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TMI Blog2020 (4) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... ders under section 201(1)) for not making TDS payments made towards foreign travel. Brief facts of the case are as under: 2 The assessee is a banking institution. Survey u/s 133A of the Act was conducted on 26/12/2013 to verify compliance of TDS. During course of survey, it was noticed that assessee paid reimbursement of Leave Travel Concession [LTC] to its employees, even in cases where a foreign destination was included in the itinerary of respective employees. Such reimbursement was made without deducting tax at source and amount paid on account of foreign travel was treated as exempt u/s 10(5) of the Act. As employees were allowed exemption u/s 10(5) read with Rule 2B for travel outside India, the assessee was treated as assessee in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 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/defaul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee employer is under no statutory obligation under the Income-tax Act, 1961, and/or the Rules to collect evidence to show that its employees had actually utilized the amount paid towards leave travel concession. Even though the same is not required as per decision referred supra, in the instant case, the assessee bank has been diligent, and has collected and brought on record evidence to show that its employees had actually utilized the amount paid towards leave travel concession. 12. At the same time, in terms of adherence to the provisions as contained in section 10(5) read with Rule 2B, we find that the assessee bank has allowed exemption to all its employees who have submitted LFC claim. The Revenue has not disputed the LFC claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 time, there is an error of judgment on part of the assessee bank in understanding and applying the provisions of section 10(5) of the Act. Therefore, we are unable to accept the Revenue's co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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). 12 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. The matter as to whether the deduction was to be given or not, was taken up by the revenue authorities and it was held that certain deductions claimed by the assessee were to be disallowed. It is not disputed that the questions regarding the disallowance of the deductions claimed by the assessee is under consideration by the High Court, as the appeal filed by the assessee has been admitted, on the substantial questions of law which have been reproduced hereinabove. 9. The mere admission of the appeal by the High Court on the substantial questions of law as have been quoted above, would make it apparent that the additions made were debatable. The Tribunal has thus rightly held that the admission of substantial questions of law by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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