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TMI Blog2019 (11) TMI 1138X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee bank has not deducted TDS on leave travel concession (LTC) paid to employees and hence the assessee was treated as 'assessee in default' within the meaning of section 201 of the Act. The Assessing Officer (AO) found there is no TDS obligation on the reimbursement of LTC provided to the employees. Further assessee claimed exemption u/s 10(5) of the Act towards reimbursement of LTC/LFC and finally AO considered that assessee has not deducted TDS and passed order u/s 201 of the Act raising demand of Rs. 31,085/-. The assessee has allowed exemption u/s 10(5) to the employees for travel outside India and travel by circuitous route which is not in accordance with provisions of section 10(5) of the Act read with rule 2B of the IT Rules, whereas exemption u/s 10(5) is available only for travel to any place in India and restricted to the amount of expenses actually incurred for the purpose of travel read with rule 2B of IT Rules. On appeal, the CIT(A) confirmed the action of the AO and dismissed the quantum appeal. Subsequently, AO issued show cause notice u/s 271C of the Act. The assessee has filed explanation by letter dated 9/11/2/17 explaining reasons and Reasonable cause as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for non-deduction of tax at source on LTC. The assessee-bank has failed to deduct TDS but in proceedings u/s 201 of the Act, the assessee has accepted the claim and paid the amounts. The fact that non-deduction of TDS has come out in the survey operations u/s 133A of the Act. We found that the assessee has not deducted TDS and explained reasonable cause in the penalty proceedings and the assessee's action is not wanton but on a bona fide belief. We found the co-ordinate bench of Tribunal in the case of Syndicate Bank vs. ACIT in ITA Nos.651 to 656/Bang/2019 dated 19/07/2019 has deleted the penalty u/s 271C of the Act and has observed at paras.11 to 14 which read as under: "11. The learned counsel for the Assessee submitted that when the Hon'ble High Court admits an appeal against the order in quantum proceedings, no penalty can be levied on the Assessee. It was submitted that when the High Court admits substantial question of law on an addition, it becomes apparent that the addition is certainly debatable. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee bank has allowed exemption to all its employees who have submitted LFC claim. The Revenue has not disputed the LFC claim in respect of these employees except in respect of 12 employees. These 12 employees, who have travelled to foreign countries as part of their travel itinerary with designated place of travel in India, and in respect of which they have submitted their LFC claim, has been disputed by the Revenue as not eligible for exemption under section 10(5) in respect of amount reimbursed towards foreign leg of their travel. The explanation of the assessee bank is that while calculating the tax liability of its employees, the figure of LFC was always exempted and this rule was being followed since many years, being in a nature of thumb rule and TDS exemption of LFC was thus allowed almost mechanically year after year. To our mind, it is important to be consistent but at the same time, one needs to be mindful of what been submitted by the employees towards their 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 amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, we are of the considered view that there was reasonable cause in terms of section 273B of the Act for not deducting tax by the assessee Bank. In the result, the penalty so levied under section 271C is hereby directed to be deleted." 12. The learned DR relied on the order of CIT(A) and further drew our attention to a decision of ITAT Bangalore Bench in the case of another branch of the Assessee in ITA No.532 to 536/Bang/2019 order dated 12.7.2019, wherein this Tribunal remanded the question of imposition of penalty to the CIT(A) for fresh consideration to see parity of facts between the case of the Assessee and the decision of ITAT Jaipur Bench in the case of State Bank of India (supra). 13. We have carefully considered the rival submissions. It is undisputed that as against the order of the Tribunal holding the Assessee to be in default for non deduction of tax at source, the Assessee has preferred appeal before the Hon'ble Karnataka High Court 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.2 ..... 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