Case Law Details
Sarv Estate Pvt. Ltd Vs JCIT (ITAT Delhi)
The issue under consideration is whether the Ao is correct in levying penalty u/s 271C for failure to deduct tax at source u/s 194C on payment of external development work charges (EDC)?
In the present case, assessee was a private limited company engaged in the business of real estate development in the State of Haryana. During the assessment, AO had levied penalty under section 271C on the ground that assessee had not deducted TDS from EDC paid to HUDA under section 194C.
ITAT states that, under the facts and circumstances it was clearly borne out that assessee did have bonafide reason for not deducting the TDS. Firstly, for the reason that the license was granted by DTCP which was a Governing authority and it had clarified that EDC charges were paid to HUDA; and secondly, DTCP had issued a clarification to the effect that no TDS was required to be deducted precisely. It has been held that it is necessary to establish ‘contumacious conduct’ on the part of the assessee for failure to deduct tax at source for levy of penalty u/s 271C of the act. There was a reasonable cause for non-deduction of tax at source by the assessee company. Further, in the absence of any findings that the assessee has deliberately avoided the TDS provision and as such there is no contumacious conduct on the part of the assesse. Accordingly, ITAT reverse the findings of the lower authorities and direct the AO to delete the penalty for all the three years.
FULL TEXT OF THE ITAT JUDGEMENT
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