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2014 (9) TMI 1171 - AT - Income TaxPenalty u/s 271C - disallowance under section 40(a)(ia) - assessee paid interest to non banking financial institution and did not deduct tax - bonafide belief - Held that:- Assessing Officer made disallowance under section 40(a)(ia) and other additions were also made in the assessment order, which are accepted by the assessee and the demand raised as per assessment order has been paid. Therefore, these circumstances would clearly reveal that the assessee has reasonable cause for failure to comply with the provisions of section. Therefore, in view it being a beginning of the assessee for failure to deduct tax and then the assessee in future has starting deducting TDS would suggest that the penalty may not be imposed in the aforesaid case. Considering the above discussion, we are of the view that the levy of penalty in the facts and circumstances of the case is not warranted. We accordingly set aside the orders of the authorities below and cancel the penalty. - Decided in favour of assessee.
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