsequently, the interest has been even waived by M/s Coal India Ltd. and in fact no interest was either paid or is payable by the assessee to CIL. As such only for making a hypothetical entry in the books of accounts there was no question of making any TDS u/s194A and hence, the penalty proceedings initiated are liable to be dropped. V. That it was further submitted that the appellant is a government company and a PSU and had always deducted TDS in regular course on the items on which TDS was required to be deducted and have filed TDS statements in due time. Its accounts are being audited by internal auditors, tax auditors and by CAG audit. It was under bonafide belief that no TDS is required to be deducted on the entry of hypothetical interest provided in its books of accounts for the purpose of showing its true financial position before BIFR. vi. There was no malafide intention in not deducting TDS. Non of the auditors never pointed out that the assessee was required to deposit TDS on such interest. Even at the state of 1st regular assessment u/s 143(3), the assessing officer allowed the interest and no addition was made. Thus, it was never pointed out by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exercised at any time at the wish of the revenue authority and that rather the same should be exercised within a reasonable time which in such cases should be about 4 years. (Case laws quoted at 09 - 12 of the CIT(A) order). 4. That apart from the above, for ready reference and on identical issue, we are attaching herewith the decision of Hon'ble ITAT Delhi Bench in the case of Hindustan Coca Cola Beverages Co. Pvt. Ltd Vs JCIT in ITA No. 3018/Del/2022 dated 17/01/2023 wherein it has been held as under:- "6. Learned Counsel of the assessee contended that penalty proceedings in this case has been initiated belatedly and much after reasonable period of 4/6 years. As a matter of fact learned Counsel submitted that penalty proceedings have been initiated 14 years after the assessment year concerned. He submitted that the proceedings are time barred. He further submitted that penalty proceeding is barred by limitation under section 275 of the Act. He further referred to several case laws in this regard.... 8. Upon careful consideration, we find that assessee deserves to succeed on both counts. Firstly, penalty proceedings have been initiated after 14 years and the same is be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Hindustan Coca Cola Beverages Co. Pvt. Ltd. Vs JCIT in ITA No. 3018/Del/2022 dated 17/01/2023 has already held as under: "6. Learned Counsel of the assessee contended that penalty proceedings in this case has been initiated belatedly and much after reasonable period of 4/6 years. As a matter of fact learned Counsel submitted that penalty proceedings have been initiated 14 years after the assessment year concerned. He submitted that the proceedings are time barred. He further submitted that penalty proceeding is barred by limitation under section 275 of the Act. He further referred to several case laws in this regard.... 8. Upon careful consideration, we find that assessee deserves to succeed on both counts. Firstly, penalty proceedings have been initiated after 14 years and the same is belated and beyond reasonable limitation period of time and this proposition is supported by the decision of the Hon'ble Jurisdictional High Court in the case of CIT Vs. NHK Japan Broadcasting 172 Taxman 230 and Bharti Airtel vs. UOI 291 CTR 254. In this regard, we may refer to the decision in NHK Japan Broadcasting (supra) as under:- "21. We are not inclined to disturb the lime- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel for the revenue submitted that the Department came to know that the assessee was an assessee in default only in November, 1998 when a survey was conducted and it came to be known only then that when the assessee had not deducted tax at source on the global salary. We are of the opinion that the date of knowledge is not relevant for the purposes of exercising jurisdiction insofar as the provisions of the Income-tax Act are concerned. If it were so, the limitation period, as for example prescribed under section 147/148 of the Act would become meaningless f the concept of knowledge is imported into the scheme of the Act." 7. In view of the above facts and circumstances and by respectfully following the above decisions passed by the Hon'ble ITAT Delhi Bench and the Hon'ble Delhi High Court, we delete the penalty imposed by the Assessing Officer and confirmed by the ld. CIT(A). In the result, grounds of appeal raised by the assessee are allowed. 8. In the result, this appeal of the assessee is allowed. 9. Now we shall take ITA No.76 & 77/Ran/2024 for the A.Y. 2009-10 and 2010-11, we find that in these cases, the assessee has raised similar grounds of appeal as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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