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TMI Blog2001 (4) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... duction of tax at source from dividends, and that such a short-deduction amounts to Rs. 1,20,000. This short-deduction is attributed to a programming error. It appears that the computer was programmed to print tax amount in five figures (before decimal points) and surcharge amount in four figures (before decimal points) since, apparently due to a briefing error, the programmer could not visualise that some tax deduction amounts will be more than Rs. 99,999 or that some surcharge amounts will be more than Rs. 9,999. However, there were two cases where these parameters were proved wanting-in the case of Andrew Yule & Co. Ltd. (AYCL) and Bengal Coal Co. Ltd. (BCCL), where the relevant details were as follows: &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es an error message. The learned CIT(A), on the other hand, has come to a finding of fact that short deduction by the assessee was not a deliberate action and, accordingly, following Hon'ble Supreme Court's judgment in the case of Hindustan Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC), the learned CIT(A) has held that penalty is not leviable for such bona fide mistakes. 5. It cannot be in dispute that penalty under s. 271C is not an automatic consequence of non-deduction or short-deduction of tax at source, since s. 273B inter aha provides that penalty under s. 271C cannot be imposed in case the person concerned can demonstrate that there was a reasonable cause for his failure referred to in s. 271C. In other words, in case the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settled law, let us come back to the facts of this case. 6. The reasons for short-deduction of tax at source, and the nature of mistakes in deduction of tax at source, do indicate that there was a discernible pattern in the error committed which can be reasonably attributed to a programming error. The balance of probabilities does favour this explanation of the assessee. No doubt that in an ideal situation, such errors should have been detected by some inbuilt mechanism in the program itself, but we are not sitting in judgment about the quality of computer program, nor do we have the requisite expertise to reach a conclusion about the same. Even Dy. CIT's rejection of assessee's explanation, on the basis of some information gathered by him ..... X X X X Extracts X X X X X X X X Extracts X X X X
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