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2016 (6) TMI 888 - AT - Income TaxPenalty u/s 271CA - waiver of penatly u/s 273B - failure with respect to TCS liability - Held that - Levy of penalty under section 271C of the Income-tax Act, 1961, for failure To deduct tax at source, is not automatic. In order to bring in application of Section 271C, in the backdrop of the overriding non obstante clause in section 273B, absence of reasonable cause, existence of which has to be established, is A sine qua non. Before levying penalty, the concerned officer is required to find out that even if there was any failure to deduct tax at source, the same was without reasonable cause. The initial burden is on the assessee to show that there exists reasonable cause which was the reason for the failure. There- after, the officer has to consider whether the explanation offered by the assessee or other person as regards the reason for failure, was on account of reasonable cause. See Wood ward Governor India P. Ltd. Vs CIT 2001 (4) TMI 34 - DELHI High Court - Decided in favour of assessee
Issues:
Appeals by Revenue against CIT (Appeals) order on penalty under section 271CA of the IT Act for non-collection of tax at source. Analysis: The consolidated order of the Appellate Tribunal ITAT Chandigarh dealt with appeals by the Revenue and Cross Objections by the assessee regarding penalty under section 271CA of the IT Act for non-collection of tax at source. The appeals arose from the order of the Commissioner of Income Tax (Appeals) relating to assessment years 2011-2012 and 2012-2013. The grounds raised by the Revenue pertained to the AO's action regarding non-collection of tax at source and deletion of penalties imposed under sections 271CA and 274 of the IT Act. The CIT (Appeals) decided in favor of the assessee on the grounds that purchasers had paid income tax on purchases and penalties could not be levied. The CIT (Appeals) also noted that no demand for non-collection of tax at source was raised by the AO. The Tribunal referred to a similar case where penalties were canceled due to reasonable cause for non-compliance with tax provisions. The Tribunal upheld the CIT (Appeals) decision, dismissing the Revenue's appeals. The Cross Objections by the assessee were withdrawn with no objections, leading to the dismissal of those as well. The Tribunal confirmed the CIT (Appeals) orders, ultimately dismissing both the Revenue's appeals and the Cross Objections. This case involved the interpretation of provisions related to tax collection at source under section 206C of the IT Act. The issue revolved around whether penalties under section 271CA could be imposed on the assessee for non-collection of tax at source during the sale of iron scrap. The assessee argued that since purchasers had paid income tax on purchases and no demand for non-collection of tax at source was raised by the AO, penalties should not be levied. The CIT (Appeals) agreed with the assessee, citing the buyers' tax payments and lack of demand for non-collection. The Tribunal, referring to a similar case, emphasized the importance of reasonable cause for non-compliance with tax provisions before levying penalties. The Tribunal found no merit in the Revenue's appeals and dismissed them based on the facts and findings recorded by the CIT (Appeals) and the Tribunal in the similar case. The orders passed by the CIT (Appeals) were confirmed, resulting in the dismissal of both the Revenue's appeals and the Cross Objections by the assessee. The Tribunal's decision highlighted the significance of compliance with tax provisions and the requirement of reasonable cause for non-compliance before imposing penalties under section 271CA of the IT Act. The case underscored the importance of buyers' tax payments and the absence of demand for non-collection of tax at source in determining the assessee's liability for penalties. By referring to a similar case, the Tribunal reinforced the principle that penalties should not be levied without establishing reasonable cause for non-compliance. The Tribunal's confirmation of the CIT (Appeals) orders reflected a consistent approach in interpreting and applying tax laws to ensure fair treatment and adherence to legal requirements in penalty assessments related to tax collection at source.
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