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The Tax Publishers ITO v. Pushpanjali Hospital & Research Center (P) Ltd. [ITA No. 450/Ag/2015, dt. 12-4-2016] : 2016 TaxPub(DT) 2229 (Agra-Trib) Reasonable cause for levy of penalty under section 271C *Facts:* Assessee in a survey was found to have deducted TDS but not remitted the same thus was held to be in default of TDS and penalty under section 271C was levied. Assessees plea was that the person who was handling taxes left them on short notice and thus the default arose which was a reasonable cause. This was found to be correct on facts and since there was no delays in TDS by assessee in earlier years Commissioner (Appeals) dropped the penalty. Aggrieved department went in appeal: Held in favour of the assessee that no penalty for default of TDS under section 271C is leviable. CIT v. Bank of Nova Scotia 2016(1) TMI 583 (SC) applied. Reasonable cause explained - 14. Before adjudicating on the issue, it is pertinent to understand what is meant by reasonable cause. Reasonable cause for the purpose of application of section 271C in the backdrop of section 273B has been explained by the Honble Delhi High Court in the case of Woodward Governors India (P) Ltd. v. CIT (2002) 253 ITR 0745 to mean a probable cause, an honest belief founded on reasonable grounds, of the existence of a state of circumstances, which assuming them to be true, would reasonably lead any ordinarily prudent and cautious man, placed in the position of the person concerned to come to the conclusion that same was the right thing to do. The cause should not be found to be frivolous, without substance or foundation

The Tax Publishers

ITO v. Pushpanjali Hospital & Research Center (P) Ltd. [ITA No. 450/Ag/2015, dt. 12-4-2016] : 2016 TaxPub(DT) 2229 (Agra-Trib)

Reasonable cause for levy of penalty under section 271C

Facts:

Assessee in a survey was found to have deducted TDS but not remitted the same thus was held to be in default of TDS and penalty under section 271C was levied. Assessees plea was that the person who was handling taxes left them on short notice and thus the default arose which was a reasonable cause. This was found to be correct on facts and since there was no delays in TDS by assessee in earlier years Commissioner (Appeals) dropped the penalty. Aggrieved department went in appeal:

Held in favour of the assessee that no penalty for default of TDS under section 271C is leviable.

CIT v. Bank of Nova Scotia 2016(1) TMI 583 (SC) applied.

Reasonable cause explained - 14. Before adjudicating on the issue, it is pertinent to understand what is meant by reasonable cause. Reasonable cause for the purpose of application of section 271C in the backdrop of section 273B has been explained by the Honble Delhi High Court in the case of Woodward Governors India (P) Ltd. v. CIT (2002) 253 ITR 0745 to mean a probable cause, an honest belief founded on reasonable grounds, of the existence of a state of circumstances, which assuming them to be true, would reasonably lead any ordinarily prudent and cautious man, placed in the position of the person concerned to come to the conclusion that same was the right thing to do. The cause should not be found to be frivolous, without substance or foundation