Sterling Ceramic Pvt. Ltd., Ahmedabad vs Department Of Income Tax

The ACIT(OSD), Sterling Ceramics Pvt. Circle-8, 2 n d Floor, "B" Ltd, 921, Navghari's Block, Pratyakshakar Vs Pole, Saraspur Char Bhavan, PanjraPole, Rasta, Ahmedabad Ambawadi, Ahmedabad PAN: AAFCS 2069 F (Appellant) (Respondent)

Revenue by: Shri M.K. Singh, Sr. D.R. Assessee by: None

Date of hearing : 23-02-2015 Date of pronouncement : 26-02-2015

आदे श/ORDER

PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER:-

This is the assessee's appeal against the order of Ld. CIT(A)-XIV, Ahmedabad dated 06-07-2011 for A.Y. 2006-07.

2. None appeared on behalf of the assessee though notice of hearing was served on the assessee. We therefore proceed to dispose of the appeal ex-parte qua the assessee on the basis of material on record. I.T.A No. 2470/Ahd/2011 A.Y. 2006-07 Page No 2 ACIT (OSD) vs. Sterling Ceramics Pvt Ltd

3. The facts as culled out from the material on record are as under.

4. Assessee is a company stated to be engaged in the business of manufacturing of glazed tiles. In this case, it was noticed that assessee was liable to pay dividend distribution tax (DDT) of Rs. 3,15,591/- u/s. 115- O of the Act on or before 20th March, 2006 but the said tax was paid on 17- 11-2006. A show cause notice was issued to the assessee and was asked to show cause as to why no penalty be levied u/s. 271(C) of the Act to which assessee inter alia submitted that Assessee had paid the tax along with interest and it was under a bonafide belief that if tax is paid late along with interest it would suffice the requirement of law and no penalty would be leviable. The submission of the assessee was not found acceptable to AO and he therefore vide order dated 01-11-2010 levied penalty of Rs. 3,15,591/- u/s. 271(C) of the Act. Aggrieved by the order of AO, Assessee carried the matter before CIT(A) who vide order dated 06-07-2011 deleted the penalty by holding as under:-

"Decision:

I have carefully considered the penalty order and the submission filed by the appellant. The provision of Section 271 C reads as under:

[Penalty for failure to deduct tax at source. 271 C. [(1) If any person fails to-

(a) deduct the whole or any part of the tax as required by or under the provisions of Chapter XVII-B; or

(b) pay the whole or any part of the lax as required by or under--

(i) sub-section (2] of section 1 1 5-O; or

(ii) the second proviso to section 194B, then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay as aforesaid.] [(2) Any penalty irnposable under sub-section (1) shall be imposed by the [Joint] Commissioner.] Therefore, a perusal of the above shows that penalty u/s.

271C can be imposed, if the person has failed to deduct the dividend I.T.A No. 2470/Ahd/2011 A.Y. 2006-07 Page No 3 ACIT (OSD) vs. Sterling Ceramics Pvt Ltd tax or has not paid the whole or part of the tax deducted. As per the Assessing Officer, the appellant has paid the tax late by about 8 months and, therefore, there was a default as per the provisions of Section 271C of the Act. It is noted from the perusal of the penalty order and the details filed by the appellant during the course of appeal proceedings that the appellant has paid the tax on 17/11/2006 along with the interest as provided in the Income Tax Act. It has also been pointed out by the appellant that the company was under bonafide belief that if the tax is paid late along with interest it would be sufficient compliance. After considering these facts and circumstances, I am of the opinion that no penalty u/s. 271C can be imposed on the appellant as he has not committed any default as mentioned in the section, he has deposited the dividend distribution tax along with interest with the department. Therefore, the penalty imposed by the Jt. Commissioner of Income Tax is deleted."

5. Aggrieved by the order of CIT(A), Revenue is now in appeal before us and has raised following ground:-

"1. The Ld. CIT(A)-XIV, Ahmedabad has erred in law and on facts in deleting the penalty of Rs. 3,15,591/- levied u/s. 271(C) of the Act."

6. Before Ld. DR supported the order of AO.

7. We have heard the Ld. DR and perused the material on record. We find that Ld. CIT(A) while deleting the penalty has noted that though the assessee had paid tax late by about 8 months but the same was paid along with interest as provided in the Act. He after considering the submission of the assessee has given a finding that no penalty u/s. 271(C) could be imposed on the assessee as the assessee had not committed any default as contemplated in the section. Before us, Revenue has not brought any contrary material on record to controvert the findings of Ld. CIT(A). We, therefore, find no reason to interfere with the order of Ld CIT(A) and thus this ground of Revenue is dismissed. I.T.A No. 2470/Ahd/2011 A.Y. 2006-07 Page No 4 ACIT (OSD) vs. Sterling Ceramics Pvt Ltd

8. In the result, the appeal of the Revenue is dismissed.

Order pronounced in open court on the date mentioned hereinabove at caption page

Sd/- Sd/-

(SHAILENDRA KR. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 26/02/2015 ak

आदे श क ूितिल प अमे षत / Copy of Order Forwarded to:-

1. Assessee

2. Revenue

3. Concerned CIT

4. CIT (A)

5. DR, ITAT, Ahmedabad

6. Guard file.

By order/आदे श से,

उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद