[2021] 124 taxmann.com 359 (Indore – Trib.)

IN THE ITAT INDORE BENCH

Jitendra Sharma

v.

Joint Commissioner of Income Tax, (International Taxation), Ahmadabad

 

KUL BHARAT, JUDICIAL MEMBER

AND MANISH BORAD, ACCOUNTANT MEMBER

IT APPEAL NOS. 500, 501 & 502 (IND) OF 2018

[ASSESSMENT YEAR 2015-16]

 

OCTOBER  14, 2020

 

Short overview of the case:

 

Section 271C, read with sections 273B and 194-IA and 195, of the Income-tax Act, 1961

 

Penalty for failure to deduct tax at source (Payment to non-resident)

 

Assessment year 2015-16

 

Assessee, along with two persons entered into an agreement for purchase of immovable property valuing Rs. 75 lakhs – Considering total transaction value being more than Rs. 50 lakhs, they deducted tax at source at rate of 1 per cent on gross sale consideration and deposited it with Government treasury

 

Assessing Officer observed that seller was a non-resident Indian and, therefore, tax to be deducted at source on gross consideration should have been 20.6 per cent as provided in section 195

 

He considered assessee as assessee in default and initiated penalty proceedings under section 271C

 

It was found that seller had not provided any documentary evidence to show that he was a Non-Resident Indian and assessee(s) prudently deducted tax at rate of 1 per cent under section 194(1A) and, subsequently, when it was brought to their notice that seller was an NRI, they immediately deposited correct amount of TDS and, thus, mens rea to evade tax was not appearing at any stage of proceedings on part of assessee

 

Whether, thus, assessee was duly eligible to get benefit of provisions of section 273B

 

In favour of assessee

 

Conclusions :

 

Where assessee had proved beyond doubt that in a bona fide belief he had deposited tax at rate of 1 per cent under section 194-IA on gross sale consideration considering seller as resident Indian and later on before conclusion of proceedings before Assessing Officer, he had deposited correct amount of tax at rate of 20.6 per cent and applicable interest, he had a reasonable cause for said failure and was duly eligible to get benefit of provisions of section 273B