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2019 (2) TMI 629 - AT - Income TaxPenalty u/s 271C - failure to deduct TDS during the year under appeal - reasonable ground to hold that provisions of Sections 194J and 194C may not apply in the case of the assessee - Held that:- In the present case, the A.O. passed the Order on account of default on the part of the assessee for non-deduction of the TDS under section 201(1)/201(1A) of the Income Tax Act. Copies of the Orders are available on record. CIT(A) considered the issue of payment made to EMRI and held that assessee was required to deduct tax at source on payments made to a EMRI. Similar view have been taken by the Ld. CIT(A) with regard to the payments made to other NGOs/Charitable Institutions and business entities. The action of the A.O. was thus confirmed in principle. Alternative argument of the assessee that the payees concerned had duly accounted for the impugned receipts in their return of income and paid the taxes as per Law - alternative contention of assessee was accepted and assessee was directed to furnish documentary evidences in support of its contention before A.O. with a direction to A.O. to satisfy himself about the correctness of the claim of assessee and modify the tax demand accordingly. Interest was however chargeable for the default and it should be reviewed as per verification of the taxes paid by the recipients. The appeal of assessee was thus partly allowed. D.R, therefore, rightly contended that there were no justification for the Ld. CIT(A) in the penalty matter to hold that assessee is not in default of deduction of tax. Since the matter of quantum is restored to the A.O. for verifying the above claim of assessee, therefore, it would be reasonable and proper to restore the penalty matter also to the file of A.O. to pass the fresh Order in accordance with Law, after passing the Order under sections 201(1)/201(1A) of the Income Tax Act, 1961, as per the directions of the Ld. CIT(A). Whether assessee would have a reasonable cause shall be re-determined by the A.O, after giving reasonable, sufficient opportunity of being heard to the assessee. Appeal of the Department is allowed for statistical purposes.
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