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TMI Blog2016 (12) TMI 1811X X X X Extracts X X X X X X X X Extracts X X X X ..... [ 2001 (4) TMI 34 - DELHI HIGH COURT] . We therefore uphold the order of the CIT(Appeals) deleting the levy of penalty under section 271CA of the Act. The appeal of the revenue is accordingly dismissed. - ITA No.560/Chd/2016 - - - Dated:- 30-12-2016 - SHRI BHAVNESH SAINI AND MS. ANNAPURNA GUPTA, JJ. Appellant by: Shri Manjit Singh, DR Respondent by: None ORDER ANNAPURNA GUPTA, J. This appeal has been filed by the Revenue against the order of learned Commissioner of Income Tax (Appeals), Patiala dated 4.2.2016 for assessment year 2011-12, deleting the penal ty levied under sect ion 271CA of the Income Tax Act, 1961 (in short the Act ) for default in collecting tax collect ion in compliance with the provisions of Tax at Sources(TCS). 2. The grounds of appeal raised by the assessee are as follows: (i) The Ld. CIT(A) is erred in holding that as no demand on account of non-collection of tax at source has been raised by the AO, the action of the AO clearly establishment that she has not treated the appellant as assessee in default as far as TCS is concerned. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the provisions of sect ion 206C of the Act. In response to show cause notice the assessee filed his reply on 14.10.2013 and relied on a judgement in the case of Wipro GE Medical Systems Ltd (2005) 24 CCH 0001 Bangalore Tribunal given by Hon ble I.T.A.T. The Assessing Officer did not accept the said judgement for the reason that the same had not reached finality and chose to follow CBDT letter F.No.275/17/2013- IT(B) dated 16.7.2013 with regard to the application of sect ion 206C. Since the assessee deductor had not collected TCS at the rate of 1% on sales of ₹ 5,45,66,201/- as required under the provisions of chapter XVII BB of the Income Tax Act, 1961 and also failed to submit any reasonable cause for non-collection of tax at source, the Assessing Officer held that the assessee was liable to pay, by way of penal ty under sect ion 271CA a sum equal to the amount of tax which he failed to collect at source. 5. Aggrieved by the same, the matter was carried in appeal before the Ld. CIT (Appeals). Detailed arguments were made by the assessee which are reproduced at para 6.2 of the CIT (Appeals) s order. Briefly put, the assessee contended that the penal ty u/s 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings of the authorities below and considered the material available on record. 9. We have gone through the order of the ITAT in the case of Sh. Om Prakash Gupta HUF in ITA No. 341 and 342/Chandigarh/2016 dated 20.06.2016. We find that the facts in that case are identical to that in the present case, in that the assessee in the said case was also in the business of purchase and sale of old Iron scrap and though tax had been collected by the parties from whom the assessee had purchased scrap, yet the assessee had failed to collect tax at source on sales made by it and therefore penalty under sect ion 271CA was levied. Ld. CIT(Appeals) in the said case, we find, deleted the penalty levied since he found that the purchasers of scrap f rom the assessee had disclosed the same in their returns of income and paid due taxes thereon and the assessee had therefore not been treated as an assessee in default for non-collection of tax at source. Ld. CIT(Appeals) followed the decision of the Bangalore bench in the case of Wipro GE Medical Systems Ltd and held that there was reasonable cause for not levying penal ty since sufficient compliance had been made as the tax demand had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit case f or levy of penalty against the assessee. Hon'ble Delhi High Court in the case of Woodward Governor India P. Ltd. Vs CIT 253 ITR 745 held as under: Levy of penalty under section 271C of the Income-tax Act, 1961, for failure To deduct tax at source, is not automatic. In order to bring in application of Section 271C, in the backdrop of the overriding non obstante clause in section 273B, absence of reasonable cause, existence of which has to be established, is A sine qua non. Before levying penalty, the concerned officer is required to find out that even if there was any failure to deduct tax at source, the same was without reasonable cause. The initial burden is on the assessee to show that there exists reasonable cause which was the reason for the failure. There- after, the officer has to consider whether the explanation offered by the assessee or other person as regards the reason for failure, was on account of reasonable cause . 6. Considering the facts of the case in the light of the above discussion and findings recorded by ld. CIT(Appeals), I do not find any merit in the appeals of the Revenue. Both appeals of the Revenue are, accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts of the goods purchased and sold by it and the definition of scrap given in the Explanation to sect ion 206C, the assessee believed that the goods did not qualify as scrap for the purpose of tax collect ion at source under sect ion 206C, which was reasonable belief being neither illogical or irrational,and therefore no taxes had been collected at source on the sale made of these goods. The relevant submissions made by the assessee are reproduced at para 6.2 of the CIT(A) order. 11. We find that the belief harboured by the assessee, considering the facts narrated above constituted a reasonable belief which an ordinary person in the prevailing circumstances would have harboured. It is not the case that the assessee was found liable to collect tax at source on the goods sold by it since the goods were categorically found to qualify as scrap as such, as provided in the definition of the same in the Explanation to sect ion 206C. In fact the assessee was found liable to collect tax at source since the assessee had accepted the same as scrap having paid taxes on the same while purchasing the goods and having not categorically established that the goods were not in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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