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TMI Blog2018 (12) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... s to show contumacious conduct on the part of the assessee. There is no such finding that assessee has deliberately avoided the tax deduction at source provisions by not deducting the tax at source and therefore has failed to prove the contumacious conduct on part of the assessee for failure to deduct tax at source. In view of this we reverse the finding of the lower authorities and direct the learned adjudicating officer to delete the penalty under section 271C - Decided in favour of assessee. - ITA No. 3431/Del/2015 - - - Dated:- 28-11-2018 - Shri Amit Shukla, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Ms. Ashita Farsanja, Adv For the Revenue : Shri Surender Pal, Sr. DR ORDER PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the assessee against the order of the ld CIT (A)- 41, New Delhi dated 02.03.2015 for the Assessment Year 2009-10. 2. The assessee has raised the following grounds of appeal:- A. That the Ld. CIT (A) failed to appreciate that the penalty was in violation of the principles of natural justice. i. That the Ld. CIT (A) erred by not appreciating that the Appellant was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failed to appreciate that the credits/payments were made only on 31.03.2009 and at that time there was a certificate under Section 197(1) dated 10.12.2008 in favour of the payee requiring no deduction of tax under Section 194J of the Act and that the date of invoice is immaterial. G. That the Ld. CIT (A) failed to appreciate that since no tax was payable by the deductee, no amount was liable to be deducted and there was no short payment of tax. H. That the Ld. CIT (A) failed to consider that as the deductee was assessed to tax on its income, no tax was payable by the Appellant and no penalty could be imposed on the Appellant. I. That the Ld. CIT (A) erred in holding in Para 4.10 that payments were being made on a monthly basis in as much as the credit to the account was made only at the end of the year. J. That the Ld. CIT (A) erred in holding that the assessee company has defaulted in complying with the applicable provisions of Chapter XVII-B of the Act on alleged pre-operative expenses: i. Ld. CIT (A) erred in confirming the Penalty Order dated 23.8.2013 without considering any grounds or giving any finding on alleged pre-operative expenses. ii. Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng officer considered the reply of the assessee and stated that assessee has not deducted tax at source on sharing expenses disallowed for financial year 2008 09 of ₹ 15 9640 7822/ on which tax under section 194J of the act was to be deducted of ₹ 1 5964782 and for FY 2006 07 preoperative expenses were disallowed of ₹ 22.50 lakhs on which tax was required to be deducted under section 194J of ₹ 2.25 lakhs totaling in all to ₹ 1 6189782/ has not been deducted by the assessee thereby the penalty provisions under section 271C of the income tax act were attracted. The learned adjudicating officer further issued a show cause notice for imposition of penalty for which no reply was received. In absence of any reply in explanation furnished by the assessee the learned adjudicating officer held that assessee has no reasonable cause for non-deduction of tax at source amounting to ₹ 1 6189782/ during the financial year 2008 09 and held that failure to deduct tax at source was due to deliberate negligence on the part of the deduct and negligence has no excuse in law. Accordingly he levied a penalty of ₹ 1 6189782/ under section 271C of the act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax under section 194J at the rate of 10%. The appellant paid these expenses to Tata teleservices Ltd but has not deducted tax at source on the said payment as Tata teleservices Ltd from 01/04/2008 to 10/12/2008 the exemption certificate under section 197 (1) was available from 10/12/2008 231/3/2009. Further, the assessee has debited preoperative expenses of ₹ 2.25 lakhs on which tax was not deducted under section 194J of the income tax act. The assessee stated that it was covered by the exemption certificate under section 197 (1) of the income tax act dated 16th/1/2015. The learned assessing officer noted that the about tax deduction at source certificate has been given for the period from 10/12/2000 08/02/1931/3/2009 only. However, there was admittedly a failure on the part of the assessee to deduct tax at source on these above two expenses. However merely failure to deduct tax does not result into penalty under section 271C of the income tax act unless the adjudicating authority shows that there is a contumacious conduct of the assessee in failure to deduct tax at source. The issue is now squarely covered in favour of the assessee by the decision of the honourable Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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