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TMI Blog2019 (12) TMI 1190X X X X Extracts X X X X X X X X Extracts X X X X ..... on has to be accepted in the given facts and circumstances of the case. It is also not disputed that the default was noticed only at the time of Survey Proceedings. Taking into consideration the nature of business and small town in which the Assessee carries on business and other circumstances, we are of the view that this is not a fit case for levy of penalty u/s.271-C as the circumstances pointed out above would be reasonable cause for the failure of the Assessee to deduct/short deduct tax at source. We therefore cancel the order imposing penalty u/s.271-C - Decided in favour of assessee. - ITA Nos. 1724 to 1726/Bang/2018 - - - Dated:- 13-12-2019 - Shri N.V. Vasudevan, Vice President And Shri A K Garodia, Accountant Member For the Appellant : Smt. Suman Lunkar, CA For the Respondent : Shri K.R. Narayana, Jt. CIT(DR)(ITAT) Bengaluru. ORDER PER N.V. VASUDEVAN, VICE PRESIDENT These are appeals by the Assessee directed against a common order dated 5.3.2018 of Commissioner of Income Tax (Appeals), Davanagere confirming the order of the Assessing Officer (AO) imposing penalty on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esponse to the show cause notice before imposing penalty u/s.271C of the Act took a plea that it was a small trader in cotton, kappas and seeds at Ranebennur, which is a small town. The Assessee lacks knowledge of TDS provisions and there are no qualified professionals who could advise the Assessee regarding compliance of TDS provisions. It is only when the Survey was conducted u/s.133A of the Act by the ITO, TDS that it came to know about its obligation to deduct tax at source. 5. The Assessee also took a plea that the order imposing penalty u/s.271C of the Act is barred by time. Section 275(1)(c) of the Act reads thus:- 275. (1) No order imposing a penalty under this Chapter shall be passed (a).... (b)..... (c) in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. 6. It was the submission of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the original grounds of appeal, the Assessee has not raised any specific ground relating to the orders of the AO imposing penalty u/s. 271C of the Act being invalid because it was passed beyond the period of limitation prescribed u/s. 271(1)(c) of the Act. However an application to raise the aforesaid ground on limitation was filed by way of additional ground on the ground that the said ground was inadvertently omitted to be taken in the original grounds of appeal. We are of the view that the plea of limitation being a legal plea which can be adjudicated on facts already available on record and which arises out of the impugned order, should be admitted for adjudication. We accordingly admit the additional ground for adjudication. 9. The learned counsel for the Assessee reiterated the plea put forth before the AO and further placed reliance on decision of Hon ble Rajasthan High Court in the case of CIT Vs. Hissaria Bros., 291 ITR 244 (Raj) for the proposition that when the subject matter of the quantum proceedings was the non-compliance with Section 269T of the Act, there was no need for the appeal against the said order in the quantum proceedings to be disposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se proceedings stand on a different footing than the proceedings u/s.201(1) of the Act based on which penalty proceedings were initiated u/s.271C of the Act, in the present case. In support of his contention that the date of initiation would be date on which JCIT issues show cause notice to the Assessee u/s. 274 of the Act read with Sec.271C of the Act, i.e., 22.1.2016 would be the date of initiation of penalty proceedings and reckoned from that date, the order imposing penalty has been passed well within the period of limitation. He placed reliance on a decision of the ITAT Jaipur Bench in the case of Jaipur National University Vs. JCIT ITA No.870/JP/2018 order dated 6.2.2019 . In that case the order u/s.201(1) was passed on 31.10.2012. The officer who passed the order u/s.201(1) of the Act was not competent to initiate and pass order imposing penalty u/s.271C of the Act. On 22.1.2013, he made a reference to the competent officer for imposing penalty proceedings u/s.271C of the Act. The Officer competent to impose penalty i.e., the JCIT issued show cause notice dated 11.2.2013. The order imposing penalty was passed on 29.8.2013. On the above facts, the Tribunal h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view that the date on which the JCIT issues notice u/s.271-C should be reckoned as the date of initiation of penalty proceedings for the purpose of the second part of Sec.275(1)(c) of the Act. 12. We have considered the rival submissions. There is no dispute that the period of limitation is required to be examined in the light of the provisions of Sec.275(1)(c) of the Act. The decision of the Hon ble Rajasthan High Court in the case of CIT Vs. Hissaria Bros (supra) which was confirmed by the Hon ble Supreme Court clearly lays down that the period of limitation for penalties that are to be imposed which are not dependent upon outcome in quantum appeals should be governed by the provisions of Sec.275(1)(c) of the Act. The issue in the present case is as what is the starting point of time u/s.275(1)(c) of the Act in the present case. As far as applicability of the first part of sec.275(1)(c) of the Act is concerned viz., after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, . In the present case, at the level of the AO, the proceedings u/s.201(1) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 271-E to the Additional CIT. For some reason, the Additional CIT did not issue a show cause notice to the Assessee under Section 271-E (1) till 20th March 2012. There is no explanation whatsoever for the delay of nearly five years after the assessment order in the Additional CIT issuing notice under Section 271-E of the Act. The Additional CIT ought to have been conscious of the limitation under Section 275 (1) (c), i.e., that no order of penalty could have been passed under Section 271-E after the expiry of the financial year in which the quantum proceedings were completed or beyond six months after the month in which they were initiated, whichever was later. In a case where the proceedings stood initiated with the order passed by the AO, by delaying the issuance of the notice under Section 271- E beyond 30th June 2008, the Additional CIT defeated the very object of Section 275 (1) (c). 14. The ITAT Jaipur Bench in the case of Jaipur National University (supra) has however taken a contrary view holding that the date of initiation of penalty proceedings u/s.271C is when the officer competent to impose penalty issues show cause notice and not when the AO who p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore there appears to be two conflicting decisions of High Courts i.e., the Hon ble High Court of Kerala in the case of Grihalakshmi Vision (supra) and the Hon ble Delhi High Court in the case of JKD Capital and Finlease Pvt.Ltd. (supra) . There is no decision of Hon ble jurisdictional High Court on this point. We are also of the view that the decision of the Hon ble Rajasthan High Court in the case of Hissaria Brothers (supra) which was affirmed by the Hon ble Supreme Court is not on the issue of what is the date of initiation when the officer noticing the default in one proceedings is not competent to impose penalty for the said default and therefore has to make reference to another officer competent to impose penalty. The said decision is authority for the proposition that time limit for proceedings for levy of penalty u/s.271-D and 271-E of the Act are governed by the provisions of Sec.275(1)(c) of the Act. 17. In the given facts and circumstances, we are of the view that we would prefer to decide this appeal on the question of reasonable cause for non-compliance with the provisions as envisaged u/s.273B of the Act rather than on the point of limitati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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