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The Income Tax Appellate Tribunal, Kolkata bench recently ordered that the penalty u/s 271C of the Income Tax Act cannot be levied for the delayed deduction of TDS amount.
Since the very basis for levy and upholding of penalty under section 271C of the Act by the authorities below for assessment years 2000- 01 and 2002-03 to 2004- 05 does not survive, the orders levying/upholding the aforesaid penalty are not sustainable.
Tribunal held that sale of SIM Cards/recharge coupons at discounted rate to distributors is not commission and therefore, not liable to TDS provisions u/s. 194H of the Act. Once, the substratum for levy of penalty has eroded there is no question for sustaining the penalty.
In Aishwarya Rai Bachchan vs. ACIT, the assessee had not deducted tax at source, AO treated the assessee as an assessee in default under section 201(1) and passed an order demanding tax of Rs. 4,27,910 and interest under section 201(1A) of Rs. 34,233.
Brief facts relating to the case are that a survey 133A of the Act was conducted in the premises of the assessee on 15/10/2009 during the course of which it was found that the assessee had deducted tax amounting to Rs.15,76,219/-
In the present case also, assessee has engaged a chartered accountant to guide her in complying to statutory requirements. Therefore, when the C.A. issued a certificate opining that there is no requirement for deduction of tax at source, assessee under a bonafide belief that withholding of tax is not required did not deduct tax at source on the remittances made.
number of foreign companies have established their liaison offices in India. The liaison offices of these foreign companies engage a number of employees in their offices in India. Some of the employees are deputed to these liaison offices by the parent companies from abroad. Such expatriate employees continue to be on the pay-roll of the parent company also and the parent company continues to pay them a part of salary in lieu of retainership, etc.
Supreme Court held In the case of CIT vs. Bank of Nova Scotia that there is no substantial question of law, the facts and law having properly and correctly been assessed and approached by the CIT (A) as well as by the ITAT that for levy of penalty u/s 271C
It was held by Kerala High Court in the case of Classic Concepts Home India Private Limited V/s. CIT that, penalty U/s 271C is exigible if delay in remittance of TDS is caused due to unreasonable cause.
It is clear that the assessee may be under the bonafide belief that TDS is not liable to be deducted on payments made to non-banking financial institution. Section 273B of the Income Tax Act provides that no penalty under section 271C shall be imposable on the person or the assessee as the case may be, for any failure referred to in the said provisions, if he proves that there was reasonable cause for the said failure.
