Punjab-Haryana High Court

Punjab Infrastructure Development ... vs Commissioner Of Income Tax (Tds) ... on 20 November, 2024

Author: Sanjeev Prakash Sharma

Bench: Sanjeev Prakash Sharma

                              Neutral Citation No:=2024:PHHC:151428-DB

       ITA No. 408 of 2019                                           -1-

      IN THE HIGH COURT OF PUNJAB AND HARYANA AT
                    CHANDIGARH

                                            Reserved on :     11.11.2024
                                 Date
                                   te of Pronouncement :      20
                                                              20.11.2024

1.    ITA No. 408
              4 of 2019 (O&M)

       unjab Infrastructure Development Board, Chandigarh ... Appellant
      Punjab
                                    versus
      Commissioner of Income Tax (TDS), Chandigarh       ... Respondent

2.    ITA No. 410 of 2019 (O&M)

      Punjab Infrastructure Development Board, Chandigarh ... Appellant
                                    versus
      Commissioner of Income Tax (TDS), Chandigarh       ... Respondent

3.    ITA No. 411 of 2019 (O&M)

      Punjab Infrastructure Development Board, Chandigarh ... Appellant
                                    versus
      Commissioner of Income Tax (TDS), Chandigarh       ... Respondent

4.    ITA No. 412 of 2019 (O&M)

      Punjab Infrastructure Development Board, Chandigarh ... Ap
                                                            Appellant
                                    versus
      Commissioner of Income Tax (TDS), Chandigarh       ... Respondent


CORAM: HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA
       HON'BLE MR. JUSTICE SANJAY VASHIST
                                  VASHISTH

Present:    Mr. Deepak Aggarwal, Advocate, for the appellant.

            Mr. Amanpreet Singh, Senior Standing counsel for Income Tax
            Department.

SANJEEV PRAKASH SHARMA, J.

These are four appeals which have been taken up together for

adjudication. The appellant - Punjab Infrastructure Development Board is a

statutory body enacted enacted under Section 18 of the Punjab Infrastructure

Development & Regulation Act, 2002. These appeals under Section 260A of

the Income Tax Act, 1961 (for short, 'the Act'), have been filed by the

appellant against the order passed by the Income Tax Appellate Tribunal,

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Chandigarh Bench, Chandigarh (hereinafter to be referred as 'the Tribunal') Tribunal'),,

on 29.03.2019 for the assessment years 2008 2008-09, 2009-10, 2010-2011 2011 and

2011-12.

2. However, the facts for the purpose of adjudication of the case

are being taken from ITA No. 408 of 2019, which is for the assessment year

2010-2011.

2011. The assessing officer has treated the appellant as assessee in

default and interest under Section 206C (7) of the Act was charged and a

demand was raised vide order dated 23.03.201 2 .03.2012. The appeal al preferred by the

appellant was dismissed taking into consideration the provisions of Section

206C (7) of the Act, which obliges the person, who is responsible for

collecting tax and failed to pay it, would be liable to pay simple interest @

1%, on part thereof on the amount of such tax from the date on which such

tax was collectable upto the date on which the tax was actually paid. The

appellant was alleged to have received a sum of ` 15,19,41,000/- on account

of toll fee. As per Section 206C (7) of the Act, the appellant was required to

collect tax @ 2%. The tax to be collected at source (TCS),, having not been

collected and deposited, the appellate authority held the assessing officer to

be right in treating the person responsible as assessee in default and the

demand was confirmed.

3. It is stated that thereafter the assessing officer issued show

cause notice dated 22.03.2013 .2013 and imposed following penalt penalties under

Section 271CA of the Act, Act which are as under

under:-

Financial Amount of Toll Tax to be collected Penalty imposable Year Fee Receipt u/s 206 C u/s 271CA 2007-08 6,93,00,000 15,66,180 15,66,180 2008-09 9,68,91,319 20,444,60 20,444,60 2009-10 18,40,41,000 38,83,265 38,83,265 2010-11 1,42,05,00,00 4,77,255 4,77,255 79,71,160 79,71,160

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4. The order was passed on 22.03.2013 imposing a total penalty of

` 79,71,160/--.. The appeal preferred before the CIT (A) was dismissed vide

order dated 13.06.2014, whereafter the appellant preferred appeal before the

Tribunal.. It was submitted that the appellant appellant was not required to collect TCS

as already held by the Tribunal in its earlier reference order. It was submitted

that as the appellant was not required to collect TCS, the penalty under

Section 271CA imposed on failure to collect tax at source could no nott have

been levied.. The appeal of the appellant was allowed and the penalty lev levied ied

by the assessing officer and confirmed by the CIT (A) was set aside.

5. The Tribunal held that the appellant assessee was not required

to collect tax at source and it had not committed any default under the

provisions of Chapter XVIIBB B of the Act. The Tribunal also proceeded to

hold that the penalty as imposed under Section 271CA of the Ac Actt could also,

therefore, not be levied. The Revenue preferred an appeal before this Courtt

bearing ITA No. 65 of 2016 The Commissioner of Income Tax (TDS) (TDS)-I, I,

Board on the issue relating Chandigarh vs M/s Punjab Infrastructure Dev. Boar

to levy of penalty under Section 271CA of the Act and interest under Section

206C (7) of the Act. The High Court vide its judgment dated 09.05.2017

remanded the case to the Tribunal as in the earlier order passed, the Tribunal

had relied upon its earlier decision relating to the aassessment years 2008-09, 09,

2009-10, 10, 2010-2011 2010 and 2011-2012.

