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20-11-2018, Union Bank Of India, Section 271C, 201 (1A), HIGH COURT OF ALLAHABAD
The assessee in these two appeals is the Union Bank of India, ADA Branch, Jaipur House, Agra.
The assessee Bank had various fixed deposits of the Agra Development Authority under different IDs for many years. It failed to deduct tax at source (TDS) and deposit the same with the Central Government for the financial years 2012-13 and 2013-14. Accordingly, penalty under Section 271 C of the Income Tax Act, 1961 (in short of the Act) amounting to Rs. 6,84,167/- and Rs. 13,23,794/-was imposed for the assessment years 2012-13 and 2013-14 respectively.
The aforesaid penalty for the year 2012-13 was affirmed and that of the assessment year 2013-14 was deleted by the CIT (Appeals).
In appeals to the Income Tax Appellate Tribunal, Agra Bench, Agra preferred by the assessee Bank for the assessment year 2012- 13 and by the Additional Commissioner, Income Tax (TDS) Kanpur for the assessment year 2013-14, the tribunal dismissed the appeal of the assessee Bank and allowed that of the revenue.
In the net result, the order of penalty passed under Section 271 C of the Act for both the assessment years 2012-13 and 2013- 14 stood affirmed.
Thus, aggrieved the assessee Bank has preferred these two appeals.
Both the appeals were admitted vide order dated 1.8.2017.
The appeal in relation to the assessment year 2012-13 was admitted on the following two substantial questions of law:-
(i) Whether the Tribunal was correct to confirm the penalty under Section 271 C of the Act in not deducting TDS on two ID's out of 9 ID's which has not found to be false or frivolous by the authority below when the error was bonafide not intentional; and
(ii) Whether the appellant having deposited the TDS on 01.03.2013 as soon as mistake was noticed and also the interest under Section 201 (1 A) of the Act having paid for delayed payment prior to the passing of the assessment order dated 15.03.2015under Section 201 (1)/201(1A) of the Act having paid for delayed payment prior to the passing of the assessment order dated 15.03.2015 under Section 201 (1)/201 (1A) of the Act, penalty was sustainable.
The appeal for the assessment year 2013-14 was admitted on the following substantial questions of law:-
(i) Whether the ITAT was correct to restore the penalty of Rs. 13,23,794/- for the F.Y. 2012-13 and A.Y. 2013-14 when the appellant has deducted and deposited Rs. 5,86,720/- on 11.01.2013 and Rs. 7,73,075/- on 01.03.2013 totaling Rs. 13,23,794/- within the same financial year in view of sub-section (4) of Sectin 194 A
of the Act; and
(I) Whether survey having taken place under Section 133A of the Act on 10.01.2013 can be presumed it that TDS was deducted by the assessee on account of survey only ignoring that the TDS and deducted and deposited in the same financial year as such the penalty under Section 271C of the Act cannot be attracted and the penalty imposed was saved by the provision of section 273 B of the Act.
We have heard Sri Suyash Agrawal, learned counsel for the assessee Bank and Sri Subham Agrawal, learned counsel appearing for the revenue ie. Additional Commissioner of Income Tax (TDS) Kanpur.
Sri Suyash Agrawal argued that in respect of the assessment year 2013-14 tax at source on the FDRs of the Agra Development Authority was deducted before the close of the relevant financial year and was deposited on 1.3.2013 and the interest for the delayed payment was deposited on 15.3.2013. Therefore, in view of Subsection (4) of Section 194 A of the Act there is no default which may attract penalty provision. Moreover, the Agra Development Authority had furnished certificates of exemption under Section 197 of the Act upto the financial year 2010-11 and as the assessee Bank had not been deducting tax at source on the interest income on its FDRs it bonafidely due to technical fault or error in programming of the computer system could not deduct tax for the relevant year in time. Thus, no penalty was leviable in view of Section 273 B of the Act. In respect for the assessment year 2012-13 he submitted that though in this year tax at source was deducted and deposited a little later but as the said delay was bonafide in view of earlier certificates submitted under Section 197 of the Act by the Agra Development Authority, there was a reasonable cause for not deducting tax at source. Thus, no penalty could have been levied in view of Section 273 B of the Act. Sri Subham Agrawal to counter the above submissions had argued that deduction and deposit of tax within the financial year concerned under Section 194 A (4) of the Act would not absolve the assessee Bank from its liability to pay interest and penalty for not