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TMI Blog2016 (2) TMI 967X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing substantial questions of law : "(i) Whether the Income-tax Appellate Tribunal was right in law in deleting the penalty imposed by the Assessing Officer under section 271C read with section 274 of the Income-tax Act for failure to deduct tax at source out of interest paid/credited to four deductees as required under section 194A of the Income-tax Act, 1961 ? (ii) Whether on the facts and circumstances of the present case and in law, the hon'ble Income-tax Appellate Tribunal is right in holding that the assessee was not liable to deduct tax at source, as required under section 194A of the Income-tax Act, 1961 ? (iii) Whether in the facts and circumstances of the case and in law the hon'ble Income-tax Appellate Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t source under section 194A of the Act at 10 per cent. on the payments made on account of interest paid to different parties and deposit the same in the Central Government account, the Deputy Commissioner of Income- tax (TDS), Chandigarh, vide order dated March 28, 2013 (annexure A-1) under section 201(1)/201(1A) of the Act separately referred to the office of the Joint Commissioner of Income-tax (TDS), Range, Chandigarh regarding initiation of penalty proceedings under section 271C of the Act. Accordingly, a notice dated April 15, 2013 was issued to the person responsible to show cause as to why penalty under section 271C read with section 274 of the Act be not levied for failing to pay the amount of tax deducted at source. The Joint Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "194A. Interest other than 'interest on securities'.- . . . (3) The provisions of sub-section (1) shall not apply- . . . (iii) to such income credited or paid to- . . . (f) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette." The Central Government had issued notification No. S. O. 3489 [No. 170 (F. No. 12/164/68-ITCC/ITJ)] dated October 22, 1970 under section 194A(3)(iii)(f) of the Act notifying corporations, undertakings, societies, etc. thereunder which reads thus : "In pursuance of sub-clause (f) of clause (iii) of sub-section (3) of section 194A of the Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Further, it was recorded that in the similar matter in ITO v. State Bank of Patiala, Kusumpti, Shimla, I. T. A. No. 271/Chd/2014, the Tribunal had dismissed the appeal of the Revenue and confirmed the order of the Commissioner of Income-tax (Appeals) in cancelling the penalty under section 271C of the Act on the ground that in such circumstances the assessee would have genuine belief that it was not required to deduct tax at source. In the case of Shri Aurobindo Society, the Commissioner of Income-tax (Appeals) again noticed that the exemption certificate under section 80G(5)(vi) of the Act was valid for the assessment year 2011-12 and a copy of the return of income of Shri Aurobindo Society where total income declared was "nil", was als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above decisions, we do not find any merit in the appeal of the Revenue. The learned Commissioner of Income-tax (Appeals) found that in case of three of the societies, the assessee was not liable to deduct tax at source. In the case of Shri Aurobindo Society, the exemption certificate under section 80G(5)(vi) was also filed. It would, therefore, prove that assessee had a reasonable cause for failure to deduct tax at source under section 201(1) of the Act. In the case of State Bank of Patiala, Kunsumpti, Shimla (supra), the Income-tax Appellate Tribunal Chandigarh Bench dismissed the Department's appeal confirming the order of the learned Commissioner of Income-tax (Appeals) in cancelling the penalty under section 271C of the Act. The fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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