TMI Blog2021 (5) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... ened only where the person/assessee do not have good/ sufficient reason for not deducting tax at source. In the present facts of the case, the provision created at the end of the accounting year has not been credited to the relevant parties to whom the payments has to be made for the reason that it was unquantifiable. Further, assessee has suo moto disallowed the said sum under section 40(a)(ia) for non-deduction of TDS. Therefore there is a sufficient and reasonable cause for not deducting TDS on the year-end provision. It is also observed that assessee consistently follows this kind of accounting system for year-end provisions which is subsequently reversed in the subsequent year in the month of April, as and when the bills are re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as in facts in deleting the penalty levied u/s.271C of Income Tax Act, 1961. 3. The Ld.CIT(A) has erred in relying on the jurisdictional ITAT decision in the assessee's own case of Wipro GE Medical Systems Ltd vs. ITO (TDS) -III [2005] 3 SOT 627 wherein the facts are that tax and interest were paid in the usual course under the provisions of the Act by the payees, whereas in the present case, the assessee has accepted its liability by disallowing the expenses in Tax Audit report in Form 3CD, but accounted for the income and paid taxes in next FY. 4. The Ld.CIT(A) has erred in not considering the decision of Hon'ble Supreme Court judgement in the case of Hindustan Coca Cola Beverages (P) Ltd (293 1TR 226) wherein it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing assessee to show cause as to why, it should not be treated as assessee in default for non-deduction of tax at source under the Act, for disallowance made under section 40(a)(ia) of the Act. 3.1. Assessee in response filed reply to the show cause notice wherein it was submitted that it has created year-end provision for expenses amounting to ₹ 22,74,37,646/- and the same has been reversed subsequently in the month of April, being the next financial year. Assessee submitted that, as on 31/03/2011, assessee was not in a position to quantify the sums payable to the parties and hence no tax was deducted at source. Assessee also submitted that assessee voluntarily disallowed the said sum under section 40(a)(ia) of the Act, on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 201(1A) of the Act demonstrates that the Company did not have any malafide intention and it has reasonable cause for non-deduction of tax. Hence, the Appellant submits that the levy of penalty under Section 271C is erroneous in law and liable to be dropped. 10. The submissions of Appellant has been considered. It is mainly emphasized that: At the time provision was created in the books of account, the issue of deduction of taxes at source was not a settled issue. As submitted by the appellant, the provisions created with respect to dealers commission are to be paid to the dealers on the sales effected by them. Such commission is payable to the dealers as a percentage of sale only on actual realization of sale proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Jt. Commissioner of Income Tax (TDS), Rage-3 have been carefully considered. In this regard with respect to the Reasonable cause' advanced by the appellant it is noticed from the submissions of the appellant above and especially in the light of the decision of Bangalore ITAT. in the appellant's case in Wipro GE Medical systems Ltd. (supra), there is sufficient force in the argument of the appellant. Considering the facts involved as discussed above and respectfully following the various judicial decisions (supra) relied upon by appellant, penalty imposed by the AO is found to be not sustainable hence deleted. Thus, the grounds of appeal raised in this appeal with regard to levy of penalty u/s 271C is allowed and the Penalty levied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f TDS. Therefore there is a sufficient and reasonable cause for not deducting TDS on the year-end provision. It is also observed that assessee consistently follows this kind of accounting system for year-end provisions which is subsequently reversed in the subsequent year in the month of April, as and when the bills are received, and the payment is made to the payee by deducting TDS. Further, admittedly, assessee has paid interest under section 201(1A) which further demonstrates there was no malafide intention. We also note that under similar circumstances in assessee s own case reported in (2005) 3 SOT 627 , coordinate bench of this Tribunal on similar facts deleted penalty as it was unsustainable. Further the decisions relied by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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