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TMI Blog2016 (4) TMI 1044X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 amounting to Rs. 27,78,033/- being 100% of tax not deducted by the assessee on the Commission / discount/handling charges paid to sub agents u/s 194H of the I.T. Act. She has failed to appreciate that the fault was established conclusively and was admitted by the assessee. 2. holding that the assessee being ignorant of law can be said to have a reasonable cause within the meaning of section 273B of the I.T. Act. She has failed to appreciate that in assessee's case which is availing services of qualified tax consultants ignorance of law cannot be a valid ground for such relief. 3. holding that the imposition of penalty u/s 271C is not justified as it would amount to penalizing the assessee for an omission which did not cause any loss o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 ITR 283 [Mad]. 4. Replying to the above, the ld. AR submitted that prior period expenses cannot be allowed in the subsequent years, hence, it was necessary to credit the accounts of sub agents/bookers instead of making provisions for the same. The ld. AR supporting the first appellate order contended that the assessee had paid short fall of TDS and interest thereon thus penalty cannot be imposed merely on technical issues. The ld. AR further submitted that the assessee was under bonafide belief that TDS was to be made at the time of payment of commission and not at the time of booking and crediting the expenditure to the respective recipients accounts. The ld. AR also pointed out the A.Y 2001-02 was the first year of TDS provisions and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of payment of commission and not at the time of booking/crediting the expenditure. He has given the following reasons to support his plea of bonafide belief (i) That it was the first year of the inactment of the relevant provision and the assessee was a bit confused, (ii) That it was a policy of the company in the past that TDS was deducted when payment of commission was made because normally there were huge bad debts in sales and it was felt that if TDS is made at the time of crediting the commission expenses and TDS certificates are also issued then if the sale is not realized then the agent would encash the TDS and in this way he will receive an undue benefit. (iii) That as far as financial year 2001-02 is concerned the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which did not cause any loss of revenue. I therefore cancel the penalty." 6. On logical analysis of the operative part of the first appellate order, we observe that the ld. CIT(A) considered the submissions, reasons and the explanation of the assessee and then noted that the sale in respect of which commission was payable did not materialize and the commissions was also written back. The ld. CIT(A) also observed this fact that the assessee has already paid the TDS and interest thereon and respective party accounts were debited by the said amounts as no commission was paid to them and the TDS refund received by them [payee sub agents/brokers] was undue benefit enjoyed by them. After noticing above mentioned facts, on careful considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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