Addl. CIT, Hyderabad v. M/s Vijayanthi Entertainment & Studies, Hyderabad

ITA 178/HYD/2009 | 2004-2005
Pronouncement Date: 04-03-2011 | Result: Dismissed

Appeal Details

RSA Number 17822514 RSA 2009
Bench Hyderabad
Appeal Number ITA 178/HYD/2009
Duration Of Justice 2 year(s) 28 day(s)
Appellant Addl. CIT, Hyderabad
Respondent M/s Vijayanthi Entertainment & Studies, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 04-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 04-03-2011
Date Of Final Hearing 22-02-2011
Next Hearing Date 22-02-2011
Assessment Year 2004-2005
Appeal Filed On 06-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A' HYDERABAD BEFORE SHRI G.C.GUPTA VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.178/HYD/2009 : ASSESSMENT YEAR 2004- 05 ITA NO.179/HYD/2009 : ASSESSMENT YEAR 2005- 06 ADDL. COMMISSIONER OF INCOME- TAX RANGE-15 HYDERABAD. . V/S. M/S. VYJAYANTHI ENTERTAINMENT & STUDIOS HYDERABAD . ( PAN NOT AVAILABLE ) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.V.N.CHARYA RESPONDENT BY : SHRI M.V.JOSHI O R D E R PER G.C.GUPTA VICE PRESIDENT: THESE TWO APPEALS BY THE REVENUE FOR THE ASSESSME NT YEARS 2004-05 AND 2005-06 ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS). SINCE IDENTICAL ISSUES ARE INVOLVED THESE ARE BEING DISPOSED OFF WITH THIS CONSOLIDATED ORDER. 2. THE ONLY ISSUE IN THESE APPEALS OF THE REVENUE IS REGARDING VALIDITY OF PENALTY LEVIED UNDER S.271C OF THE ACT. 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT I N THE CASE OF UNION OF INDIA V/S. DHARMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277 THERE IS NO NEED TO PROVE MENS REA ON THE PART OF THE ASSESSEE FOR NOT COMPLYING ITA NO.178 & 179/HYD/09 M/S. VYJAYANTHI ENTERTAINMENT & STUDIOS HYDERABAD. 2 WITH THE PROVISIONS OF TDS AND THE PENALTY LEVIED I S IN THE NATURE OF CIVIL LIABILITY. HE REFERRED TO PARAS 3.1 3.2 AND 3.3 O F THE PENALTY ORDER IN SUPPORT OF HIS SUBMISSION THAT THE ASSESSEE WAS GUI LTY OF NOT COMPLYING WITH VARIOUS PROVISIONS OF TDS CONTAINED IN THE ACT . HE SUBMITTED THAT EVEN OTHERWISE THERE WAS NO REASONABLE CAUSE WITH THE ASSESSEE FOR NOT EFFECTING FULL PAYMENT OF TDS IN TIME. HE RELIED O N THE ORDERS OF THE ASSESSING OFFICER. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS NOT A CASE OF NON-DEDUCTION OF TDS BUT THE CASE OF THE A SSESSEE IS THAT OF SHORT-FALL IN THE AMOUNT OF TDS EFFECTED BY THE ASS ESSEE. HE SUBMITTED THAT THERE WAS A REASONABLE CAUSE FOR MAKING THE SH ORT-DEDUCTION OF TDS ON ACCOUNT OF BONA FIDE OPINION OF THE ASSESSEE THA T THE CASE OF THE ASSESSEE ATTRACTS A LESSER RATE OF 2% FOR DEDUCTION AS TDS ON THE PAYMENTS MADE. HE RELIED ON THE ORDERS OF THE CIT (A) IN SUPPORT OF HIS ARGUMENTS. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE CIT(A) HAS PASSED A WELL REASONED AND SPEAKING ORDE R ON THIS ISSUE. THE FIRST DEFAULT OF THE ASSESSEE WHICH ATTRACTED THE IMPUGNED PENALTY RELATES TO SHORT DEDUCTION OF TDS UNDER S.194I OF T HE ACT WITH REGARD TO PAYMENTS MADE TO HOTELS AND OTHER GUEST HOUSES. W E FIND THAT IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS DEDUCTED TAX UNDER S.194C OF THE ACT AND IT IS A CASE OF SHORT DEDUCTION OF TAX BY APPL YING A WRONG PROVISION OF THE ACT AND NOT A CASE OF NON-DEDUCTION OF TAX. THE CIT(A) HAS REFERRED TO VARIOUS DECISIONS IN SUPPORT OF HIS ACTION IN C ONCELLING THE PENALTY LEVIED ON THIS COUNT BY HOLDING THAT THE ASSESSEE S EXPLANATION CONSTITUTES A REASONABLE CAUSE. PENALTY PROCEEDING S AND ASSESSMENT ITA NO.178 & 179/HYD/09 M/S. VYJAYANTHI ENTERTAINMENT & STUDIOS HYDERABAD. 