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2017 (11) TMI 313 - AT - Income TaxPenalty u/s 271C - non deduction of tds to overseas group entities - demands under section 201(1)/201(1A) - sufficient cause for non deduction of tax at source - Held that:- Claim of the assessee that the overseas entities have absolutely no presence in India remains uncontroverted even before us as the department has not brought any material on record to prove the contrary. Furthermore, the assessee has obtained a certificate from an independent Charted Accountant in Form No. 15CB, wherein, the concerned Chartered Accountant has opined that TDS is not required to be made on such payment. Also it is a fact on record that, though, the assessee has made payment of identical nature to overseas group entities in past several years without deducting tax at source, no proceedings has been initiated by the Department under section 201(1), except assessment years 2010–11 and 2011–12. In as much as, no disallowance under section 40(i)(a) has ever been made. Even though, similar payment was made in A.Y. 2010–11 and facts for both the assessment years are identical, the Assessing Officer has not initiated proceedings for imposition of penalty under section 271C for A.Y. 2010–11. Thus one can reasonably conclude that the failure on the part of the assessee to deduct tax at source while making such payment was for bona fide reasons, hence, in terms of section 273B of the Act there being a reasonable cause for such failure, no penalty can be imposed under section 271C of the Act - Decided in favour of assessee.
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