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TMI Blog2017 (5) TMI 772X X X X Extracts X X X X X X X X Extracts X X X X ..... o levy of penalty on such short deduction of tax at source amounting to ₹ 44,766/-. Similarly, the assessee having not established its case of TDS not applicable on which short deduction was to the extent of ₹ 44,878/- the assessee is exigible to levy of penalty under section 271C of the Act. Accordingly, we uphold levy of penalty under section 271C of the Act. TDS on such amounts which were paid in the succeeding year - The assessee claims that there was some reconciliation pending in the case of two transporters and on reconciliation of the amounts the TDS was paid in the succeeding year. In respect of such a claim of the assessee, we find merit in the bonafides of the same and we hold that the assessee had reasonable cause for non deduction of tax on such payments and after reconciliation the assessee admittedly has paid the TDS on a total sum of ₹ 70,387/- in the succeeding year. There is no merit in the levy of penalty under section 271C on such payments.- Decided partly in favour of assessee. - ITA Nos.1334 to 1337/PUN/2014 - - - Dated:- 25-1-2017 - MS. SUSHMA CHOWLA, JM, AND SHRI ANIL CHATURVEDI, AM For The Appellant : Shri R.D. Onkar For Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct for the F.Y. 2007-08 was ₹ 8,81,819/- on the said default demand was raised under section 201(1) of ₹ 8,81,819/-. The Assessing Officer also computed the interest under section 201(1A) of the Act at ₹ 14,10,909/-. 5. The assessee was also issued show cause notice under section 271C of the Act. In response to the said notice the assessee pleaded that the short deduction/non deduction under various heads was suo motu acknowledged by them so it does not attract the penal provisions. The Additional CIT, TDS, Pune observed that the defaults were noted only during the survey action which was conducted at the premises of the assessee and during post survey proceedings. The suo motu compliance by the assessee was held to be not correct. The plea of the assessee that the default occurred due to oversight and was a bonafide mistake was also not accepted by the Additional CIT. Relying on the ratio laid down by the Hon ble Supreme Court in Union of India and others Vs. Dharmendra Textile Processors and others (2008) 306 ITR 277 (SC), the Additional CIT held that it was difficult to accept the plea that error was bonafide. In the absence of the assessee justifying any re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxmann.com 431. The second contention raised by the assessee was that for the Financial Year 2007-08 twin conditions of section 9(1)(vii) were applicable, wherein it had to be satisfied that the services were rendered in India and utilized in India. In this regard, reliance was placed on the ratio laid down in Ishikawajma Harima Heavy Industries Ltd. Vs. DIT 288 ITR 408 (SC). He stressed that in assessee s case the project report was done outside India in Germany. The off-shore services thus would not attract the fee for technical services as the twin conditions of the relevant section were not satisfied. He further pointed that the amendment which came in effect from 2010 were not applicable to the instant assessment years. 10. Another aspect of the issue pointed out by the Ld. AR for the assessee was that some payments were against reimbursement of expenses at actual and also there was element of service tax, on which no TDS had to be deducted. The TDS, if any, had to be deducted on professional fees and not on reimbursement of expenses or the service tax element. With regard to relevant provisions applicable, the Ld. AR for the assessee pointed that the assessee had reimburs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) shall be imposed by the Joint Commissioner. Further under the provisions of section 273B of the Act it is laid down that, notwithstanding anything contained in the various provisions of section mentioned therein, which also include section 271C of the Act, no penalty is to be imposed on such person or the assessee, as the case may be, for any failure referred to in the said provisions of different sections, if he proves that there was reasonable cause for the said failure. In other words, the penalty leviable under section 271C of the Act can be waived off in case the assessee or the person, as the case may be, proves the reasonable cause, i.e. the reason for failure to comply with the requisite provisions under which he was liable to deduct tax at source and pay the same in the account of the treasury. In other words, in case of reasonable cause the person can be exempted from the levy of the penalty under the requisite provisions as applicable. 14. In the facts of the present case, the assessee had made certain payments and in respect of one set of payments the assessee had deducted the tax at source under section194C of the Act. However, the Assessing Officer was of the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudication is in respect of the above said defaults where the assessee can avail the benefit of the provisions of section 273B of the Act establishing its case of reasonable cause for non deduction of tax at source in order to escape the rigours of section 271C of the Act. 16. The Hon ble Supreme Court in Price Waterhouse Coopers Ltd. (Supra) while deciding the issue of levy of penalty under section 271(1)(c) of the Act, where the plea of the assessee was that because of a bonafide mistake by the auditor, a provision for gratuity was not added back to the total income and hence no penalty for concealment is attracted. The Hon ble Supreme Court addressed the issue of the assessee that where there was a bonafide and inadvertent error and the assessee in such circumstance was not guilty of furnishing inaccurate particulars or attempting to conceal its income. The plea of the revenue on the other hand was that where the assessee was a reputed firm and had expertise available with it, could it make such mistakes in computing the total income. The Hon ble Supreme Court on such issue held that undoubtedly the assessee was a reputed firm and had great expertise available with it but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The second aspect which has been raised in this regard is that the off-shore services were rendered outside India and since it did not satisfy the twin conditions laid down in section 9(1)(vii) applicable to the Financial Year 2007-08, there was no merit in holding the assessee to be in default. 20. The issue of applicability of section 194J of the Act, vis- -vis similar payments of data line charges arise before the Pune Bench of the Tribunal in IGATE Computer Systems Ltd.(Supra) and it has been held that as there was no human intervention for transmitting the date it did not involve technical services and the provisions of section 194J of the Act were not applicable. 21. The plea of the assessee before us is similar that where it was accessing standard data server facility of the German company which was located outside India in Financial Years 2007-08 to 2009-10, then the payments made did not partake the nature of professional/technical services and the provisions of section 194J of the Act were not applicable. We find merit in the plea of the assessee in this regard and even where the assessee has deducted the tax at source on such consultancy fees paid and deposited the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racted or not and even if the stand of the Assessing Officer was such, does not make the assessee exigible to levy of penalty under section 271C of the Act and hence the same is deleted. 27. The next set of deduction which is claimed to be amounts on which TDS was not applicable and short deduction/oversight in deduction of tax at source. The total amount of payments on which tax in default is ₹ 44,878/- and further short deduction was on amounts totaling ₹ 44,766/-. The assessee has failed to explain as to why the TDS was not applicable on the amounts payable at ₹ 44,878/-. Further the assessee has admitted that it has by oversight not deducted the tax at source on payments on which TDS of ₹ 44,766/- has been held to be in default. We find that where the assessee has short deducted the tax at source and has admitted to have done the same, then the assessee is liable to levy of penalty on such short deduction of tax at source amounting to ₹ 44,766/-. Similarly, the assessee having not established its case of TDS not applicable on which short deduction was to the extent of ₹ 44,878/- the assessee is exigible to levy of penalty under section 271 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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