2018 (6) TMI 1102 - AT - Income Tax

Penalty u/s 271C - non deduction of tds - Held that - As decided in the assessment years 2011-12 to 2013-14 Section 273B of the Act provides that in case of a reasonable cause, penalty otherwise exigible, inter alia, u/s 271C of the Act, cannot be imposed. When we advert to the facts of the instant case, being no deduction of tax at source made prior to the year of survey on 24.02.2014; no other order against the assessee requiring deduction of tax at source at that time when the assessee made payment of lease rental - the assessee entertained a bona fide belief that no tax withholding was required on lease rent payments. This belief, being a reasonable cause, for non deduction of tax at source in respect of lease rent payment, magnetizes the provisions of section 273B. Considering the provisions of section 271C read with section 273B, we hold that the penalty imposed u/s 271C is not sustainable. - Decided in favour of assessee.

Summary

Issues:
Confirmation of penalty under section 271C of the Income Tax Act, 1961.

Detailed Analysis:
The judgment by the Appellate Tribunal ITAT Delhi involved three appeals by the assessee against separate orders of the ld. CIT(A)-I, Noida, all concerning the confirmation of penalties under section 271C of the Income Tax Act. The appeals were heard together due to common issues and disposed of in a single order for convenience. The grounds raised in the appeals for the assessment year 2011-12 challenged the penalty imposition, arguing that it was time-barred, imposed without proper hearing, and without a reasonable cause for non-deduction of tax at source under section 194I. Similar grounds were raised in other appeals with varying penalty amounts.

During the hearing, the assessee's counsel contended that the issue was in the assessee's favor based on a previous order dated 23.11.2017 in the assessee's own case for the same assessment years. The counsel provided a copy of the said order, which supported the assessee's position. The Senior DR supported the impugned orders but did not counter the assessee's contention.

The Tribunal considered the submissions and the material on record, noting that a similar issue had been addressed in previous departmental appeals for the assessment years 2011-12 to 2013-14. In the previous order, it was held that the assessee was liable for tax deduction at source for lease rent but not for interest payment. The Tribunal upheld the penalty in relation to interest payment but deleted the penalty concerning lease rent, citing a bona fide belief by the assessee for non-deduction of tax at source as a reasonable cause under section 273B. The Tribunal found that the penalty under section 271C was not sustainable based on the facts and legal provisions.

Consequently, the Tribunal deleted the penalties imposed by the Assessing Officer and sustained by the CIT(A) for all the assessment years under consideration, following the precedent set in the previous order. As a result, the appeals of the assessee were allowed, and the penalties under section 271C were deleted for the respective assessment years.

In conclusion, the Tribunal's judgment focused on the legality and justification of the penalties imposed under section 271C, considering factors such as time limitations, proper hearing, reasonable cause for non-deduction of tax at source, and previous legal precedents in similar cases.