Commissioner Of Income Tax vs Matsushita Electric Industrial ...
2005 Latest Caselaw 826 Del

JUDGMENT

Swatanter Kumar, J.

1. In this appeal under section 260A of the Income-tax Act, the appellant raises a challenge to the order passed by the Income-tax Appellate Tribunal dated 5th November, 2004 in relation to the assessment year 1994-95. It is contended on behalf of the appellant that the impugned order suffers from a patent error of law and raises a substantial question of law for consideration of the Court in the present appeal in relation to deletion of a penalty under section 271(c) of the Income-tax Act imposed by the Commissioner of Income-tax.

2. During the course of survey operation conducted by the appellant under section 133A at the liaison office of the assessed company, which is stated to be a non-resident Indian Company incorporated in Japan, it came to the notice of the authorities that the assessed-company during the relevant period had utilised services of its expatriate employees for rendering services in India, but were paid salaries and perquisites by the assessed outside India over and in addition to the part paid in India. This fact was not disclosed in the annual return of the salaries submitted in Form-24 and tax at source was not deducted by the assessed in terms of section 192 of the Act. Relying upon the circular of the Board, the Assessing Officer made the requisite additions and imposed the penalty upon the assessed under section 271C of the Act. The assessed preferred an appeal against the order of the Assessing Officer which was dismissed by the Commissioner of Income-tax (Appeals) vide his order dated 10th October 2000. The assessed preferred an appeal before the Income-tax Appellate Tribunal. The appeal was accepted vide order dated 5th November, 2004 wherein the Tribunal while relying upon the judgment of the High Court rejected the contention of the Revenue that the assessed had made the payment in question only after the survey under section 133A of the Act and as such it was not a voluntary act on the part of the assessed while believing that there was sufficient cause on the part of the assessed not deducting the TDS directed deletion of the penalties under section 271C of the Act.

3. The contentions raised on behalf of the Revenue need not detain us any further in view of the fact that in the case of CIT v. Hitachi Ltd. Japan (ITA No. 284/2005) decided on 27.4.2005 by a Division Bench of this Court, similar contentions raised on behalf of the Revenue were rejected and the Court held as under :-

"It is not necessary for us to notice the merit or otherwise of the contentions raised before us in any greater detail. Suffices it to note and which is fairly pointed out by the learned counsel appearing for Revenue Department that the controversy in the present case is squarely covered on finding of fact as well as on question of law by a judgment of this Court in the case of Commissioner of Income-tax v. ITOCHU Corporation 268 ITR 172. In that case, the Court held that finding relation to the fact whether the assessed acted bona fide was a finding of fact and the assessed had paid the tax in terms of law subsequently. On such finding of fact, the Tribunal was justified in deleting the penalty and it would not give rise to a substantial question of law unless the finding recorded was patently perverse. In this very judgment while relying upon in the Division Bench judgment of this Court in the case of Woodward Governor India (P) Ltd. v. CIT (2002) 253 ITR 745, the Bench also noticed that whether there was reasonable cause or not for the assessed not to deduct tax at source, is a question of fact which has to be determined by the Tribunal and normally would not give rise to a question of law. With respect, we would adopt the reasoning of the Division Bench in the CIT v. ITOCHU Corporation (supra). In the present case, the Tribunal has come to a finding of fact that the reasonable cause can be reasonably said to be a cause which prevents a man of average intelligence and ordinary prudence, acting under a normal circumstances without negligence or inaction or want of bonafide. It then recorded a definite finding that the act on the part of the assessed was bonafide and it acted under a reasonable belief.

We find no merit in this appeal as no substantial question of law arises for consideration in this appeal. Dismissed."

4. For the reasons aforestated and in view of the above referred judgment, we are of the considered view that no question of law much less a substantial question of law arises for determination in the present appeal. The appeal of the Revenue, thus, is dismissed while leaving the parties to bear their own costs.