2005 (7) TMI 63 - HC - Income Tax

The only question that fell for consideration before Tribunal was whether there was reasonable cause for not deducting tax at source u/s 192 in respect of the retention money paid outside the country to the Japanese expatriates working in India. The Tribunal upon consideration of the circumstances recorded a finding of fact that there was reasonable cause for not making the deduction and, accordingly, cancelled the penalty levied upon the assessee u/s 271C - Tribunal found that As from the facts and from the correspondence exchanged between the assessee and the other authorities, it is clear that the assessee tried to solve the dispute amicably, therefore, it cannot be said that there was any mala fide intention on the part of the assessee - No question of law much less a substantial question of law therefore arises for our consideration to warrant admission of these appeals

Issues:
1. Whether there was reasonable cause for not deducting tax at source under section 192 of the Income-tax Act, 1961 in respect of retention money paid to Japanese expatriates.
2. Whether the Tribunal's finding of reasonable cause for not deducting tax at source was valid.
3. Whether the facts of the present case were similar to previous cases where penalty was cancelled.
4. Whether the failure to deduct tax at source on retention money paid to Japanese expatriates was justified.
5. Whether there was a distinction in the present case due to a letter addressing potential penalties for non-deduction of tax at source.

Analysis:

1. The primary issue before the Income-tax Appellate Tribunal was whether there was a reasonable cause for not deducting tax at source under section 192 of the Income-tax Act, 1961 concerning retention money paid to Japanese expatriates. The Tribunal found reasonable cause and canceled the penalty under section 271C of the Act based on a factual assessment of the circumstances. This decision was supported by previous orders upheld by the High Court.

2. The validity of the Tribunal's finding on reasonable cause was challenged in the present batch of appeals. The Revenue argued that the Tribunal failed to establish the similarity of circumstances with previous cases where penalties were canceled. However, the High Court disagreed, emphasizing that the question of reasonable cause is a matter of fact. The Court cited previous judgments to support the view that such findings do not give rise to substantial questions of law.

3. The Court further analyzed the similarity of facts between the present case and previous cases where penalties were canceled for failure to deduct tax at source on retention money paid to Japanese expatriates. It was noted that the Revenue did not adequately dispute the similarity of circumstances or provide evidence of dissimilarities, which was essential to challenge the Tribunal's decision.

4. The argument that a letter addressing potential penalties for non-deduction of tax at source created a distinction in the present case was also addressed. The Tribunal found that the letter demonstrated the assessee's bona fide intention to resolve the issue amicably, indicating no mala fide intent. The Court concluded that there was no substantial basis for considering the facts in the present case as dissimilar to previous cases, leading to the dismissal of the appeals.

5. Ultimately, the Court dismissed the appeals, highlighting that no substantial question of law arose to warrant further consideration. The decision reaffirmed the Tribunal's finding of reasonable cause for not deducting tax at source in the specific circumstances related to retention money paid to Japanese expatriates, aligning with previous judgments on similar cases.

← Previous Next →