DCIT, Circle - 59, Kolkata, Kolkata v. Videsh Sanchar Nigam Limited, Kolkata

ITA 1138/KOL/2010 | 2004-2005
Pronouncement Date: 25-02-2011

Appeal Details

RSA Number 113823514 RSA 2010
Assessee PAN AAACV2808C
Bench Kolkata
Appeal Number ITA 1138/KOL/2010
Duration Of Justice 8 month(s) 17 day(s)
Appellant DCIT, Circle - 59, Kolkata, Kolkata
Respondent Videsh Sanchar Nigam Limited, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Department
Bench Allotted C
Tribunal Order Date 25-02-2011
Assessment Year 2004-2005
Appeal Filed On 07-06-2010
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL C BE NCH : KOLKATA [BEFORE HONBLE SHRI B. R. MITTAL JM AND HONBLE S HRI C. D. RAO AM] ITA NO. 1138 (KOL) OF 2010 : ASSESSMENT YEAR : 200 4-05 DY. COMMISSIONER OF INCOME TAX -VS.- VIDESH SANHAR NIGAM LIMITED CIRCLE-59 KOLKATA. KOLKATA [PAN : AAACV2808C] [APPELLANT] [RESPONDENT] APPELLANT BY : SHRI S. BHA DRA RESPONDENT BY : SHRI V. N. PU ROHIT PER C. D. RAO A.M. THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2004-05 AGAINST THE ORDER OF THE LD. CIT(A)-XXXVI KOLKATA DATED 30.03.2010. THE ONLY ISSUE RAISED BY THE REVENUE IN THIS APPEAL IS RELATING TO THE DELETION OF PENALTY OF RS.4 69 020/- IMPOSED BY THE ASSESSING OFFICER U/S. 271C READ WITH SECTION 273B & 274 OF T HE INCOME TAX ACT. 2. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSING OFFICER IMPOSED PENALTY U/S. 271C. PURSUANT TO SURVEY CONDUCTED U/S. 133A ON 02-03-200 5 IN THE OFFICE PREMISES OF THE DEDUCTOR ASSESSEE-COMPANY AN ORDER U/S. 201(1)/(1A) READ WIT H SECTION 194C WAS PASSED FOR THE FINANCIAL YEAR 2003-04 ON 30-08-2005 RAISING A DEMA ND OF RS.7 58 714/-. IT WAS FOUND THAT THE DEDUCTOR ASSESSEE HAD PAID BSNL RS.65 81 386/- UNDE R THE HEAD OF RENT OF LANDLINE AND RS.2 50 52 097/- UNDER THE HEAD OF TRANSMISSION CO ST WITHOUT DEDUCTING TAX AT SOURCE. SUBSEQUENTLY THE ORDER WAS RECTIFIED U/S. 154 ON 2 1-11-2005 REVISING THE DEMAND TO RS.5 57 743/-. THE SAID FIGURE OF RS.5 57 743/- REP RESENTS AMOUNT OF NON-DEDUCTION OF TAX AT SOURCE OF RS.4 69 020/- AND INTEREST U/S. 201(1 4) OF RS.88 723/-. BEING AGGRIEVED THE DEDUCTOR ASSESSEE WENT ON APPEAL BEFORE THE LD. CIT(A) VIDE ORDER DATED 29/03/2007 IN ITA NOS. 175 & 176/05-06 AND UPHELD THE DEFAULT DETECTED BY THE AO (TDS) REGARDING NON DEDUCTION OF TAX AT SOURCE FROM PAYMENT OF LANDLINE RENT AND TRANSMISSI ON COST TO BSNL BY THE DEDUCTOR ASSESSEE DURING THE SAID PERIOD. HOWEVER FOLLOWING THE DECISION IN THE CASE OF M/S. ADIDAS INDIA MARKETING PVT. LTD. (DELHI) 206-CTR-(DEL) 499 AND IN THE CASE OF ACIT VS. METAL CENTRE LTD. BY THE HONBLE