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2018 (6) TMI 27 - AT - Income TaxInitiation of penalty u/s 271C - delay caused in depositing the tax deducted at source - reasonable cause for delay - Held that - As per section 273B no penalty shall be imposed u/s 271C if the assessee is able to prove that there was reasonable cause for depositing TDS - Tribunal had primarily allowed the appeals of the assessee by holding there was reasonable cause as mandated u/s 273B - thus there was reasonable cause on part of assessee for the default in remittance of tax deducted at source into the Government account on time, and therefore, that the penalty u/s 271C of the I.T.Act is not warranted - Decided in favor of assessee.
Issues:
1. Imposition of penalty u/s 271C of the I.T.Act for delay in depositing tax deducted at source. 2. Appeal filed by assessee against penalty imposition. 3. Tribunal's decision to cancel penalty orders. 4. Revenue's Miscellaneous Applications seeking to recall Tribunal's orders. 5. Allegation of misrepresentation of facts by the assessee. 6. Legal provisions regarding penalty imposition and reasonable cause for delay. 7. Tribunal's consideration of reasonable cause for delay. 8. Jurisdictional High Court's judgment on penalty waiver based on reasonable cause. Analysis: 1. The case involved the imposition of penalty u/s 271C of the I.T.Act due to a delay in depositing tax deducted at source. The Assessing Officer imposed the penalty, leading to appeals by the assessee against the penalty order. 2. The CIT(A) rejected the appeals filed by the assessee, prompting further appeal to the Tribunal. The Tribunal found a reasonable cause for the delay in payment of TDS and subsequently canceled the penalty orders passed by the Assessing Authority u/s 271C of the I.T.Act, thereby allowing the appeals of the assessee. 3. Subsequently, the Revenue filed Miscellaneous Applications seeking to recall the Tribunal's orders, alleging that the Tribunal's decision was based on misrepresentation of facts by the assessee. The Revenue argued that the assessee misled the Tribunal by stating that no order u/s 201(1) was issued before initiating penalty u/s 271C. 4. The Tribunal, in its analysis, highlighted that the imposition of penalty u/s 271C is subject to the provisions of section 273B of the I.T.Act, which mandates that no penalty shall be imposed if there was a reasonable cause for the failure. The Tribunal found that there was a reasonable cause for the delay in remittance of tax deducted at source, leading to the cancellation of the penalty. 5. The Tribunal noted that the Revenue did not challenge the specific finding that there was a reasonable cause for the delay in remittance. Therefore, the Miscellaneous Applications by the Revenue were dismissed as they did not challenge the crucial finding of reasonable cause for the delay. 6. The Tribunal also referenced the judgment of the jurisdictional High Court, emphasizing that penalty u/s 271C could only be waived if the assessee could prove a reasonable cause as mandated by section 273B of the I.T.Act. As the Tribunal had found a reasonable cause for the default and canceled the penalty, the Miscellaneous Applications were dismissed. 7. Ultimately, the Tribunal upheld its decision to cancel the penalty orders, emphasizing the requirement of proving a reasonable cause for the delay in depositing tax deducted at source to avoid penalty imposition under section 271C of the I.T.Act.
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