TMI Blog2016 (3) TMI 818X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to ₹ 499/-. We find that the assessee had given an explanation for non deduction of TDS as stated above by the Ld. AR which has not been found to be false by the authorities below. The same we find is a good and sufficient reason for not deducting tax. No contumacious conduct can therefore be attributed to the assessee and therefore applying the ratio laid down by the Hon’ble Apex Court in the case of CIT Vs. Bank of Nova Scotia [2016(1) TMI 583 (SC) ] we hold that no penalty under section 271 C is leviable for nondeduction of TDS on salary. In FY 2008-09 we find that the assessee has also failed to deduct TDS on AMC charges amounting to ₹ 288/- for which no explanation has been offered. In the absence of any explanation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at facts therein are distinguishable from the facts of the assessee. Further in AY 2009-10, the assessee has raised the following ground also : 2. Because the learned authorities below have erred both on facts and in law in considering an amount of ₹ 1,54,072/- incorrectly taken for the imposition of penalty under section 271C which was subsequently reduced in proceedings under section 201(1)/201(1A)/154 vide order dated 16.05.2012 and thereby not considered assessee in default under section 201 of the Income Tax Act, 1961. The penalty imposed is liable to be deleted. 4. Briefly stated the facts of the case are that a spot verification / survey u/s 133A of the Act was carried out at the premises of the assessee on 18/11/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty under section 271C in the present case since the assessee had reasonable cause for not deducting the TDS. Ld. AR stated that primarily the assessee had defaulted in deduction of TDS relating to advertisement, salary, and AMC charges. Ld. AR stated that the default in deduction of TDS on advertisement had occurred on account of the fact that the asseessee was ignorant of its obligation to deduct TDS on the payments made. Ld. AR clarified that the amount on account of advertisement had been paid to M/s Market Creators, Agra and Aaj Prakashan Pvt. Ltd. Agra for announcement of date for admission of students and appointment of staff. Ld. AR stated that the assessee was under the impression that these payment were made just to announce th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y deducted tax from their salary for November itself and deposited it on 01/12/2009. Ld. AR therefore submitted that since there was reasonable cause with the assessee for not deducting TDS, penalty under section 271 C was not leviable. Ld. AR placed reliance on the decision of Hon ble Supreme Court in the case of CIT Vs. Bank of Nova Scotia 2016(1) TMI 583 (SC) in this regard. Ld. AR further argued that in the case of salary the tax had been deposited by the payee themselves as is evident from the order passed u/s 154 and therefore the assessee could not be treated as a assessee in default as per the provisions of Section 201of the Act and in such circumstances no penalty under section 271C was leviable. Ld. AR placed reliance on the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... At the same time penalty proceedings under section 271C were initiated for the default committed of non deduction of TDS and penalty levied on the same. 10. We find that the assessee had offered an explanation for not deducting TDS on advertisement payment made, stating that since the payment had been made for announcing dates for receiving application for admission of students and for appointment of staff, the assessee was under the belief that the same did not amount to advertisement for the purpose of deducting tax at source thereon. Ld. CIT(A) we find, rejected this explanation as not constituting reasonable cause. It is pertinent therefore to understand what is meant by reasonable cause. Reasonable cause for the purpose of app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee and hence penalty under section 271 C cannot be levied in such circumstances. The Hon ble Apex Court in the case of CIT Vs. Bank of Nova Scotia (supra) has held that for the levy of penalty under section 271 C, it is necessary to establish contumacious conduct on the part of the assessee. 11. In view of the above we delete the penalty levied on account of default committed by the assessee of non deduction of tax on payments made on account of advertisement. 12. Besides the above we find that in FY 2008-09 the assessee was found to have failed to deduct tax on payment made on account of salary amounting to ₹ 1,54,072/-. Subsequently an order under section 154/201(1)/201(1A) was passed stating that since the entire ..... X X X X Extracts X X X X X X X X Extracts X X X X
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