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2021 (2) TMI 1020 - AT - Income TaxPenalty u/s 271(1)(c) - deduct tax at source u/s 194J - assessee company has suo motu deposited the tax deducted at source along with interest in the Government account to settle the dispute with the Revenue - HELD THAT - We are of the considered view that when, in the undisputed facts and circumstances of the case, assessee company has voluntarily on its own deducted the tax and deposited the same with Government exchequer along with interest well prior to date of filing of income-tax return, it shows its bona fide creating a reasonable cause to be covered u/s. 273B of the Act, hence penalty imposed by the AO is not sustainable. So, finding no illegality or perversity in the impugned order passed by the ld. CIT(A), present appeal filed by the Revenue is hereby dismissed.
Issues Involved:
- Applicability of penalty under section 271C of the Income Tax Act for failure to deduct tax at source. - Justification for cancellation of penalty by CIT(A). - Assessment of mala fide intention for non-deduction of tax. - Demonstration of genuineness of reasonable cause by the assessee. - Legality and factual accuracy of the CIT(A) order. Analysis: Issue 1: Applicability of penalty under section 271C of the Income Tax Act for failure to deduct tax at source: The Appellant, ITO, Ward 78(4), New Delhi, sought to set aside the order passed by the Commissioner of Income-tax (Appeals)-41, New Delhi, regarding the imposition of a penalty under section 271C of the Income Tax Act for failure to deduct tax at source. The penalty amount was levied on the assessee for not deducting tax at source on a specific date as required by law. Issue 2: Justification for cancellation of penalty by CIT(A): The CIT(A) justified the cancellation of the penalty by considering various factors, including the assessee's past compliance history, the voluntary deposit of the tax deducted at source along with interest, and the absence of any contumacious conduct on the part of the assessee. The CIT(A) also assessed the impact on revenue and the genuineness of the reasons provided by the assessee for the non-deduction of tax. Issue 3: Assessment of mala fide intention for non-deduction of tax: The CIT(A) evaluated whether there was any mala fide intention behind the non-deduction of tax by the assessee. The Tribunal considered the actions taken by the assessee, such as voluntary depositing the tax along with interest before the due date of filing the income tax return, to determine the presence or absence of mala fide intent. Issue 4: Demonstration of genuineness of reasonable cause by the assessee: The CIT(A) was tasked with assessing the genuineness of the reasonable cause presented by the assessee for the failure to deduct tax at source. The Tribunal examined whether the reasons provided by the assessee, along with the actions taken to rectify the non-compliance, demonstrated a bona fide belief and a reasonable cause as per the provisions of the Income Tax Act. Issue 5: Legality and factual accuracy of the CIT(A) order: The Tribunal thoroughly reviewed the facts, legal provisions, and precedents cited by both parties. After considering the arguments presented and the orders passed by the revenue authorities, the Tribunal found no illegality or perversity in the CIT(A) order. Consequently, the Tribunal dismissed the appeal filed by the Revenue, upholding the decision to cancel the penalty imposed under section 271C of the Income Tax Act. This detailed analysis of the judgment highlights the key legal aspects and considerations involved in the case, providing a comprehensive overview of the issues addressed and the Tribunal's decision.
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