2012. The High Court had remanded the said

cases earlier also vide its judgment dated 20.12.2016. When the appeal again

came up for hearing before the Tribunal, it reached to the conclusion that the

appellant llant Board had ha collected the toll fee/ con concession ession fee as a grantor of the

concession on principal to principal basis and taking into the actual activity

performed by the appellant board and irrespective of the wordings of the

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concession agreement, it held the appellant Board to be liable to pay interest

as per Section 206C(7) of the Act and penalty under the provisions of

Section 271CA of the Act and accordingly decided against the assessee

board and in favour of the respondent-revenue.

respondent revenue. Feeling aggrieved, the

present appeals have been filed.

6. Learned counsel for the appellant has relied on the Finance Bill,

2012, whereby the provisions were inserted under Sections 201, 206C and

40 (a)(ia) of the Act and provisions of rationalization of tax at source and tax

collection at source were made. It was submitted that the person shall be

deemed to be assessee in default in in respect of non/short deduction of tax

only in cases where the payee failed to pay the tax directly. A deductor

cannot be treated as assessee in default in non/ short deduction of tax if the

payee has discharged his tax liability. The payer would be liabl liablee to pay

interest under Section 201 (1A) of the Act on the account of non/short

deduction of tax from the date on which such tax was deductible to the date

on which the payee has discharged his tax liability directly. There was no

clarity and Section 201 of of the Act was amended and interest under Section

201 (1A)(i) of the Act shall be payable from the date on which such tax was

deductible to the date of furnishing of return of the income by such resident

payee. Similarly amendments were also made to Section 206C of the Act

relating to TCS for clarifying the deemed date of discharge of tax liability.

These amendments were brought into force with effect from 2012. Learned

counsel, therefore, submitted that the appellant had reasonable cause for not

collecting TCS under Section 206C (ic) of the Act. The penalty under

Section 271CA of the Act was unwarranted.

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7. Learned counsel for the appellant, thus, submitted that the

learned Tribunal was not justified in summarily dismissing the appeals of the

appellant. More More so, as there was no notice under Section 271CA of the Act

and the penalty ought to have been deleted.

8. Learned counsel for the respondent, however, supports the

orders passed by the Tribunal. It is stated that interest as per the provisions

of Section ion 206C(7) of the Act have been deposited.

9. We have considered the submissions.

10. We find that the appellant is just a nodal agency as conforming

party. The agreement has been entered between the Government of Punjab

and the Concessionaire. The Tribunal has erroneously held that the

agreement is just a paper document and the appellant bboard oard itself would be

acting as a guarantor. Taking into consideration, the penalty was imposed.

However, we find that the document which has been executed between the

Government of Punjab and the Concessionaire could not have been ignored

nor its nature could co be changed by the Tribunal Tribunal.. If the appellant Board is

collecting the toll fee, concession fee, the same would be on behalf of the

Government of Punjab. Usage of such an amount to certain extent by the

Board, would not mean that the Board is liable for the same and for the

purpose of depositing the TCS. The findings arrived at by the Tribunal with

regard to imposition of penalty under Section 271CA of the Ac Act are,

therefore, found to be without any basis and are set aside.

11. We find that the issue regarding egarding Section 271C of the Act has

been considered by the Supreme Court in Commissioner of Income Tax,

New Delhi vs Eli Lilly and Company (India) Private Limited (2009) 15

SCC 1, wherein it was held as under:-

under:

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"93. Section 271-C C inter alia states that if any person fails to deduct the whole or any part of the tax as required by the provisions of Chapter XVII XVII-B B 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. In these cases we are concerned with Section 271-C(1)(a).

C(1)(a). Thus Section 271 271-C (1)(a) makes it clear that the penalty leviable shall be equal to the amount of tax which such person failed to deduct. We cannot hold this provision to be mandatory or a compensatory or automatic because under Section 273 273-B B Parliament has enacted that penalty shall not be imposed in cases falling thereunder. Section 271--C C falls in the category of such cases.

94. Section 273-B B states that notwithstanding anything contained in Section 271 271-C, no penalty ty shall be imposed on the person or the assesses for failure to deduct tax at source if such person or the assessee proves that there was a reasonable cause for the said failure. Therefore, the liability to levy of penalty can be fastened only on the person on who does not have good d sufficient reason for not deducting tax at source. Only those persons will se liable to penalty who do not have good and sufficient reason for sot deducting the tax. The burden, of course, is on the person to prove such good and sufficient reason."

We find that in the present case too deduction of tax at source was on

bonafide reasons and, therefore, imposition of penalty was wholly uncalled

for.

12. Accordingly, penalties imposed under Section 271CA of the

Act amounting to ` 15,66,180 for the financial year 2007 2007-08, ` 20,44,460/--

for the financial year 2008-09, 2008 ` 38,83,265/-- for the financial year 2009-10, 10,

and ` 4,77,255/-

4,77,255/ for the financial year 2010-11 11 are quashed and set aside.

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13. All the appeals are accordingly allowed.

14. All pending applications stand disposed of.