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TMI Blog2014 (2) TMI 1228X X X X Extracts X X X X X X X X Extracts X X X X ..... 271C of the IT Act of Rs. 10,25,957/- (for A.Y.2007-08), of Rs. 12,42,922 (for A.Y.2008-09) & Rs. 7,03,086/- ( for A.Y.2009-10) levied by the Addl. CIT, Surat (herein after referred as AO) for the reason that the penalty proceedings u/s. 271C were not initiated while passing the order u/s.201(1) & 201(1A) by the ITO, TDS-1, Surat and in deciding so she completely failed in not considering the statutory provisions of sec. 271C(2) according to which the Jt. Commissioner was the statutory authority to impose the penalty and Jt. Commissioner includes Addl. Commissioner as defined u/s.2(28C)." 2 For the years under consideration, penalty u/s.271C was imposed vide orders dated 23.03.2012. The assessee is engaged in generation of power. A survey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty levied u/s.271C was deleted. Relevant portion is extracted below: "I have gone through the penalty order, submission of the appellant and the case law relied upon by it. The additional grounds raised at the time of appeal proceedings are admitted in the interest of natural justice. On a perusal of the order u/s.201(1) & 201(1A), it is seen that penalty u/s. 271C of the IT Act was not initiated by the AO while passing the order. It is only by the show cause notice dated 02.03.2012 has the Addl. CIT initiated penalty proceedings u/s.271C of the IT Act. It is a fact that the appellant did not deduct tax at source on food allowances shown as reimbursement u/s. 192 of the IT Act. However, on receipt of order u/s. 201(1) & 201(1A) the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty u/s. 271C. Section 273B provides discretion to the AO towards imposition of penalty u/s. 271C after considering the reasonableness of the cause shown by the appellant for failure on its part to deduct tax at source. In this case the appellant was under a bona fide belief that it was not to deduct tax at source u/s. 192 from reimbursement of food expenses paid to its employees. The fact that appellant has paid the entire tax & interest levied as per order u/s. 201 & 201(1 A) further establishes its bona fide intention. 8.2 It is a fact that the appellant paid the tax & interest on receipt of order u/s. 201 & 201(1A). The penalty u/s. 271C was not initiated while passing the order u/s. 201 & 201(1A). From the facts & circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s exempted from tax and that employees were placed on remote areas; hence, not chargeable to tax. The assessee has pleaded that under bona fide belief it was decided that reimbursement of "canteen subsidy scheme" was not subject to TDS. We have noted that in the case of Muthoot Bankers, 18 taxmann.com 203, it was held that no penalty is leviable if there is a bona fide omission in not deducting the tax at source. We have also examined the case laws as indicated by learned Sr.D.R. but considering the facts and circumstances of the case, those case laws are distinguishable on fact and law; hence, not helpful to the Revenue Department. Resultantly, we hereby affirm the view taken by learned CIT(A) and dismiss the ground of the Revenue. 6. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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