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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 ..... ual by status was unaware with the provisions of section 194IA, so the alleged default at the end on the appellant was not at all willful so as to made him liable for the penalty under section 271C of the Act. 2. BECAUSE the penalty confirmed by the CIT(A) on the ground that it cannot be accepted that the assessee was unaware of the provisions of section 194IA as the said provisions were given vide publicity, is bad and is liable to be deleted. 3. BECAUSE the maxim 'ignorance of law is no excuse' is not applicable to the fiscal laws (as the Income-tax Act is) as per the principle laid down by the Hon'ble Supreme Court in the case of Motilal Padampat Sugar Mills Co. Vs. State of U.P. reported in 118 ITR page 326 and accordingly the penalty of Rs.68250/- confirmed by the CIT(A) on the said ground is also not correct and the same deserves to be deleted. 4. BECAUSE, without prejudice to the aforesaid, the seller had duly disclosed the capital gain in his return filed by him and there is overall no loss of revenue to the department, so looking to the facts in its entirely, the benefit of section 273B should have been allowed by the CIT(A) while passing the impugned app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the seller was also submitted in support of the contention. I have perused the penalty order and the submissions made by the appellant. The submission of the appellant that since the seller has disclosed the income in his return filed for the year under consideration, the penalty u/s 271C was unjustified, is found to be without any merit. The penalty u/s 271C of the Act is independent of the provision u/s 201 of the Act. Failure to deduct tax invites consequences of tax being not deducted, interest charged on the late deduction or no deduction of the tax and penalty for the failure to deduct the tax. The Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages Pvt. Ltd. Vs. CIT (2007) 293 ITR 226 (SC) has clarified the above said issue. The apex court held that "Be that as it may, the circular No, 275/201/95- IT(B) dated 29.1.1997 issued by the Central Board of Direct Taxes, in our considered opinion, should put an end to the controversy. The circular declares "no demand visualized under Section 201(1) of the Income- tax Act should be enforced after the tax deductor has satisfied the officer-in-charge of TDS, that taxes due have been paid by the deductee-asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to deduct income-tax at source u/s. 194IA of the Act, hence penalty of Rs.68,250/- was levied by AO u/s. 271C read with Section 194IA of the 1961 Act, which stood later confirmed by ld. CIT(A). It was submitted that the seller of the plot of land has duly filed its return of income with department, and has paid all due taxes to the Revenue, and thus no prejudice was caused to Revenue. The ld. Counsel for the assessee drew our attention to the appellate order passed by ld. CIT(A) where the contentions of the assessee was recorded by ld. CIT(A) that the seller of the property has filed return of income, declared capital gains and paid due taxes to the Government . The ld. Counsel for the assessee submitted that the assessee being individual was not knowing the provisions of Section 194IA of the 1961 Act . The ld. Counsel for the assessee submitted that provisions of Section 271C is subject to provisions of Section 273B. The ld. Counsel for the assessee relied upon the judgment and order of Hon'ble Supreme Court in the case of Motilal Padampat Sugar Mills Company Limited v. State of Uttar Pradesh, reported in (1979)118 ITR 326(SC). The ld. Counsel for the assessee reiterated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e default by assessee of not deducting income tax at source u/s 194IA is thus an admitted position, but at the same time it remain uncontroverted that the seller included capital gains on sale of plot of land in its return of income filed with Revenue, and paid due taxes to the Government. The assessee has claimed that it is an individual and was not aware of the provisions of Section 194IA, which led to default in not deducting income tax at source . It has also been claimed that the Registering authorities before registering the property in favour of the assessee, also did not brought to the notice of the assessee that the assessee was required to deduct income tax at source @1% of the purchase consideration under provisions of Section 194IA while making payment for purchase of plot of land. The assessee has claimed that there is no presumption in law that every individual knows all the law, although there is a general presumption that ignorance of law is not an excuse . The assessee has claimed that no prejudice is caused to Revenue, as the seller has declared the capital gains on sale of plot of land in the return of income filed with Revenue and paid due taxes to government . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R OF CERTAIN IMMOVABLE PROPERTIES (OTHER THAN AGRICULTURAL LAND) There is a statutory requirement under section 139Aof the Income-tax Act read with rule 114B of the Income-tax Rules, 1962 to quote Permanent Account Number (PAN) in documents pertaining to purchase or sale of immovable property for value of Rs. 5 lakh or more. However, the information furnished to the department in Annual Information Returns by the Registrar or Sub-Registrar indicate that a majority of the purchasers or sellers of immovable properties, valued at Rs. 30 lakh or more, during the financial year 2011-12 did not quote or quoted invalid PAN in the documents relating to transfer of the property. Under the existing provisions of the Income-tax Act, tax is required to be deducted at source on certain specified payments made to residents by way of salary, interest, commission, brokerage, professional services, etc. On transfer of immovable property by a non-resident, tax is required to be deducted at source by the transferee. However, there is no such requirement on transfer of immovable property by a resident except in the case of compulsory acquisition of certain immovable properties. In order to have a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r penalty for non deduction of income tax at source, under Chapter XVII-B, which reads as under: "[Penalty for failure to deduct tax at source. 271C. [(1) If any person fails to- (a) deduct the whole or any part of the tax as required by or under the provisions of Chapter XVII-B; or (b) pay the whole or any part of the tax as required by or under- (i) sub-section (2) of section 115-O; or (ii) the second proviso to section 194B, then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay as aforesaid.] [(2) Any penalty imposable under sub-section (1) shall be imposed by the [Joint] Commissioner.]" The Section 271C stipulates levying penalty equivalent to the amount of tax which the person failed to deduct or pay. The assessee was required to deduct tax at source u/s 194IA @1% of the total consideration of property to the tune of Rs. 68,25,000/- paid by the assessee to seller, and the assessee having failed to deduct income tax at source u/s 194IA, the AO levied penalty of Rs. 68,250/- which was equivalent to amount of tax which the assessee was required to deduct . The provisions of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Hon'ble Supreme Court in the case of Motilal Padampat Sugar Mills Limited(supra), wherein Hon'ble Apex Court observed at para 6, as under: "......Morever, it must be remembered that there is no presumption that every person knows the law. It is often said that every one is presumed to know the law, but that is not a correct statement : there is no such maxim known to the law. Over a hundred and thirty years ago, Maule, J., pointed out in Martindale v. Falkner, (1846) 2 CB 706: "There is no presumption in this country that every person knows the law : it would be contrary to common sense and reason if it were so". Scrutton, LJ" also once said : "It is impossible to know all the statutory law, and not very possible to know all the common law". But it was Lord Atkin who, as in so many other spheres, put the point in its proper context when he said in Evans v. Bartlam, 1937 AC 473"...the fact is that there is not and never has been a presumption that every one knows the law. There is the rule that ignorance of the law does not excuse a maxim of very different scope and application." It is, therefore, not possible to presume, in the absence of any material placed before the Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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