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Issues: Penalty under s. 272A(2)(c) for failure to deduct TDS and file Form No. 27A within the prescribed time limit.
Analysis: 1. The appeal was against the penalty imposed under s. 272A(2)(c) of the IT Act for not deducting TDS from interest paid to creditors and filing Form No. 27A late. The AO initiated penalty proceedings due to the delay in filing Form No. 27A beyond the deadline. 2. The assessee argued that the penalty order was time-barred as it was initiated after more than 5 years of the default under s. 206A. The CIT(A) rejected this argument and upheld the penalty, stating that the accountant being part-time and out of station was not a valid excuse. 3. The matter was brought before the Tribunal, where the assessee cited s. 275(1)(c) of the IT Act, claiming that the penalty cannot be imposed after a specific timeframe from the initiation of penalty proceedings. The assessee contended that the penalty order was passed beyond the limitation period, as the default was brought to the AO's notice in 1991, but the penalty was imposed in 1997. 4. After considering the submissions, the Tribunal found merit in the assessee's argument regarding the penalty being time-barred. The Tribunal noted that as per s. 275(1)(c), the penalty should have been levied within a specific timeframe from the end of the financial year in which the default occurred. Since the penalty was imposed after the prescribed period, it was deemed barred by limitation. Consequently, the Tribunal annulled the penalty order and set aside the CIT(A)'s decision, ultimately deleting the penalty. 5. The Tribunal allowed the appeal of the assessee, ruling in favor of the assessee due to the penalty being barred by limitation.
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