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2014 (1) TMI 1233 - AT - Income TaxValidity of admission of Additional grounds – penalty u/s 271C - period of limitation - Held that:- The CIT (A) is correct in admitting the additional ground raised before him for adjudication as this additional ground raised by the assessee goes to the root of the matter in deciding the case - The Assessing Officer has been requested to submit his comments on the additional ground raised - the additional ground raised by the assessee has been admitted by the CIT (A) in view of the Hon'ble Supreme Court's decision in the case of NTPC vs. CIT [1996 (12) TMI 7 - SUPREME Court] – there was no infirmity in the action of the CIT (A) for admitting the additional ground raised by the assessee. Deletion of penalty u/s 271C of the Act – Held that:- Bona-fide belief in non-deduction of TDS would constitute a reasonable cause - Ignorance of law may be no excuse but simultaneously it is also true that there is no presumption that everyone knows the law - The assessee submitted evidence from hospitals wherein the payment received was reflected in their incomes and paid tax - Thus, the assessee is not treated as an assessee in default for the purpose of section 201(1) of the Act – Relying upon Hindustan Coco Cola Beverage Pvt. Ltd. vs. CIT [2007 (8) TMI 12 - SUPREME COURT OF INDIA] - interest u/s. 201(1A) is mandatory and is required to be charged – thus, it is evident from the assessment order that the assessee was not treated as an assessee in default u/s. 201(1) of the Act. When the AO himself treated the assessee as an assessee not in default in respect of the amounts of TDS to be deducted, then there cannot be any scope for levying penalty u/s. 271C of the Act - the amount of tax has been paid by the recipient of the income - the provisions of section 271C cannot be applied to the assessee's case as these provisions clearly state that if any person fails to deduct whole or any part of the tax as required under the provisions of Chapter XVII-B, then such person shall be liable to pay by way of penalty an amount equal to the amount of tax which such person failed to deduct or pay as above said – thus, the assessee is not in default in respect of the amount of tax itself, there cannot be any levy of penalty u/s. 271C, more so, where there was a reasonable cause for not deducting the TDS on the payment made by the assessee – Decided against Revenue.
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