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2020 (10) TMI 659 - AT - Income TaxLevy of penalty u/s 271(1)(c) - wrong deduction of TDS @1% instead of 20.6% - purchase of immoveable property - seller is a Non Resident Indian - short payment of tax and subsequently the assessee paid the remaining amount of short deducted tax and interest - HELD THAT:- The assessee(s) prudently deducted tax @1% u/s 194 (1A) of the Act. Subsequently when it was brought to their notice that the seller is a Non Resident Indian they as law abiding citizens immediately deposited the correct amount of TDS @20.6% applicable on the said transaction u/s 195 along with interest in addition to 1% already deposited. Mens rea to evade tax is not appearing at any stage of the proceedings on the part of the assessee. No difference for them to deduct tax @1% or 20.6% since it was to be withheld from the purchase consideration. There cannot be any other mal intention for deduction of TDS at lower or wrong rate. Assessee(s) are duly eligible to get the benefit of the provisions of Section 273B of the Act as they have proved beyond doubt that in a bonafide belief they deposited tax @1% u/s 194IA of the Act considering the seller as Resident Indian and later on before conclusion of the proceedings before the Ld. A.O have deposited correct amount of tax @20.6% and applicable interest. Thus they had a reasonable cause for the said failure and in addition the decision in the case of SMS India Ltd [2005 (11) TMI 363 - ITAT MUMBAI] also applies squarely on the case of the assessee. We thus set aside the finding of Ld. CIT(A) and direct the revenue authorities to delete the penalty levied u/s 271C - Decided in favour of assessee.
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