IN THE INCOME TAX APPELLATE TRIBUNAL “DB” BENCH, AGRA BEFORE HON’BLE SHRI SATBEER SINGH GODARA, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं. / ITA No.288/Agr/2024 (िनधा(cid:330)रणवष(cid:330) / Assessment Year: 2016-17)

The Chief Manager (Admin) Addl. CIT (TDS)

State Bank of India (RBO) बनाम/ Kanpur

327/44, Gwalior Road, Civil Lines Vs.

Jhansi – 284 001 (cid:830)थायीलेखासं./जीआइआरसं./TAN No. AGRS-14799-B (अपीलाथ५/Appellant) : (ঋ(cid:529)थ५ / Respondent)

अपीलाथ५कीओरसे/ Appellant by : None ঋ(cid:529)थ५कीओरसे/Respondent by : Shri Shailendra Shrivastava – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 11-02-2025 घोषणाकीतारीख /Date of Pronouncement : 28-03-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member)

1. Aforesaid appeal by assessee for Assessment Year (AY) 2016-17 arises out of an order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 10-06- 2024 confirming levy of penalty u/s 271C. At the time of hearing, none appeared for assessee and Ld. Sr. DR pleaded for dismissal of the appeal.

2. From case record, it emerges that impugned penalty has been levied for short deduction of tax at source on payment of Leave Fare Concession (LFC) journey to overseas destination as claimed by various employees. An order was passed u/s 201(1) / 201(1A) for short deduction of tax at source raising demand of Rs.12.99 Lacs u/s 201. As per express provisions of Sec.10(5), the exemption could be granted only for journey to any place in India and there was no intention to allow the employees to travel abroad under the garb of benefit available u/s 10(5). The reimbursement so made by the assessee was not exempt and liable for TDS. Consequently, impugned penalty was levied for Rs.12.99 Lacs u/s 271C for want of any satisfactory explanation from the assessee.

3. During the appellate proceedings, it was submitted that assessee paid LFC / LTA to its employees and LFC was granted for domestic travel. Under the package, the employees visited foreign places en-route to the designated place in India and the assessee employer did not deduct any TDS on such reimbursements under a bona-fide belief that such reimbursements were exempt u/s 10(5) which do not require any TDS. No TDS was deducted under bona fide impression that if the destination was in India irrespective of the fact that en-route journey was out of India, the entire reimbursements would be exempt. This belief was supported by interim order dated 16-02-2015 of Hon’ble Madras High Court in MP No.2 of 2-014, WP No. 11991/2014 permitting assessee banker not to deduct TDS on such reimbursements. The assessee bank, following consistent practice, considered LFC claim as exempt and computed tax liability accordingly. The same was under a bona-fide belief that even when the journey involved a foreign leg, the employees would be entitled for exemption of Sec. 10(5) when the designated place was in India. There was no intention / motive either to defy the position of law or to evade any tax. Reference was made to the decision of Hon’ble Supreme Court in the case of Pricewaterhouse Coopers P. Ltd (25 Taxmann.com 400) holding that imposition of penalty was not warranted since the assessee had committed an inadvertent and bona fide error and not intended to conceal its income. However, Ld. CIT(A) rejected the same on the ground that this issue was ultimately been held against the assessee by Hon’ble Supreme Court (reported as 144 Taxmann.com 131) holding that the assessee was required to deduct tax at source on such reimbursements. Aggrieved, the assessee is in further appeal before us.

4. From the facts, it clearly emerges that the assessee, following consistent stand as taken earlier, did not deduct tax at source on impugned reimbursements under a bona-fide belief that irrespective of en-route journeys, when the ultimate destination was in India, such reimbursements would be exempt u/s 10(5). The same is also supported by the fact that t