TMI Blog2016 (8) TMI 822X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee's claim that it was under the bona fide belief that tax was deducted only when service charge was determined by a specific agreement and were paid. There was no prompting by the Department and assessee had made the payment voluntarily. In this background, it would be relevant to refer to a judgment of the Apex Court in the case of CIT v. Eli Lilly and Co. (India) P. Ltd., [2009 (3) TMI 33 - SUPREME COURT ]. In that case, it has been held that liability to pay penalty u/s.271C can be fastened only on the person who does not have good and sufficient reason for not deducting tax at source and the burden, of course, will be on that person to prove such good and sufficient reason. - Decided in favour of the assessee - TAX APPEAL NO. 195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .201(1A) was calculated and penalty equivalent to the amount of tax deductible on the basis of the provision as on 31.03.2005 was levied u/s.271C of the Act. Thereafter, the ACIT (TDS), Baroda passed order u/s.201(1) on 28.02.2006 and order u/s.201(1A) of the Act on 02.03.2006. The penalty order u/s.271C of the Act was passed on 31.03.2006 amounting to ₹ 1,09,30,427/for failure to deduct tax u/s.195 of the Act. 3. Against the said order, the assessee filed three different appeals before the CIT(A). However, except reducing the penalty to ₹ 97,59,312/, the other two appeals were dismissed. Aggrieved by the orders of CIT(A), the assessee preferred appeals before the Tribunal. By impugned order dated 17.04.2009, the Tribunal all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount. 6. In our opinion, the assessee could not be faulted if it thought that its own determination of what would be the income of the Canadian and UK Companies were not conclusive of its liability to deduct tax from the provisions. Such belief appears to have been held by the assessee bona fidely. The bona fide belief is fortified when the assessee deducted and paid tax in October 2005 when it received invoices and remitted the service charges. In respect of the U.K. Company, no formal agreement was executed even later also, as in the case of the Canadian Company. This strengthens the assessee's claim that it was under the bona fide belief that tax was deducted only when service charge was determined by a specific agreement and we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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