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2017 (10) TMI 768 - AT - Income TaxPenalty u/s 271C - TDS has been deducted by assessee under 194J instead of section 194C - short deduction of tds - reasonable cause - Held that:- In our considered view, levy of penalty under section 271C for failure to deduct tax at source is not automatic. In order to bring in application of section 271C in backdrop of overriding non obstante clause in section 273B, absence of reasonable cause, existence of which has to be established is sine qua non. No doubt initial burden is on the assessee to show that there existed reasonable cause to substantiate failure to deduct tax at source. There existed a reasonable cause for not deducting tax at source from payments made to U P Jal Nigam on the mobilisation fees paid (being reimbursement of expenses on actual cost) within meaning of section 273B, and accordingly no penalty under section 271C is exigible. Accordingly grounds raised by assessee on merits stands allowed.
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