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2017 (11) TMI 185 - AT - Income TaxPenalty u/s 271C - non deduction of tax/ short deduction of tax on account of bank guarantee commission to various banks u/s 194H - Held that:- Hon Delhi High court in JDS apparel (P) ltd (2014 (11) TMI 732 - DELHI HIGH COURT ) has also held that bank is not acting as an agent of the assessee. The provision of section 273B of the Act provides that penalty u/s 271C of the Act cannot be levied if the assessee shows reasonable cause for the failure referred to in that provision. In the present case non-deduction tax at source on bank guarantee commission is supported by many decisions of the coordinate benches as well as the notification issued by the CBDT. Therefore, even if assuming that there is a default of non-deduction of tax at source it cannot be said that it is without a reasonable cause. As held in case of CIT Vs. Bank of Nova Scotia [2016 (1) TMI 583 - SUPREME COURT] in confirming the decision of a coordinate bench, where Hon'ble Delhi High Court rejected appeal of the revenue , that for the purpose of levy of penalty it is necessary to establish that there was contumacious conduct on the part of the assessee. The coordinate bench also followed several decisions of the Hon'ble Delhi High Court for deleting the penalty u/s 271C of the Act. There was no such contumacious conduct shown by the revenue in the present appeals. Thus deleting the penalty levied u/s 271C confirmed - Decided in favour of assessee.
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