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TMI Blog2023 (1) TMI 865X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. CIT(A) has erred in deleting the penalty levied u/s. 271C as penalty levied is consequential in nature to the order passed u/s. 201(1)/201(1A) for default for short/non-deduction in the Ld. CIT(A) order 187/15-16/18-19/4088 dated 22.07.2019 and second appeal is being filed to ITAT against the said Ld. CIT(A) order. 3. The learned Senior Departmental Representative supporting the assessment order submitted that the AO was right in imposing u/s. 271C of the Income Tax Act 1961, because the deductor assessee has failed to deduct TDS in accordance with the provision of chapter xvii-b of the Act. He further explained that the assessee deductor was under statutory obligation to deduct TDS on the payments on hiring and there was no reasona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of CIT vs. SAS Pharmaceuticals, reported as 335 IT 259 have held that penalty proceedings have to be strictly construed (para 12 of that order). In the case at hand, it is not clear at all as to with regard to what payments did the appellant not deduct tax at source. When the A.O. himself is not sure at all, there is no question of levy of penalty u/s 271C of the Act. Further, the appellant's conduct is not contumacious. When the appellant's conduct is not contumacious, penalty cannot be levied, as held by Hon'ble Supreme Court in the case of CIT vs. Bank of Nova Scotia, reported as 380 ITR 550 (SC). This concept finds elaboration by Hon'ble Delhi High Court in the case of CIT vs. ITOCHU Corpn., reported a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en consistently followed by lower authorities and Hon'ble jurisdictional High Court of Delhi in the case of CIT vs. ITOCHU Corp (supra) and CIT vs. Mistui & Co. Ltd., (supra). Therefore we are unable to see any valid reason to interfere with the findings arrived by the Ld. CIT(A) and thus uphold the same resultantly appeal of revenue ITA no. 8064/Del/ 2019 is dismissed. ITA 8063/Del/2019 7. The grounds of appeal raised by the revenue read as under:- 1. That on the facts and circumstances of the case the Ld.CIT(A) has erred in directing the AO to ascertain whether the assessee was required to deduct tax by ignoring the provision of section 194C & 194J of the Act ignoring the nature of expenses incurred by the Delhi Police. 2. That on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y reasonable basis and justified ground. Therefore the impugned first appellant order may kindly be set aside by restoring that of the AO. 9. Replying to the above the learned assessee representative drawing our attention towards relevant part of the first appellate order submitted that the Assessing Officer passed assessment order in a hasty manner without considering the submissions of the assessee in the right perspective therefore the Ld. CIT(A) was right in deleting the impugned demand of TDS amount and interest thereon. The Ld. AR further drawing our attention towards first appellate order submitted that the CIT(A) has not granted any relief to the assessee but simply remitted the matter to the file of Assessing Officer for required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. It is a peculiar situation of the present case that is listed calling remand report and allowing the assessee to place its rejoinder the Ld. CIT(A) limited the matter to the file of AO for proper verification after allowing due opportunity of hearing to the assessee and to frame fresh assessment order. Therefore in our considered opinion if the said order is set aside and the Ld. CIT(A) is again ask to adjudicate the first appeal afresh by following the procedure as noted above then there would be multiplicity of proceedings and therefore as agreed by learned representative both the sides. We are of the view that there would be no illegality or absurdity if the issue is adjudicated by the AO afresh after allowing due opportunity ..... X X X X Extracts X X X X X X X X Extracts X X X X
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