Penalty u/s 271C not leviable when assessee misconstrued provisions

Penalty u/s 271C cannot be levied when the assessee misconstrued the provision of law and did not deduct tax at source In the instant case, the assessee is a Co-operative Bank. Clause 5 of sub-section (3) of Section 194 A expressly exempts the Bank from deducting the tax at source on interest payable by the Bank to its members and other Co-operative Societies. As stated by the assessee, they did not properly construe this provision. By mis­construing this provision they also did not deduct tax from the interest payable to non-members.That is the bonafide mistake which they have committed. The...