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Issues involved: Appeal against imposition of penalty u/s 221(1) of the Income Tax Act for non-payment of tax demanded u/s 201(1)/201(IA) due to failure to deduct tax at source u/s 194A.
Summary: 1. The assessee failed to deduct tax at source u/s 194A during an inspection u/s 133A, leading to demands u/s 201(1)/201(IA) for non-payment of tax. The AO imposed a penalty u/s 221(1) for non-payment of the demanded tax, despite the assessee's claim that the tax had been paid by the deductees. The CIT(A) upheld the penalty. 2. The assessee contended that the penalty u/s 221(1) was not justified as the tax had been paid by the deductees, citing the decision in Hindustan Coca-Cola Beverages Ltd. case. However, the AO found no evidence to support this claim and imposed the penalty. The CIT(A) affirmed the AO's decision, emphasizing that interest under section 201(IA) was also payable due to delayed tax deposits by the deductees. 3. The ITAT concurred with the CIT(A) that the assessee had indeed failed to deduct tax at source, leading to the imposition of penalty u/s 221(1). The ITAT noted that the assessee did not provide evidence of the tax being paid by the deductees, and upheld the penalty and interest payments as per the Supreme Court's decision in Hindustan Coca-Cola Beverages Ltd. case. 4. Consequently, all grounds of appeal by the assessee were dismissed, and the appeals against the penalty imposition were rejected. Judges: H. S. Sidhu (Judicial Member) and B. P. Jain (Accountant Member)
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