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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 ..... ds credence to the bona fide of the assessee and therefore, the penalty is not exigible under Section 271(1)(c) of the Act. Merely because the claim of the assessee has been rejected by the revenue authorities would not make the assessee liable for penalty. - Decided in favour of assessee. - ITA 2450 And 2451/Bang/2019 - - - Dated:- 14-2-2020 - Shri. A. K. Garodia, Accountant Member And Smt. Beena Pillai, Judicial Member For the Appellant : Shri. H. Muralidhar, CA For the Respondent : Mr. Shahnawaz Ul Rahman, JCIT DR ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeals have been filed by assessee against common order dated for September 2019 passed by Ld. CIT (A) 10, Bangalore for assessment years 2012 13 and 2013 14 against levy of penalty under section 270 1C of the act by treating assessee as assessee in default (pursuant to orders 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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/defaults. He also placed reliance on a decision of the Hon ble ITAT Jaipur Bench in the case of State Bank of India Vs. ACIT (2019) 101 taxmann.com 61 (Jaipur-Trib.) wherein on identical default of non deduction of tax at source on perquisite not exempt u/s.10(5) of the Act and imposition of penalty for such failure u/s.271C of the Act, the ITAT Jaipur deleted penalty imposed u/s.271C of the Act, observing as follows:- 10. We also refer to Hon'ble Supreme Court decisions in case of CIT v. I.T.I. Ltd. [2009] 183 Taxman 219 (SC) and CIT v. Larsen Toubro Ltd. [2009] 181 Taxman 71 (SC) wherein it was held that the beneficiary of exemption under section 10(5) is an individual employee. There is no circular of Central Board of Direct Taxes (CBDT) requiring the employer under section 192 to collect and examine the supporting evidence to the declaration to be submitted by an emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnated place being in India and the amount of claim not exceeding the economy fare of the national carrier by the shortest route to the place of destination. However, the Revenue's case is that what the assessee bank has failed to consider is that the travel plan includes the foreign leg of travel and corresponding travel expenses which is not eligible for exemption under section 10(5) of the Act. However, the assessee's bank explanation to this effect is that 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion is whether penalty can be imposed on the Assessee u/s.271C of the Act. The Hon ble Karnataka High Court in the case of Ankita Electronics Pvt. Ltd. (supra) had an occasion to deal with identical issue and the Court held as follows:- 6. While dismissing the appeal, the Tribunal has observed that the additions in respect of which penalty under Section 271(1)(c) of the Act was levied, have been admitted by the High Court for consideration and thus found that the additions made were debatable and would lead credence to the bonafides of the assessee. It thus held that the matter of imposing penalty under Section 271(1)(c) of the Act, was not exigible in the case on hand. 7. The Tribunal placed reliance on decision of the ITAT, Mumbai in the case of Nayan Builders Developers (P.) Ltd. v. ITO [IT Appeal No. 2379/Mum/2009, dated 18-3-2011], which had also held that the admission of substantial questions of law by the High Court lends credence to the bona fides of the assessee in claiming deduction. Once it turns out that the claim of the assessee could have been considered for deduction as per a person properly instructed in law and is not completely debarred at all, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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