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TMI Blog2023 (5) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal. 4. Necessary cost be awarded to the assessee." 3. Succinctly, the fact as culled out from the records is that in this case, the return of income was e-filed on 30.09.2014 declaring total income at Rs. 10,47,410/-. The return of income was processed u/s 143(1) of the Act, 1961 on 11.04.2015. This case was selected for scrutiny through CASS for 'Complete Scrutiny'. Accordingly, a notice u/s 143(2) of the Income Tax Act, 1961 was issued on 28.08.2015 and case fixed for hearing on 08.09.2015. This notice was duly served upon the assessee. The notice was duly complied with by the assessee. Thereafter, a notice u/s 142(1) along with a detailed questionnaire was issued on 17.06.2016. Simultaneously, due to change of incumbent a fresh opportunity vide notice u/s 143(2) of the I.T. Act dated 17.06.2016 was provided to the assessee. Assessment order was passed on 31.10.2016 under section 143(3) of the Act. 3.1 After culmination of the assessment in this case the ACIT, Circle-2, Ajmer referred letter no. 197 dated 30.07.2019 that the revenue audit party has raised minor audit objection in this case that the assessee has purchased a property for purchase consideration of Rs. 57,94, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1A) of the I.T. Act, 1961 was passed on 28.10.2020 by creating demand of Rs. 57940/- of TDS default u/s 201(1) and Rs. 49828/- u/s 201(1A) as interest @ 1.00% per month of the I.T. Act, 1961. Therefore, penalty notice u/s 271C of the I.T. Act, 1961 issued on 24.11.2020 to the deductor by the office of the undersigned fixing date of hearing on 01.12.2020. Despite giving due opportunities the assessee failed to represent its case. No compliance made by the assessee till date, which shows that the assessee has nothing to say in this regard and default of the assessee is established. From the above, it is clear that the deductor has to deduct TDS of Rs. 57,940/- @ 1% u/s 194IA of the IT Act, 1961 at the time of payment of sale consideration to the seller and deposit the same in Central Govt. Account, but deductor failed to do so. Relying on the case of Classic Concepts Home India (P) Ltd. vs. CIT of the Kerala High Court, IT Appeal No. 89, 90, 91 & 92 of 2015 dated 21 May, 2015, wherein it is held that the tax was deducted at source and the same was remitted belatedly, though with interest, authorities were fully justified in levying penalty u/s 271C of the I.T. Act, 1961 and thereby ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d their written submission on record in support of the grounds so raised which is extracted in below; 1. The assessee is engaged in real estate business. Assessment u/s 143(3) of IT Act was completed on 31.10.2016 at income of Rs.10,77,780/- against returned income of Rs.10,47,410/-. 2. Thereafter on the basis of audit objection, the ACIT, Circle-2 vide letter dt. 30.07.2019 made reference to Additional Commissioner of Income Tax, Range- TDS, Udaipur (Addl. CIT-TDS) to initiate penalty proceedings u/s 271C of the IT Act for failure to deduct tax at source u/s 194-IA of Rs.57,940/- on land purchased on 05.08.2013 at Mangliyawas for Rs.57.94 lacs. 3. Accordingly, Addl. CIT-TDS issued show cause notice u/s 271C of the Act dt. 21.01.2020, 17.02.2020 & 02.03.2020 and forwarded the case to ITO(TDS) for passing order u/s 201/201(1A). ITO(TDS) passed the order u/s 201(1)/201(1A) on 28.10.2020 and raised demand of Rs.57,940/- u/s 201(1) & interest u/s 201(1A) at Rs.49,828/- and communicated this fact to Addl. CIT-TDS vide letter dt. 02.11.2020. 4. The Addl. CIT-TDS again issued notice u/s 271C of the Act on 24.11.2020 & 03.12.2020 but in the absence of reply, relying on the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive years. Hon'ble Delhi High Court in case of CIT Vs. NHK Japan Broadcasting Corporation (2008) 305 ITR 137 after considering the said decision of Hon'ble Supreme Court with reference to the proceedings initiated u/s 201 where no time limit for initiation of proceedings is prescribed at para 19 to 22 of its order held as under:- 19. Even though the period of three years would be a reasonable period as prescribed by s. 153 of the Act for completion of proceedings, we have been told that the Tribunal has, in a series of decisions, some of which have been mentioned in the order which is under challenge before us, taken the view that four years would be a reasonable period of time for initiating action, in a case where no limitation is prescribed. 20. The rationale for this seems to be quite clear-if there is a time-limit for completing the assessment, then the time-limit for initiating the proceedings must be the same, if not less. Nevertheless, the Tribunal has given a greater period for commencement or initiation of proceedings. 21. We are not inclined to disturb the time-limit of four years prescribed by the Tribunal and are of the view that in terms of the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime in the year under consideration, it escaped the assessee's attention. This was explained by the assessee vide letter dt. 05.03.2020 (copy enclosed) where it was also stated that neither the sub-registrar nor the AO while completing the assessment raised any objection on this default and only on the basis of audit objection the proceedings were initiated. Assessee paid the tax & interest on such default u/s 201(1)/201(1A) and therefore under such circumstances, ignorance of law is a reasonable cause for not complying with section 194-IA so as to levy penalty u/s 271C of the Act. For this reliance is placed on the following cases:- Hindustan Steel Ltd. Vs. State of Orissa in (1972) 83 ITR 26 (SC) where it was held as under:- "An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation- Penalty will not also be imposed merely because it is lawful to do so-Whether penalty should be imposed for failure to pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een initiated, are completed or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. In the present case, since penalty u/s 271C has not been initiated during the course of any proceedings, first part of sec. 275(1)(c) would have no application and it is only the second part which would apply. Thus the penalty order ought to have been passed within a period of six months beginning from the end of the month in which the action for imposition of penalty was initiated. Since the show cause notice u/s 271C was issued on 21.01.2020, the period of six months would have to be reckoned from 01.02.2020 that would end to 31.07.2020. Therefore, penalty order passed on 16.12.2020 is barred by limitation. In view of above, penalty levied u/s 271C be directed to be deleted." 6. In addition, the ld. AR of the assessee vehemently argued that before levy of demand of TDS default notice for penalty was issued. On being pointed out the additional CIT referred the matter first for demanding the TDS from the assessee and after that again notice for levy of penalty u/s. 271C was issued which is beyond six years. The assessment of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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