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2015 (10) TMI 2658 - ITAT DELHILevy of penalty u/s 221 (1) - Tax Deductor continued deducting the tax, but failed to deposit the same into the Central Govt. account within the stipulated time - assessee in default - binafied belief - CIT-A deleted the penalty - Held that:- No reason to interfere with the order of the CIT(A). The order was passed in the light of the Hon’ble Supreme Court decision in the case of Amit Mohan Bindal [2009 (8) TMI 44 - SUPREME COURT] saying that the penalty (in the context of section 271(1)(c)) is a civil liability albeit a strict liability. Irrespective of tfe fact whether the tax was deducted at source at the time of making payment of salary to the employees and paid beyond prescribed time limits or not deducted at the time of payment of salary but deducted and paid late, there remains no dispute that the appellant was in default in terms of the provisions of section 201(1) of the Act. The only aspect that is to be seen is whether there was good, sufficient or bonafide reasons for not making compliance to the provisions of law. There is no doubt that the issue of deduction of tax at source from the salary of non residents expatriated to India has been debatable issue in as much as whether the tax was required to be deducted by their employer abroad while making payment in their country or by their joint venture partners in India. In the context of provisions of section 192 read with section 9 of the Act vis-a-vis the deduction of tax at source, the Hon 'ble Apex court in the case of CIT vs. Eli Lilly and Co. (312 ITR 225) has held that this was the first instance' that such an issue was examined by the Court. The Hon'ble Court also went ahead in holding that where the tax deductor was under a genuine and bonafide belief that it was not under an obligation to withhold taxes, there was no question of imposition of penalty as the assessees had been able to discharge the burden of showing reasonable cause for non deduction of taxes. The Hon'ble Court held that only those persons will be liable to penalty who do not have good and sufficient reason for not deducting the tax. The present case is not the case of the Revenue that the tax has been deducted but not paid to the credit of the company. Hence, we uphold the order of ld. CIT(A) and dismiss the appeal filed by the Revenue. - Decided in favour of assessee.
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