ITAT A BENCH KOLKATA VIDE ITA NO. 925/KOL./2005 DATED 03/08/2005 THE LD. CIT(A) DECIDED THAT THE DEDUCTO R ASSESSEE SHOULD NOT BE FURTHER PENALISED ITA NO. 1138/KOL/20 10 2 FOR PAYMENT OF THE AMOUNT NOT DEDUCTED AS THE DEDUC TEE ASSESSEE BSNL HAD SHOWED THE RECEIPTS IN ITS ACCOUNTS AND CONSIDERED THE SAME WH ILE COMPUTING NET PROFIT. FURTHERMORE LD. CIT(A) HAS ALSO CONFIRMED CHARGING OF INTEREST U/S. 201(1A) FOR A SHORTER PERIOD. CONSIDERING THE DECISION OF THE LD. CIT(A) THE AO(TDS) REVISED THE ORDER IN THE CASE OF THE ASSESSEE VIDE ORDER DATED 31/03/2008 U/S. 201(1A) READ WITH SECTI ON 194C. IT IS TRUE THAT TAX FOR NON DEDUCTION WAS NOT CHARGED IN THE REVISED ORDER AS THE DEDUCTEE ASSESSEE BSNL HAD ALREADY PAID TAXES ON THE SAID RECEIPT FROM THE ASSESSEE-CO MPANY. HOWEVER THE NON DEDUCTION DETECTED BY THE AO(TDS) WAS UPHELD. SUBSEQUENTLY THE ADDL. CIT VIDE HIS ORDER DATED 19-11-2007 IMPOSED PENALTY OF RS.4 69 020/- U/S. 271C READ WIT H SECTION 273B & 274 OF THE I T ACT 1961 FOR FAILURE ON THE PART OF THE DEDUCTOR TO MAKE PAY MENT TO BSNL AS MENTIONED ABOVE WITHOUT DEDUCTION OF TAX AT SOURCE. THE PRESENT ORDER OF TH E LD. CIT(A) EMANATED FROM AN APPEAL FILED BY THE DEDUCTOR ASSESSEE AGAINST THE ORDER OF THE A DDL. CIT IMPOSING PENALTY U/S. 271C READ WITH SECTIONS 273B & 274. ON APPEAL THE LD. CIT(A) AFTER TAKING INTO CONSIDERATION THE VARIOUS SUBMISSIONS OF THE ASSESSEE HAS DELETED THE SAME BY OBSERVING THAT THE ENTIRE DEMAND WAS DELETED BY THE ASSESSING OFFICER VIDE HIS ORDER DATED 31.03.2008. IN VIEW OF THE FACT THAT THERE ARE TWO VIEWS ON THE DEDUCTIBILITY OF TDS TH IS IS NOT A FIT CASE FOR LEVY OF PENALTY U/S. 271C OF THE INCOME TAX ACT. ACCORDINGLY THE ASSESS ING OFFICER HAS DIRECTED TO DELETE RS.4 69 020/-. AGGRIEVED BY THIS NOW THE REVENUE IS IN APPEAL BEF ORE US. 3. AT THE TIME OF HEARING BEFORE US THE LD. DEPART MENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 4. ON THE OTHER HAND LD. COUNSEL APPEARING ON BEHA LF OF THE ASSESSEE RELIED ON THE ORDER OF LD. CIT(A) AND HE FURTHER SUBMITTED THAT AFTER A MENDMENT OF SECTION 194-I BY FINANCE ACT 2007 WITH EFFECT FROM 01.06.2007 IT IS CLEAR THAT SUCH PAYMENTS WERE NEITHER COVERED BY SECTION 194C NOR BY SECTION 104-I AND HENCE NOW SPE CIFICALLY COVERED BY SECTION 194-I. HE FURTHER SUBMITTED THAT WHETHER RELATIONSHIP OF CONT RACTOR AND CONTRACTEE EXISTED BETWEEN BSNL AND VSNL IN RELATION TO USE OF BSNLS INSFRASTRUCTU RE BY VSNL COULD NOT BE SAID FOR CERTAIN AT THE RELEVANT TIME AND AFTER AMENDMENT OF SECTION 194-I AS ABOVE IT IS CLEAR THAT IT WAS NOT SO. VSNL WAS CONSISTENTLY FOLLOWING