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2017 (5) TMI 710 - AT - Income TaxLevy of penalty under section 271C - violation of the provisions of section 194H - non deduction of tds on sale of SIM cards/recharge coupons at discounted rates to the distributors - Held that:- The appeal of the assessee for the assessment year 2007-08 was allowed, as the order passed by the Assessing Officer under section 201(1) and 201(1A) of the Act was barred by limitation. In respect of the other assessment years i.e. the assessment years 2008-09 to 2012-13, the Tribunal held that sale of SIM cards/recharge coupons at discounted rate to the distributors is not commission and therefore, not liable to the TDS provisions under section 194H of the Act. Although the Tribunal has remitted the matter back to the file of the Assessing Officer to verify the manner in which the books of account are maintained and whether the sale discount is reflected in the books. However, in principle the Tribunal has deleted the addition holding that there is no payment of commission, hence, the provisions of section 194H are not attracted. Various Benches of the Tribunal in the assessee's own case have taken a consistent view holding that the TDS provisions under section 194H are not applicable in respect of sale of SIM cards/recharge coupons at discounted rates to the distributors. Once, the substratum for the levy of penalty has eroded there is no question for sustaining the penalty. Since the co-ordinate Bench of the Tribunal has deleted the quantum addition in all the assessment years under appeal, under such circumstances there is no question of levy of penalty. Accordingly, the impugned orders are set aside and all the appeals of the assessee are allowed.
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