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2020 (12) TMI 113 - AT - Income TaxPenalty u/s 272A(2)(k) - delay in submitting the quarterly TDS Statement in Form 26Q - order passed by the AO u/s 154 after the penalty order passed u/s 272A(2)(k) - HELD THAT:- CIT(A) has not even considered the fact that the penalty proceedings were initiated by the AO for default on the part of the assessee on account of non - filing of Form 26Q within the period specified u/s 200(3) read with proviso to section 206(3) of the Income Tax Act. Once the assessee has stated on the affidavit and given an undertaking that the assessee has not paid any amount or deducted any TDS on any sum during these assessment years which requires to submit in Form 26Q, the levy of penalty for default of delivering the From 26Q is invalid and consequently the penalty order passed by the AO is bad in law, ab initio. Once the initiation of the penalty is based on some wrong facts and wrong ground which is not an error or mistake due to any incorrect mentioning of provision of law but the very basis of initiation of the proceedings was misconceived by the AO being the TDS statement in Form 26Q was not delivered by the assessee within the specified time. AO has accepted that the assessee was not under any obligation to deduct TDS in respect of the alleged transaction but the assessee was under the obligation to collect the tax in respect of various amounts received by the assessee and consequently the assessee was required to submit the statements in Form No. 27EQ. Once the AO has accepted this fact that the assessee was not required to deduct TDS or submit Form 26Q then the initiation of the penalty by the AO for such a non- existing default renders the penalty order invalid. The invalid initiation of the penalty vitiates the entire proceedings and consequently the penalty orders passed u/s 272A(2)(k) based on absolutely non- existing grounds is not sustainable in law. The CIT(A) has summarily dismissed all the appeals of the assessee without even discussing the correct fact brought on record and accepted by the AO while passing 154 order. Hence the impugned penalty orders are not sustainable in law and liable to be quashed. - Decided in favour of assessee.
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