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TMI Blog2011 (12) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) which negate the possibility of imposition of penalty under Section 221 if the Assessing Officer is satisfied that the person liable had good and sufficient reasons to not deduct and pay the tax in question. Thus, in view of proviso to Section 201(1) no penalty can be imposed on the assessee under Section 221 . The matter is remanded to to the assessing officer for the limited purpose of computing the exact quantum of default and the interest payable under Section 201(1A) of the said Act. - Decided partly in favor of Revenue. - ITA 74/2003, 75/2003 & 653/2005 - - - Dated:- 21-12-2011 - MR BADAR DURREZ AHMED AND MS JUSTICE VEENA BIRBAL JJ. Appearance by: For the Appellants :Mr Abhishek Maratha, Sr. Standing Counsel with Ms An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the same financial year i.e., 1992-93. ITA No.653/2005 relates to a different assessee i.e., American Express Bank Limited but is in respect of the issues which arise under Section 201 and 201 (1A) of the said Act and also pertains to the financial year 1992-93. In ITA No.653/2005, certain additional reimbursements have been made under heads such as lunch coupons, reimbursement of educational expenses etc. 2. The Income Tax Appellate Tribunal in each of these cases has held in favour of the assessee by coming to the finding that the assessee had not deducted/paid tax at source on account of the aforesaid heads of reimbursement because it was under a bona fide belief that it was not required to deduct the said amounts. We need not go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Section 200 and in the cases referred to in section 194, the principal officer and the company of which he is the principal officer does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall, without prejudice to any other consequences which he or it may occur, be deemed to be an assessee in default in respect of the tax: Provided that no penalty shall be charged under Section 221 from such person, principal officer or company unless the assessing officer is satisfied that such person or principal officer or company, as the case may be, has without good and sufficient reasons failed to deduct and pay the tax. (1A) Without prejudice to the provisions of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icient reasons, no penalty shall be levied under this section. xxxx xxxx xxxx xxxx 7. The Income Tax Appellate Tribunal in ITA No.74/2003 held as under:- The plethora of decisions on this point make it amply clear that the assessee company had acted honestly and fairly in short deducting the tax at source under a bona fide belief that the reimbursement of certain expenses on account of salary of gardeners/sweepers, etc., actual conveyance expenditure and the expenditure on newspapers and periodicals in the hands of the employees. Under these circumstances, the assessee, as an employer did not deduct the tax at source. The revenue has not brought any evidence on record suggesting that the assessee company had acted in a fraudulent ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding, the Income Tax Appellate Tribunal concluded that the assessee cannot be held to be an assessee in default under Section 201 of the Act for short deduction of tax on the above items. Consequently, the Tribunal held that no interest under Section 201(1A) was leviable on the assessee and, therefore, the Tribunal deleted the levy of tax and interest under Section 201/201(1A) of the said Act. 9. While we are not inclined to disturb the finding of the Income Tax Appellate Tribunal that the assessee had acted in a bona fide manner, we do not agree with the conclusion of the Income Tax Appellate Tribunal that the assessee cannot be regarded as being as an assessee in default in respect of the short deduction. It is important to remembe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis that the default was not intentional or on any other basis. (See Bennet Coleman Co. Ltd. v. V.P.Damle, Third ITO, [1986] 157 ITR 812 (Bom.) and CIT v. Prem Nath Motors (P). Ltd., Therefore, the second question is also answered in favour of the Revenue and against the assessee. 11. We would like to reiterate that although the questions have been decided in favour of the Revenue, it must be remembered that the finding of the Tribunal that the assessee acted in a bona fide manner, has to be kept in mind and, therefore, no penalty can be imposed on the assessee under Section 221 because of the specific stipulation in the proviso to Section 201(1) of the said Act. We also note that the exact quantum of the default needs to be com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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