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TMI Blog2019 (8) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... CA Respondent by : Dr. P.V. Pradeep Kumar, Addl.CIT(DR)(ITAT), Bengaluru. ORDER These are 36 appeals by different branches of Syndicate Bank, a nationalised bank, carrying on banking business against different orders of respective CIT(Appeals), Bengaluru, relating to different Assessment years as set out in the cause title. The issue involved in all the appeals are common and deal with the only issue of validity of imposition of penalty on the Assessee u/s.271-C of the Income Tax Act, 1961 (Act). The issue arises under identical facts and circumstances and the reasoning for levying penalty and the arguments of the Assessee for not levying penalty are identical in all these cases. These cases were heard together and we deem it convenient to dispose them off by way of this common order. 2. At the time of hearing, both the parties agreed that identical issue came up for consideration before this Tribunal in ITA Nos. 651 to 656/Bang/2019 in the case of Syndicate Bank, Koramangala, Yelhanka and Ganganagar Branches, Bangalore, wherein both of us constituted the Bench and vide order dated 19.07.2019, the appeals of the assessees were allowed deleti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions for the purpose of section 10(5) and it reads thus: 2B. (1) The amount exempted under clause (5) of section 10 in respect of the value of travel concession or assistance received by or due to the individual from his employer or former employer for himself and his family, in connection with his proceeding,-- (a) on leave to any place in India; (b) to any place in India after retirement from service or after the termination of his service, shall be the amount actually incurred on the performance of such travel subject to the following conditions, namely :-- (i) where the journey is performed on or after the 1st day of October, 1997, by air, an amount not exceeding the air economy fare of the national carrier by the shortest route to the place of destination; (ii) where places of origin of journey and destination are connected by rail and the journey is performed on or after the 1st day of October, 1997, by any mode of transport other than by air, an amount not exceeding the air-conditioned first class rail fare by the shortest route to the place of destination; and (iii) where the places of origin of journey and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead with Rue 2B of the Rules are not satisfied. The Assessee in these appeals reimbursed leave travel allowances to its employees in respect journey undertaken out of India. In respect of such reimbursement it did not deduct tax at source. According to the bank, if the destination is India, irrespective of the en-route journey, it need not deduct tax at source as the reimbursement of LTA was exempt u/s.10(5) of the Act. 5. A survey was conducted u/s.133A of the Act in the business premises of the Assessee and it was noticed that the Assessee did not deduct tax at source on LTA reimbursement even when the travel was out of India to a destination in India through a long circuitous route. The Act mandates that a specified percentage of Tax is required to be deducted by the payer at the time of making certain payments to the payee. The requirement to deduct tax is there for payments such as payment of Commission, interest, salary, royalty, contract payment, brokerage etc. The non exempt LTA will be in the nature of salary and the Assessee ought to have deducted tax at source and the Assessee failed to do so under the impression that if the destination is India, irrespective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (1) of section 272BBB or clause (b) of sub-section (1) or clause (b) or clause (c) of subsection (2) of section 273,no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure. 7. There is no definition for the term reasonable cause and it has to be decided upon the facts of each case. The Hon'ble Supreme Court of India made the following observation in the Case of CIT, New Delhi Vs. M/s Eli Lilly Company (India) Pvt. Ltd. Ors., CIVIL APPEAL No. 5114/2007, Order dated 25th March, 2009, with regard to reasonable cause for failure to deposit TDS:- (iv) On the Scope of Section 271C read with Section 273B: 35. Section 271C inter alia states that if any person fails to deduct the whole or any part of the tax as required by the provisions of Chapter XVII-B then such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct. In these cases we are concerned with Section 271C(1)(a). Thus Section 271C(1)(a) makes it clear that the penalty leviable sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvation in the Case of The Commissioner of Income Tax and Others Vs. The Rajajinagar Co-operative