The assessee, the State Bank of India provided benefit of leave travel concession to its employees and while deducting tax at source from the salary of the employees, leave travel concession was considered exempted under section 10(5) of the Act read with rule 2B of the Income-tax Rules, 1962. A survey under section 133A of the Act was conducted in the business premises of the assessee’s head office and it was noticed that the assessee has given exemption under section 10(5) of the Act towards reimbursement of leave travel concession or leave fare concession for travel outside India and travel by long circuitous routes to the destination. The same practice was followed by all the branches of the bank. Proceedings under section 201(1) and (1A) of the Act were initiated by issuing show-cause notices. The Assessing Officer rejected the explanation offered by the assessee and considered the assessee an “assessee in default” under section 201 of the Act for making short deduction under section 192 of the Act and liable to pay the defaulted amount. This order was confirmed by the Commissioner (Appeals) and the Tribunal. On appeals to the High Court Dismissing the appeals, the Court held that the service conditions and circulars issued by the Indian Banks’ Association is not a statutory circular and would not govern the Income-tax Department. The employees had directly travelled abroad and in the return journey, had visited places in India. The itinerary confirmed this. The charges towards the tour received by the tour operator demonstrated that it was the consolidated charges for the entire journey. In such circumstances, they could not be split up to avail of the benefit of leave travel concession or leave fare concession by the employees. That the plea of bona fide belief by the assessee placing reliance on the circular issued by the Indian Banks’ Association was untenable since no clarification from the Department was sought by the assessee on this aspect. The bona fide belief pleaded by the assessee was without any legal basis. Considering these aspects, the authorities had rightly held that the assessee was an “assessee in default” under section 201(1). (AY.2011-12, 2012-13, 2013-14)