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TMI Blog2019 (12) TMI 1106X X X X Extracts X X X X X X X X Extracts X X X X ..... 961 (for short 'the Act'), qua the assessment year 2015-16 on the grounds inter alia that :- "1. Under the facts and circumstances of the case, the penalty order dt. 11.01.2018 passed u/s 271C of the Income Tax Act,1961 by the ld. Assessing Authority and upheld by the Ld. First Appellate Authority is void as it is barred by limitation as prescribed u/s 275(1)(c) of the Act and the same deserves to be quashed. 2. Under the facts and circumstances of the case, the penalty u/s 271C of the Act levied by the ld. Assessing Authority on the appellant is injudicious and bad at law as no such payment of EDC has been made by the Appellant company. 3. Under the facts and circumstances of the case, the Ld. Assessing Authority has grossly erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicious, unwarranted, against the facts of the case and bad at law." 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : on the basis of information come on record during the survey proceedings conducted under section 133A of the Act at the business/office premises of Haryana Urban Development Authority (HUDA), Assessing Officer (AO) noticed that the Tax Deducted at Source (TDS) was not made on payment of External Development Charges (EDC) and consequently, initiated the penalty proceedings u/s 271C of the Act. AO proceeded to hold that the assessee was statutorily bound to deduct TDS on the amount of Rs. 10,11,00,000/- nor brought on record any evidence if the non-deduction/non-deposit of tax at sourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s/circulars. It is also not in dispute that the assessee has not credited the amount of EDC paid to Shri Vardhman Infra Heights Pvt. Ltd. in its P&L account. It is also not in dispute that Agreement between the land owners intended to set up a Group Housing Society dated 30.11.2010 was entered into between M/s. Dial Softech Pvt. Ltd., Shri Tek Ram, Smt. Saroj Singhal, Smt. Luxmi Devi and Smt. Sunehra Devi c/o M/s. Santur Infrastructure Pvt. Ltd. and the Governor of Haryana acting through the Director, Town & Country Planning (DTCP), Haryana, whereby owner undertakes to pay proportionate EDC as per rate, schedule, terms and conditions contained in the Agreement. 6. When we examine the question "as to whether TDS on payment of EDC to HUDA w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in pursuance of any work contract or under statutory obligation meaning thereby that when the assessee has no privity of contract with HUDA rather the assessee has privity of contract with DTCP, a Government Department of Haryana, as per Agreement (supra) and the HUDA has merely received the payment for and on behalf of DTCP, the assessee was not required to deduct the TDS. 10. Ld. DR for the Revenue by relying upon the Office Memorandum F.No.370133/37/2017-TPL dated 23.12.2017 issued by the Central Board of Direct Taxes (CBDT) contended that there is no ambiguity that HUDA is a taxpayer entity under the Incometax Act and as such, TDS provisions would be applicable on EDC payable by developer to HUDA. 11. When we examine aforesaid co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f clarified not to deduct the TDS, no penalty is leviable u/s 271C on the assessee. 13. Even otherwise, for argument sake, even if it is assumed that tax is required to be deducted on EDC but not deducted under bonafide belief that the provisions contained u/s 271C are not attracted, no penalty can be levied. 14. Hon'ble Supreme Court in the case of CIT vs. Bank of Nova Scotia 380 ITR 550 upheld the findings returned by the tribunal that, "if there is no contumacious conduct of the assessee, penalty u/s 271C cannot be levied." Operative part of the judgment supra is extracted for ready perusal as under :- "2. The matter was pursued by the Revenue before the Income Tax Appellate Tribunal. The Income Tax Appellate Tribunal vide order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly dismissed." 15. Furthermore, coordinate Bench of the Tribunal in case of DCIT (TDS), ACIT (TDS) and JCIT (TDS), Dehradun vs. The Joint Secretary Organizing Committee for Winter Games also decided the identical issue by relying upon the decision rendered by Hon'ble Supreme Court in case of CIT vs. Bank of Nova Scotia (supra) and deleted the penalty u/s 271C by returning following findings :- "31. We have carefully considered the rival contentions and perused the orders of the lower authorities. On looking to the facts of the case as discussed by us in appeal of the assessee and revenue in 201(1) and 201(1A) proceedings above, we find that the belief of the assessee is bonafide and failure to deduct tax at source u/s 194C of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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