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2013 (6) TMI 498 - AT - Income TaxPenalty u/s 271C - Non deduction of TDS u/s 194C - CIT(A) deleted the levy on the basis of claim of the assessee that there was no agreement between the parties and the appellant was of bonafide belief that he is not bound to deduct the tax at source because as per his knowledge and belief tax u/s 194C is always deductible when payment is made by specified person to resident contractor, treating it as squarely covered under the mandate of section 273B - whether bonafide belief of the assessee that he is not bound to deduct the tax at source be treated as 'reasonable cause'? - Held that:- In the case of the assessee i.e Uttarakhand Educational Department there was bona fide belief under which the assessee operated that it was not required to deduct TDS. The explanation of the assessee that it believed that it had no choice but to transfer the funds received in its account and that it had no control over the executing agency to detain its payments has rightly been held as a reasonable cause as the bona fide belief is borne out from the fact that as soon as the said fact was pointed out to the assessee, the position was corrected. Accordingly department's ground is dismissed.
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