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TMI Blog2022 (6) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty levied by AO u/s 271C and confirmed by ld. CIT(A) is not sustainable in the eyes of law, and is hereby ordered to be deleted - Decided in favour of assessee. - ITA No. 216/Vns/2019 - - - Dated:- 31-5-2022 - Shri Vijay Pal Rao, Judicial Member And Shri Ramit Kochar, Accountant Member For the Assessee : Shri Ashish Bansal, Advocate For the Revenue : Shri A.K. Singh, Sr. DR ORDER PER SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER: This appeal, filed by assessee, being ITA No. 216/Vns/2019, is directed against the appellate order dated 16.07.2019 passed by ld. Commissioner of Income Tax (A), Lucknow (hereinafter called the CIT(A) ) in Appeal No. A.No./CIT(A)/GKP/2018-19, confirming penalty of Rs. 68,250/- levied by ld. Assessing Officer u/s 271C read with Section 194IA of the Income-tax Act, 1961 (hereinafter called the AO ), vide penalty order dated 31.03.2019 in Order No. ITBA/PNL/F/15B(3)/2018-19/1015613185(1) . We have heard both the parties in Open Court through physical hearing mode. 2. The grounds of appeal raised by assessee in memo of appeal filed with Income Tax Appellate Tribunal, Varanasi (hereinafter called the tribunal ), reads as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty order dated 31.03.2019 passed by AO, filed first appeal with ld. CIT(A), which appeal filed by the assessee stood dismissed by ld. CIT(A), vide appellate order dated 16.07.2019, by holding as under: 5. In this case the appellant has raised five grounds of appeal through which it is contended that the penalty imposed by the AO was not correct and the seller has disclosed the capital gain in his return of income and has paid tax on the basis of the said return. In this case the appellant had purchased a plot of land for Rs.68,25,000/- during the year consideration from Shri Ashish Jaiswal. As per the provisions of section 194IA, the appellant was liable for deduction of tax @ 1% of the purchase consideration. The appellant did not deduct the tax, accordingly penalty proceeding u/s 271C were initiated and the AO imposed a penalty of Rs. 68,250/- for the failure. During the course of appellate proceeding it was submitted that the appellant could not be considered as an assessee in default since the seller has furnished his return u/s 139 of the Act and has taken into account, the sale consideration in his computation of income and has paid the due tax on such incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of the act and neither the seller nor the registering authority told the provisions to the appellant. The provisions of section 194IA of the Act were introduced by the finance Act, 2013 w.e.f 01/06/2013. The said provisions were given vide publicity thus the contention of the appellant the tax was not deducted for the want of knowledge of the provisions does not hold good. Furthermore it has been held through a number of judgment that ignorance of law is of no excuse. The appellant-has failed to offer any valid or cogent reason for not deducting the tax. Accordingly the penalty imposed u/s 271C is upheld. 6. As a result, the appeal is rejected. Thus, as could be seen, penalty levied by AO of Rs. 68,250/- by invoking provisions of Section 271C read with Section 194IA of the 1961 Act, was confirmed by ld. CIT(A) and the appeal filed by the assessee stood dismissed by ld. CIT(A), vide appellate order dated 16.07.2019. 5. The assessee being aggrieved by the appellate order dated 16.07.2019 passed by ld. CIT(A) filed second appeal with tribunal. The Ld. Counsel for the assessee opened arguments before the Division Bench and submitted that the assessee is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as submitted before ld. CIT(A) as well stated in the statement of facts as well Grounds of appeal filed before ld. CIT(A), that the seller of plot of land Shri Ashish Jaiswal has shown the capital gains arisen from the sale of plot of land in the return of income filed with Revenue and paid due taxes to government. Even similar contentions are raised vide ground number 4 filed by assessee in memo of appeal filed before tribunal, and statements were made by ld. Counsel for the assessee before the DB that the sellers have duly included capital gains on sale of this plot of land in the return of income filed with Revenue and due taxes stood paid. This fact has not been controverted by Revenue at any stage, including even before us. It is an admitted fact that the assesssee is an individual and has purchased plot of land during the year under consideration for Rs. 68,25,000/-, but he failed to deduct income-tax at source @1% of the purchase of property u/s 194IA, while making payments to seller, Mr. Ashish Jaiswal. The property was registered by Registering Authorities in favour of the assessee, without taking into cognizance of the fact that no income tax was deducted at source @1% u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), shall, at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent of such sum as income-tax thereon. (2) No deduction under sub-section (1) shall be made where the consideration for the transfer of an immovable property is less than fifty lakh rupees. (3) The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section. Explanation.-For the purposes of this section,- (a) agricultural land means agricultural land in India, not being a land situate in any area referred to in items (a) and (b) of sub-clause (iii) of clause (14) of section 2; (b) immovable property means any land (other than agricultural land) or any building or part of a building.] In the Memorandum to Finance Bill, 2013, the purpose of introducing Section 194IA was mentioned to be to widen tax base, create a reporting measure as an anti avo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or recurring in nature for majority of individuals in this country, unless they are high networth individuals or are engaged in the business of real estate. The assessee is an individual and is proprietor of New Manish Medial Agencies. As is emanating from records, the assessee has purchased only one property in the year under consideration which is covered by provisions of Section 194IA. The assessee has submitted that he was not aware of legal provisions for deduction of income-tax at source as is enshrined in Section 194IA, nor the Registering authority brought to his notice about the same before registering property in his name. The seller has already filed return of income and declared capital gains on sale of this property, and due taxes paid to credit of government. This provision u/s 194IA was introduced to widen tax base and to check evasion of the taxes as an anti avoidance measure. Once the seller has declared capital gains in the return of income filed with department and due taxes paid to credit of government, the allegation of non deducting tax at source with malice of evasion of taxes does not survive, and further the seller having filed return of income, is an exis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure.] The assessee has submitted that he is an individual and was not aware of the provisions of Section 194IA, nor the seller as well the registering stamp authorities brought to his knowledge about the provisions of Section 194IA of the 1961 Act. The assessee has also demonstrated that no prejudice is caused to Revenue, as the sellers had declared capital gains in return of income filed with Revenue and paid due taxes to the credit of government . The Revenue is not able to controvert this submission of the assessee. The assessee is the Prop. of New Manish Medical Agencies, and it could not be shown that the assessee is in the business of real estate or is regularly indulging in sale and purchase of properties . This is the solitary property purchased by the assessee, during the year under consideration, which was covered under the ambit of Section 194IA, consideration being not lower than Rs. 50,00,000/- . There is a latin maxim ignorantia legis neminem excusat which means that ignorance of law shall not excuse a person. But at the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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