ITA No. 379/Nag/2016. IN INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. No. 379/Nag/2016 Assessment Year: 211-12. Income-tax Officer, District Collector, (TDS), Ward-2(2), Amravati. Vs. Amravati. TAN NGPCO2999D Appellant. Respondent. Appellant by : Shri A.R. Ninawe. Respondent by : None. Date of Hearing : 04-10-2016 Date of Pronouncement : 4th Oct., 2016 ORDER. This appeal by Revenue is directed against order of learned CIT(Appeals)-II, Nagpur dated 17-03-2016 and pertains to assessment year 2011-12. grounds of appeal read as under : 1. On facts and circumstances of case Learned CIT(Appeals) is justified in deleting penalty of Rs.11,44,348/- for Asstt. Year 2011-12 levied u/s 271CA of I.T. Act? 2. Whether on facts and circumstances of case Learned CIT(A) is justified in deleting penalty without appreciating that assessee admittedly committed default of not collecting TCS in terms of Sec. 206C of Act? 3. Whether on facts and circumstances of case Learned CIT(A) is justified in holding that default is technical default without appreciating that assessee failed to prove any reasonable cause for default except stating and without providing that it is technical default? 2. In this case AO noted that assessee was required to collect tax at source during F.Y. 2010-11 but same was done in month of July, 2 ITA No. 379/Nag/2016. 2011 which was beyond prescribed dates and he therefore required assessee to show cause as to why penalty u/s 271CA should not be imposed. assessee sought time in view of Loksabha Election were under way during that period and that therefore Collector Office was busy with same. AO after giving opportunity to assessee eventually passed order imposing penalty of Rs.11,44,348/- u/s 271CA since assessee did not give any valid explanation for said default nor was able to establish any reasonable cause to explain same. 3. Before learned CIT(Appeals) assessee pleaded that cause for non compliance was ignorance of applicability of relevant clause. Referring to assessee s submission, learned CIT(Appeals) observed as under: From above order sheet it is evident that appellant was not very sure as to whether, in given set of facts and circumstances, TCS was required to be made or not and it is only when Income Tax Department, Amravati on 07-07-2011 conducted workshop on collection of TCS that appellant became aware of correct provisions of TCS. It is also fact that immediately thereafter, on 18-07- 2011 issued clear instructions to its field formations viz. Superintendent & DDO delegated by Collector in this behalf, to collect & credit sum of 2% TCS due on royalty charges credited at mining section of this office. 4. Referring to another office order of assessee learned CIT(Appeals) further observed as under : 5.2 From above notings in order sheet as well as order dated 18-07-2011 it become clear that there was lack of clarity in appellant s mind with regard to applicable TCS provision and it was only after Income Tax Department workshop conducted on 07-07-2011 that appellant became clear about provisions of TCS and immediately issued said office order with regard to recovery of 2% TCS on Royalty u/s 206C of I.T. Act. In such facts no malafide intention cannot be attributed to appellant that could result in penalty u/s 271CA of I.T. Act. Thus there did exist reasonable cause 3 ITA No. 379/Nag/2016. which resulted in delay for collecting TCS and penalty cannot be imposed u/s 271CA in such circumstances. 5.3 Even otherwise there is merit in submissions of appellant that where person has failed to collect tax and pay same in Government Account, penalty u/s 271CA is imposable but such provisions would not apply to case of appellant because appellant has collected tax and immediately thereafter deposited same to Government Account. I am in agreement with this view. Thus since appellant has collected and paid tax, there was no question of imposing penalty u/s 271CA. 5.4 There is sufficient judicial support for above view that penalty u/s 271CA is not imposable where there exist reasonable cause for default and when there was no loss to Revenue. 5. Learned CIT(Appeals) further referred to decision of Jaihind Project Ltd. vs. Addl. Commissioner of Income Tax TDS, Ahmedabad 65 Taxmann.com 254 and Sub Divisional Engineer (HQ) vs. Addl. CIT, TDS, Chandigarh in ITA No. 673/Chd/2012. Learned CIT(Appeals) concluded as under : facts of case of appellant are similar. appellant was not very sure of provisions of TCS and its applicability in its own case and it became aware of same in month of July, 2011 after workshop of Income Tax Department and has thereafter immediately collected tax and deposited same. appellant also paid interest of Rs.1,67,174/- to cover up delay in collecting payment of TCS. Thus, in case of appellant, failure on part of assessee was technical and venial breach which did not result into any loss to Revenue as TCS was paid along with interest thereon. In view of above facts, order passed u/s 271CA imposing penalty of Rs.11,44,348/- is hereby cancelled. This ground is therefore allowed. 6. Against above order, assessee is in appeal before ITAT. 7. I have heard learned D.R. None appeared on behalf of assessee. However, in my considered opinion issue can be adjudicated by hearing learned D.R. and perusing records. 4 ITA No. 379/Nag/2016. 8. Upon careful consideration I find that reasonable cause for non timely compliance has been attributed to ignorance of applicable law. To demonstrate ignorance, assessee has submitted documentary evidence before learned CIT(Appeals) who has found same to be cogent. Further more assessee has subsequently made compliance and claimed that no loss to Revenue has been caused. Learned CIT(Appeals) has found same as acceptable. Further more reliance placed by learned CIT(Appeals) on case laws also support case for non levy of penalty. Accordingly I do not find any infirmity in order of learned CIT(Appeals). Accordingly I uphold same. 9. In result, this appeal filed by Revenue sands dismissed. Order pronounced in Open Court on this 4th day of Oct., 2016. Sd/- ( SHAMIM YAHYA) ACCOUNTANT MEMBER. Nagpur, Dated: 4th Oct. , 2016. Copy forwarded to : 1. District Collector, Collector Office, Camp, Amravati. 2. I.T.O., (TDS) Ward-2(2), Amravati. 3. C.I.T.- (TDS), Nagpur. 4. CIT(Appeals), -II, Nagpur. 5. D.R., ITAT, Nagpur. 6. Guard File True Copy By Order Assistant Registrar, Income Tax Appellate Tribunal, Nagpur Bench, Nagpur. Wakode. Income-tax Officer (TDS), Ward-2(2), Amravati v. District Collector