Commissioner Of Income Tax vs Itochu Corporation
2004 Latest Caselaw 482 Del

JUDGMENT

B.C. Patel, C.J.

1. Against the order made by Income-tax Appellate Tribunal in appeal Nos. 769-778/Del/2001 for assessment years 1989-90 to 1998-99, the present appeals have been preferred. We are disposing these appeals by a common judgment as the impugned judgment of Tribunal is common and for all the years same question is raised. We have heard these matters together and at length.

2. At the initial stage when the appeals were heard the following common question was raised by the Revenue:

"Whether the Tribunal was right in law in cancelling the penalty imposed under Section 271C of the Income-tax Act, 1961."

3.We shall consider this in the light of facts in ITA No.17/2003. The respondent M/s Itochu Corporation is a company incorporated in Japan having its liaison office in Delhi for the business activities. Japanees employees were deputed to work in India. The remuneration was paid to these employees on the basis of the respondent's world-wide compensation policies for rendering services in India. It transpires that the assessed filed its annual return of salary in Form No.24 and the salary paid in India to its expatriate employees were shown. The company used to make payment to these employees outside India. However, the same was not reflected in the return nor the taxes were deducted at source. On notice being issued, the assessed filed revised co

4. Before the Tribunal the relevant record was placed by the assessed as well as by the Revenue and on appreciation of evidence, the Tribunal arrived at a conclusion which is as under:

with the Department. It also fulfillls the criteria laid down by the jurisdictional High Court in this regard. Since the assessed had paid the tax Along with interest voluntarily and there existed a bona fide belief which has been discussed above, we few.

The Tribunal also held in para 27 as under:

5.The CIT (Appeals) in its order dated 21.12.2000 in para 8 has recorded in detail the submissions made by the learned counsel which have been considered by the Appellate Tribunal whereupon the conclusion has been arrived at which we have referred to he reinabove.

6.Whether these appeals raise a substantial question of law or not is required to be determined first. In case of Azadi Bachao Andolan v. Union of India: 252 ITR 471 this court had occasion to examine a similar question. In that case the Revenue's stand was as under:-

bona fide action was taken by the assessed to deposit the tax and interest, it was decided not to levy penalties. Each case was considered on the merits and after being satisfied that reasonable cause existed for non-compliance, penalty has not been levi

The court, thereafter, examined the question and pointed out as under:

that event, a case for reference under Section 256(1) or (2) of the Act would not arise. What would constitute reasonable cause cannot be laid down with precision. It would depend upon factual background and the scope for interference in a reference application, or much less in a writ petition, is extremely limited and unless the conclusions are perverse based on conjectures or surmises and/or have been arrived at without consideration of relevant material and/or taking into account irrelevant materia, there is no scope for interference. Reasonable cause, as applied to human action, is that which would constrain a person of average intelligence and ordinary prudence. The expression "reasonable" is not susceptible of a clear and precise definition; which prevents a man of average intelligence and ordinary prudence, acting under normal circumstances, without negligence or inaction or want of bona fides.

Above being the position, the action of the authorities in not levying the penalty/dropping proceedings cannot be said to be unreasonable. Considering the limited jurisdiction as well as limited scope for interference in a writ petition, we do not find cause or not for the assessed not to deduct tax at source is a question of fact which has been determined by the Tribunal. As such, no substantial question of law arises.

Accordingly, all the appeals are dismissed.