I. S. Verma, J.M. - (1.) THE common issue involved in all these appeals by the Revenue of 3 different appellants of the same group relates to the imposition of penalties under s. 271C of the IT Act for failure to deduct and pay the tax at source as required by the provisions of s. 194H of the IT Act. For the sake of convenience, we proceed to decide these appeals by this consolidated order. THE common ground, except the quantum of penalty, for all these 3 cases, as taken by the Revenue, runs as under : "That the CIT(A) erred in law and facts in cancelling the penalty under s. 271C of Rs. 9,99,513 in spite of the clear-cut provision as laid down in s. 271C that the person failing to deduct the tax as required by s. 194H shall be liable for penalty under s. 271C. Further the CIT(A)'s order in A. No. 41/TDS/VNS/1992-93 dt. 12th March, 1993, on similar issue has not been accepted by the Department and the matter is still sub judice before the Tribunal."
(2.) We have heard the learned Departmental Representative as well as the assessee's counsel. Before divulging to their respective submissions, we consider it necessary to record the undisputed facts, as borne out from the records before us, which, are, in the following terms : As a result of newly inserted provisions of s. 194H of the IT Act, 1961 (hereinafter called as "the Act"), as a result of Finance Act, 1991, which received the assent of the President of India on 27th September, 1991, all these respondents were under an obligation to deduct and pay the tax at source @ 10 per cent from all payments or payables on account of commission after 1st October, 1991. All these respondents, taking shelter under the provisions of sub-s. (2) of s. 194H according to which the Central Government has retained the power to exempt any person or class or classes of persons from the applicability of provisions of s. 194H(1), moved their respective petitions for exemption to the CBDT on 4th November, 1991 (copy of the first respondent placed at pp. 5 and 6 of the assessee's paper book), which was decided by the CBDT as per its order placed at pp 8 to 11 of the paper book, only after the directions of the Hon'ble High Court of Allahabad dt. 23rd July, 1992, given in writ petitions filed by these respondents. The order of the CBDT dt. 30th September, 1992, has been claimed by the assessee to have been received in the second week of October, 1992. Respondent-assessees had also requested the Hon'ble Finance Minister, Government of India on 30th March, 1992, for disposal of their petition furnished under s. 194H(2) of the Act. Since the CBDT rejected the respondent's petitions for exemptions, these respondents have claimed to have deducted the tax at source on 27th October, 1992, and deposited the same into Government account on 29th October, 1992. In the meantime, on 18th August, 1992, the Asstt. CIT (TDS), Varanasi, called upon the respondents to furnish their annual return of commission as required under s. 206C of the Act. The first respondent complied with the requirement of the Asstt. CIT (TDS) by way of letter, dt. 5th September, 1992 (copy placed at p. 58 of the assessee's paper-book), which reads as under : "The Asstt. CIT (TDS) Varanasi. Filing of Annual return under s. 206C of the IT Act, 1961, for the financial year 1991-92. Sir, We write with reference to your letter No. TDS/Annual/1991-92 dt. 18th August, 1992, served on 3rd September, 1992, we submit as under : (a) Annual return of salary under s. 192 has already been submitted to your office on 1st June, 1992, photocopy of the acknowledgment No. 36651 is enclosed for your perusal. (b) Annual return of payment of contractors under s. 194C has already been submitted to your office on 26th June, 1992, photostat copy of acknowledgment No. 37540 is enclosed for your perusal. (c) Annual return of payment of commission of brokerage under s. 194H enclosed herewith and request your honour to condone the delay. As regards our remarks is Form No. 26-I we like to add that we are not liable to deduct and pay TDS on commission under s. 194H as the matter is being agitated both before the Government of India in the Ministry of Finance as well as before the Hon'ble High Court of Judicature at Allahabad and is still subjudice before both the authorities. The Government having exempted large number of units e.g,. tea brokers under Notification 8989, dt. 6th February, 1992, air travel agents under Notification No. 9006 dt. 3rd March, 1992, and commission agents and dealers in foodgrains trade under Notification No. 9007, dt. 3rd March, 1992, our case stands on a much higher and stronger footing for exemption and we have every reasonable expectation that we shall be granted similar exemption by the Government. Moreover, the exemption is not detrimental to the interest of the Revenue. On the contrary its consequences on us are very grave. We cannot keep out capital which has a marginal profit looked in the Department. Thereafter it is a cumbersome exercise to claim and obtain refund. In this connection, our bona fide stand in the writ petition may kindly be looked into. It is, therefore, requested that no action in the matter has been taken until the matter is finally decided by the Ministry of Finance as well as till the disposal of our writ petition before the High Court of Judicature at Allahabad. Thanking you,              Yours faithfully,             for UP National Mfrs. Ltd.,                     Sd/-             (Sharad Kumar Sah)               Managing Director." (It is not considered necessary to reproduce the reply of other two assessees.) The first respondent furnished the details of commission paid as per letter dt. 11th September, 1992 (copy placed at p. 60 of the assessee's paper book). Form No. 26-I were also filed on 7th September and 30th November, 1992 (copies placed at pp. 69 to 70 of the assessee's paper book).
(3.) THE Asstt. CIT (TDS) passed order under s. 201 of the Act on 14th October, 1992, whereby demand on account of liability of TDS and interest under s. 201(1A) was created against all these three respondents and the orders were served upon the assessee on 4th November, 1992, by which date they have deducted and paid the tax at source.;