A PRACTICE OF N OT DEDUCTING TDS ON SUCH PAYMENTS IN ITA NO. 1138/KOL/20 10 3 PAST AND HAS BEEN ACCEPTED BY DEPT. IN AS MUCH AS T HAT NO OBJECTION WAS EVER RAISED. FURTHER WHEN A MATTER IS FULL OF CONTROVERSY AND ASSESSEE T AKES A POSSIBLE VIEW QUESTION OF IMPOSING PENALTY BASED ON OTHER VIEW CANNOT ARISE. NUMBER OF DECISIONS CITED OUGHT TO HAVE BEEN CONSIDERED BY ADDL. C.I.T. GIVING REASONS AS TO WHY THE PRINCIPLE LAID DOWN THEREIN ARE NOT APPLICABLE TO THIS CASE. IN ANANATRAM VIRSINGHAIAT VS. CIT 123 ITR 457 (SC) IT HAS BEEN HELD THAT INFERENCE DRAWN IN ASSESSMENT PROCEEDINGS CANN OT AUTOMATICALLY BE ADOPTED IN PENALTY PROCEEDINGS. THUS ACCEPTANCE OF DEPARTMENTAL VIEW B Y CIT(A) IS IN ITSELF CANNOT BE A REASON FOR PENALTY AS HAS BEEN DONE BY ADDL. C.I.T. THE PR INCIPLE LAID DOWN IN CASE OF DILIP N SHROF VS. JCIT 291 ITR 519 (SC) ARE GUIDING PRINCIPLE AS TO LEVY OF PENALTY AND EXTENT OF NEED OF MENS REA IN SUCH PROCEEDINGS ARE EQUALLY APPLICABLE K.P. MADHUSUDANS CASE [251 ITR 99 (SC)] AS REFERRED BY ADDL. C.I.T. IN HIS PENALTY OR DER IS AN OLD CASE AFTER WHICH NUMBER OF CASES HAVE BEEN DECIDED BY SC AND REFERRED OR DISCUSSED I N THEIR JUDGMENT IN DILIP N SHROFS CASE (SUPRA). IN VIEW OF THE ABOVE VSNL HAD A REASONABLE CAUSE IN NOT DEDUCTING TDS ON PAYMENTS FOR BSNL. THEY HAVE STARTED DOING SO U/S.194C IN FU TURE IS NOT CORRECT AS NOW SECTION 194-I SHOULD APPLY. 5. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF THE MATERIAL AVAILABLE ON RECORD IT IS OBSERVED THAT THE LD. CIT(A) HAS DELE TED THE PENALTY BY OBSERVING THAT IN THE CONSEQUENTIAL ORDER PASSED BY THE ASSESSING OFFICER DATED 31.03.2008 SINCE THE ASSESSEES DEMAND RAISED BY THE ASSESSING OFFICER ON ACCOUNT O F DEFAULT SURVIVING U/S. 201(1) HAS BEEN DELETED THE PENALTY PROCEEDINGS BECOME INFRUCTUOUS AS HELD BY VARIOUS JUDICIAL PRONOUNCEMENTS. IT IS FURTHER OBSERVED THAT IN OUR CONSIDERED OPINION THE ASSESSEE HAD A REASONABLE CAUSE FOR NON-DEDUCTION OF TDS. THEREFOR E WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) AND THE SAME IS DISMISSED. 6. IN THE RESULT THE APPEAL OF THE DEPARTMENT IS D ISMISSED. ORDER PRONOUNCED IN THE COURT ON 25. 02. 2011. SD/- SD/- [ B. R. MITTAL ] [ C. D. RAO ] JUDICIAL MEMBER ACCOUN TANT MEMBER DATED : 25TH FEBRUARY 2011. ITA NO. 1138/KOL/20 10 4 COPY FORWARDED TO THE - 1. DY. COMMISSIONER OF INCOME TAX CIRCLE-59 10B MIDDLETON ROW KOLKATA-700 071. 2. VIDESH SANCHAR NIGAM LIMITED 1/18 CIT SCHEME VII M ULTADANGA KOLKATA-700 054. 3. CIT(A)- (4) CIT- 5. D.R. I.T.A.T. KOLKATA. [TRUE COPY] BY ORDER DEPUTY/ASSISTANT REGISTRAR (KKC) I .T.A.T. KOLKATA.