bank Limited ITA 86 of 2006, Order Date 20th July, 2011, with regards to reasonable cause for failure to deposit TDS:- 10. In the instant case, the assessee is a Cooperative Bank. Clause 5 of sub-section (3) of Section 194A expressly exempts the Bank from deducting the tax at source on interest payable by the Bank to its members and other Cooperative Societies. As stated by the assessee, they did not properly construe this provision. By misconstruing this provision they also did not deduct tax from the interest payable to nonmembers. That is the bonafide mistake which they have committed. Their bonfides is demonstrated to the effect that once in a survey the said mistake was notice and pointed out immediately they have paid the tax with interest. Therefore, in the light of this undisputed facts of this case, when the Appellate Commissioner and the Tribunal held that the same constitutes a reasonable cause and when the same is not shown to be false, the assessee has satisfied the requirement of Section 273- B, in which event, no penalty shall be imposable. Therefore the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In such circumstances no penalty can be levied u/s 271C. In this regard the learned counsel for the Assessee placed reliance on the decision of the Hon'ble Karnataka High Court in the case of CIT v. Ankita Electronics Pvt. Ltd. 379 ITR 50 (Kar) wherein it was held that the admission of substantial question of law by the High Court lends credence to the bona fides of the assessee in his action and hence no penalty can be imposed on such additions/defaults. He also placed reliance on a decision of the Hon'ble ITAT Jaipur Bench in the case of State Bank of India Vs. ACIT (2019) 101 taxmann.com 61 (Jaipur Trib.) wherein on identical default of non deduction of tax at source on perquisite not exempt u/s.10(5) of the Act and imposition of penalty for such failure u/s.271C of the Act, the ITAT Jaipur deleted penalty imposed u/s.271C of the Act, observing as follows:- 10. We also refer to Hon'ble Supreme Court decisions in case of CIT v. I.T.I. Ltd. [2009] 183 Taxman 219 (SC) and CIT v. Larsen Toubro Ltd. [2009] 181 Taxman 71 (SC) wherein it was held that the beneficiary of exemption under section 10(5) is an individual employee. There is no circular of Central B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LFC claims. It appears that the assessee bank has looked at these 12 employees' claim broadly, as in other cases, in terms of actual travel being undertaken, the designated place being in India and the amount of claim not exceeding the economy fare of the national carrier by the shortest route to the place of destination. However, the Revenue's case is that what the assessee bank has failed to consider is that the travel plan includes the foreign leg of travel and corresponding travel expenses which is not eligible for exemption under section 10(5) of the Act. However, the assessee's bank explanation to this effect is that section 10(5) and Rule 2B doesn't place a bar on travel to a foreign destination during the course of travel to a place in India and there is nothing explicit provided therein to prohibit such travel in order to deny the exemption. Having considered the rival submissions and facts on record, we are of the opinion that the assessee bank has undertaken reasonable steps in terms of verifying the assessee's claim towards their LFC claims and is aware of employees travelling to foreign countries as part of their travel itinerary but at the same ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt and the question whether the Assessee is guilty of non deduction of tax at source or not is to be decided in such appellate proceedings. In this background of facts, the question is whether penalty can be imposed on the Assessee u/s.271C of the Act. The Hon'ble Karnataka High Court in the case of Ankita Electronics Pvt.Ltd. (supra) had an occasion to deal with identical issue and the Court held as follows:- 6. While dismissing the appeal, the Tribunal has observed that the additions in respect of which penalty under Section 271(1)(c) of the Act was levied, have been admitted by the High Court for consideration and thus found that the additions made were debatable and would lead credence to the bonafides of the assessee. It thus held that the matter of imposing penalty under Section 271(1)(c) of the Act, was not exigible in the case on hand. 7. The Tribunal placed reliance on decision of the ITAT, Mumbai in the case of Nayan Builders Developers (P.) Ltd. v. ITO [IT Appeal No. 2379/Mum/2009, dated 18-3-2011], which had also held that the admission of substantial questions of law by the High Court lends credence to the bona fides of the assessee in c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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