State Bank of India Local Head Office Chandigarh Vs ACIT (TDS) (ITAT Chandigarh)
ITAT upheld penalty of ₹17.23 lakh u/s 271C levied on the bank for failure to deduct TDS u/s 192 on LTC/LFC reimbursements relating to foreign travel. Tribunal noted that exemption u/s 10(5) applies only to travel within India, and the Hon’ble Supreme Court in the assessee’s own case had already clarified that foreign travel reimbursements are taxable salary.
Assessee’s plea of reasonable cause based on interim High Court orders was rejected, as statutory obligation to deduct tax remained unchanged and penalty u/s 271C being a civil liability does not require mens rea. Finding no change in facts or law after the binding Supreme Court decision, ITAT confirmed the penalty and dismissed the appeal.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/NFAC, Delhi dt. 11/06/2025 for the Assessment Year 2016-17.
2. In the present appeal Assessee has raised the following grounds:
1. The impugned order is both against facts and erroneous in law.
2. On the facts and circumstances of the case the Ld.CIT(Appeals) NFAC has erred in having confirmed the order of the Ld.AO imposing penalty of Rs.17,23,630/- u/s 271C of the Income Tax Act.
3. On the facts and circumstances of the case the Ld.CIT(Appeals) NFAC has erred in having held that the assessee/appellant has not shown any reasonable cause that prevented it from deducting TI)S on the LTC/LFC payments.
4. On the facts and circumstances of the case the Ld.CIT(Appeals) NFAC has erred in having confirmed the penalty order passed by the Ld.AO as there was no specific charge of failure either to deduct or to deposit the tax deducted at source.
5. On the facts and circumstances of the case the Ld.CIT(Appeals) NFAC has erred in having relied upon the case laws which were not applicable to the facts of present case as all these judgements were distinguishable on facts.
6. The assessee craves leave to add to, alter or amend the above grounds of appeal before the same is heard or disposed off.
It. is prayed that penalty of Rs.17,23,630/- may kindly be deleted.
3. Briefly the facts of the case are that the assessee is a banking company engaged in the business of banking and is responsible for deduction of tax at source on salary payments under section 192 of the Income-tax Act, 1961. For the assessment year 2016-17, the Assessing Officer conducted TDS verification proceedings and issued notice under section 133(6) seeking details of Leave Travel Concession/Leave Fare Concession (LTC/LFC) payments made to employees. On examination of the details furnished, it was noticed that the assessee had reimbursed LTC/LFC expenses to its employees involving foreign travel and no tax was deducted at source on such payments.