3 PROCEEDINGS ARE DIFFERENT. ON THE ISSUE OF CORRECT PERCENTAGE OF AMOUNT TO BE DEDUCTED TWO VIEWS ARE POSSIBLE AND THIS CAS E OF THE ASSESSEE SEEMS TO BE A CASE OF AN HONEST DIFFERENCE OF OPINI ON. IN THESE FACTS WE CONFIRM THE ORDER OF THE CIT(A) WITH REGARD TO HIS ORDER CANCELLING THE PENALTY FOR DEFAULT UNDER S.194I OF THE ACT. 6. NEXT DEFAULT FOR WHICH PENALTY WAS LEVIED WAS WITH REGARD TO PAYMENTS MADE BY THE ASSESSEE TO LAB ETC. THE ASSE SSEE TREATED THE SAME AS CONTRACTUAL PAYMENTS AND THEREFORE DEDUCTI ON OF TAX WAS MADE IN TERMS OF S.194C OF THE ACT. ASSESSING OFFICER O N THE OTHER HAND HELD THAT THE ASSESSEE SHOULD HAVE DEDUCTED TAX UNDER S 194J. ON MERITS THE CIT(A) HAS HELD THAT PAYMENT TO LABS ETC. SHOULD BE COVERED UNDER S.194J AND NOT UNDER S.194C. HOWEVER DEALING WITH THE JUSTIFICATION FOR PENALTY THE CIT(A) HAS HELD THAT ISSUE WAS HIGHLY DEBATABLE WITH REGARD TO THE NATURE OF SERVICES RENDERED AND THREE WAS NO MALA FIDE INTENTION ON THE PARTY OF THE ASSESSEE FOR EFFECTING TAX DEDU CTION AT SOURCE AT A LESSER RATE. WE FIND THAT THIS DEFAULT OF THE ASS ESSEE IS ALSO ON ACCOUNT OF AN HONEST DIFFERENCE OF OPINION WITH REGARD TO T HE TDS AMOUNT TO BE DEDUCTED BETWEEN THE ASSESSEE AND THE DEPARTMENT WHICH HAS GIVEN RISE TO APPLICATION OF INCORRECT PROVISION OF LAW. THE ISSUE IS HIGHLY DEBATABLE WITH REGARD TO THE NATURE OF SERVICES REC EIVED BY THE ASSESSEE AND THE SAME HAS GIVEN RISE TO THE DISPUTE AS TO W HETHER LESSER RATE OF 2% UNDER S.194C WAS APPLICABLE FOR MAKING TDS BY TH E ASSESSEE. ALL THE MATERIAL FACTS WERE DISCLOSED BY THE ASSESSEE. IN THESE FACTS OF THE CASE WE ARE OF THE VIEW THAT THERE IS NO MISTAKE IN THE ORDER OF THE CIT(A) IN CANCELLING THE PENALTY LEVIED ON ACCOUNT OF DEFAUL T UNDER S.194J OF THE ACT. ITA NO.178 & 179/HYD/09 M/S. VYJAYANTHI ENTERTAINMENT & STUDIOS HYDERABAD. 4 7. WITH REGARD TO THE THIRD ISSUE OF TDS MADE ON PAYMENTS TO VARIOUS TRAVELS ARTISTS AND DRIVERS ETC. WE FIND THAT THE ASSESSEE HAS EFFECTED DEDUCTION OF TAX AT SOURCE BY CONSIDERING THOSE AMOUNTS AS CONTRACT PAYMENTS TO VARIOUS PAYEES. THE CIT(A) HA S RECORDED VALID REASONS FOR REDUCING THE PENALTY OF THE ASSESSMENT YEAR 2004-05 AND FOR DELETING THE PENALTY LEVIED ON THIS COUNT FOR THE A SSESSMENT YEAR 2005- 06. THE ASSESSEE HAS MADE EXCESS PAYMENT OF RS.28 875 FOR THE ASSESSMENT YEAR 2004-05 AND THE CIT(A) HAS REDUCED THE PENALTY ON THIS COUNT. THE ASSESSEE HAS DISCLOSED ALL MATERIAL FAC TS RELEVANT FOR ITS CASE BEFORE THE ASSESSING OFFICER. IN THESE FACTS OF TH E CASE WE HOLD THAT NO INTERFERENCE WITH THE ORDER OF THE CIT(A) ON THIS A SPECT IS CALLED FOR. WE ACCORDINGLY UPHOLD THE ORDER OF THE CIT(A) IN THIS BEHALF. 8. IN THE LIGHT OF THE ABOVE DISCUSSION WE UPHOL D THE ORDER OF THE CIT(A) AND REJECT THE GROUNDS OF THE REVENUE IN BOTH THESE APPEALS. 9. IN THE RESULT BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 4.3.2011 SD/- SD/- (CHANDRA POOJARI) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 4.3.2011 COPY FORWARDED TO: 1. M/S. VYJAYANTHI ENTERTAINMENT & STUDIOS 104 ROAD NO.71 NAVANIRMAN NAGAR JUBILEE HILLS HYDERABAD . ITA NO.178 & 179/HYD/09 M/S. VYJAYANTHI ENTERTAINMENT & STUDIOS HYDERABAD. 5 2. ADDL. COMMISSIONER OF INCOME TAX RANGE - 15 HYDERABAD . 3. COMMISSIONER OF INCOME - TAX(APPEALS) - II HYDERABAD . 4. COMMISSIONER OF INCOME TAX (TDS) HYDERABAD 5. THE DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD . B.V.S .