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2016 (12) TMI 1804 - AT - Income TaxPenalty u/s 271CA for default in collecting tax at Sources(TCS) - Reasonable belief - CIT (Appeals) rejected assessee’s contention that the goods sold did not qualify as scrap and that the assessee harbored a bonafide belief that the goods were not scrap and hence not exigible to TCS but at the same time the Ld. CIT (Appeals) agreed with the assessee’s contention that there was a reasonable cause for not levying penalty - HELD THAT:- The belief harboured by the assessee, considering the facts narrated above constituted a reasonable belief which an ordinary person in the prevailing circumstances would have harboured. It is not the case that the assessee was found liable to collect tax at source on the goods sold by it since the goods were categorically found to qualify as scrap as such, as provided in the definition of the same in the Explanation to section 206C. In fact the assessee was found liable to collect tax at source since the assessee had accepted the same as scrap having paid taxes on the same while purchasing the goods and having not categorically established that the goods were not in the nature of scrap. In such circumstances, where as a matter of fact it has not been categorically established that the goods were scrap and waste as such which could not be used further, the facts narrated by the assessee , which we find had not been controverted by the revenue, reveal that the assessee harboured an honest belief based on reasonable grounds that the goods sold were not scrap. The same constituted reasonable cause for not collecting tax at source even though the Ld. CIT( appeal) did not accept this contention of the assessee on merit. We agree with the Ld.CIT(A) that the assessee had reasonable cause for not collecting tax at source ,the absence of which is essential for levying penalty as held by the Delhi High Court in the case of Woodward governor [ 2001 (4) TMI 34 - DELHI HIGH COURT] . We therefore uphold the order of the Ld. CIT( appeal) deleting the levy of penalty under section 271CA - Decided in favour of assessee.
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