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Issues:
1. Penalty under section 271C for failure to deduct tax at source on interest exceeding Rs. 2,500 credited to creditors' accounts without possession of Form No. 15H before the financial year end. Detailed Analysis: The appeal was filed against the order of the CIT(A) regarding the penalty under section 271C for the assessment year 1999-2000. The assessee-firm credited interest exceeding Rs. 2,500 to some creditors without deducting tax at source and received Form No. 15H after the financial year end. The Income Tax Officer (ITO) issued a notice for penalty proceedings under sections 221/201, which was further referred to the Joint Commissioner of Income Tax (Jt. CIT). The Jt. CIT imposed a penalty of Rs. 9.028 under section 271C after finding no reasonable cause with the assessee. The first appellate authority confirmed this penalty, stating the legal obligation of the assessee as a tax deductor to deduct tax on interest exceeding limits. Both parties presented similar arguments before the bench, emphasizing the possession of Form No. 15H after the financial year end. The undisputed facts revealed that the assessee-firm did not possess Form No. 15H before crediting interest exceeding Rs. 2,500 on March 31, 1999, receiving the forms on April 1, 1999. The assessee argued reasonable cause based on past practices and a decision by the Bench in a related case. The Departmental Representative supported the penalty imposition. The judgment highlighted the nature of penalty under section 271C as a deterrent for tax compliance, emphasizing the need for a reasonable cause to exonerate the defaulter. Considering the circumstances, the defaulter was found to have a reasonable excuse for the technical default, leading to the cancellation of the penalty. The judgment concluded by allowing the appeal and disposing of the case accordingly.
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