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Tax Publishers Levy of penalty under section 271C for non-deduction of TDS as per Section 194-IA whether automatic *Facts:* Assessee purchased two properties on which they were supposed to do TDS under section 194-IA which they failed to. AO deemed them to be in default for non-deduction of TDS and penalty under section 271C was levied. On appeal the assessee supported their stand with submissions that they were ignorant and not properly guided professionally for the TDS deduction to be done, besides the fact that both sellers had filed their taxes and there was no revenue loss. Interest under section 201(1A) was also paid ad interim. CIT(A) held them to be in default and upheld the levy of penalty under section 271C. On higher appeal - Held in favour of the assessee that the penalty under section 271C was not leviable in the absence of any contumacious conduct by the assessee. A bonafide mistake needs to be considered on merits before levy of penalty. *Applied :* Bank of Nova Scotia (2016) 66 taxmann.com 175 (SC)/(2016) 237 Taxman 594 (SC) : 2016 TaxPub(DT) 0811 (SC), *Cited :* CIT v. P.S.S. Investments (P) Ltd., reported in (1977) 107 ITR 0001(SC) : 1977 TaxPub(DT) 0716 (SC) The intelligence of even those with legal background gets staggered in this continuous process of carving exceptions to exceptions. It seems more like a conundrum, baffling the mind and requiring special acumen to unravel its mystique. One can only wonder as to how the ordinary taxpayers, most of whom are laymen, can keep abreast of such laws. Yet the maxim is that every one is presumed to know the law. The one redeeming feature is that the above pattern was given up after 1959. From 1960 to 1964 there was another pattern. Since 1965 the charge of super-tax has been discontinued and the rates of income-tax have been so increased as to absorb fully the former levy of super-tax. ..... Thus, keeping in view the entire factual matrix of the case as discussed and detailed above, we are of the considered view that the assessee has demonstrated a reasonable cause under section 273B for not deducting income-tax at source under the provisions of Section 194IA, and hence the penalty levied by AO under section 271C and confirmed by ld. CIT(A) is not sustainable in the eyes of law, and is hereby ordered to be deleted. We order accordingly". *Case:* Arrone Ceramic v. Jt. CIT 2023 TaxPub(DT) 5136 (Rjt-Trib)

Tax Publishers

Levy of penalty under section 271C for non-deduction of TDS as per Section 194-IA whether automatic

Facts:

Assessee purchased two properties on which they were supposed to do TDS under section 194-IA which they failed to. AO deemed them to be in default for non-deduction of TDS and penalty under section 271C was levied. On appeal the assessee supported their stand with submissions that they were ignorant and not properly guided professionally for the TDS deduction to be done, besides the fact that both sellers had filed their taxes and there was no revenue loss. Interest under section 201(1A) was also paid ad interim. CIT(A) held them to be in default and upheld the levy of penalty under section 271C. On higher appeal -

Held in favour of the assessee that the penalty under section 271C was not leviable in the absence of any contumacious conduct by the assessee. A bonafide mistake needs to be considered on merits before levy of penalty.

Applied :

Bank of Nova Scotia (2016) 66 taxmann.com 175 (SC)/(2016) 237 Taxman 594 (SC) : 2016 TaxPub(DT) 0811 (SC),

Cited :

CIT v. P.S.S. Investments (P) Ltd., reported in (1977) 107 ITR 0001(SC) : 1977 TaxPub(DT) 0716 (SC)

The intelligence of even those with legal background gets staggered in this continuous process of carving exceptions to exceptions. It seems more like a conundrum, baffling the mind and requiring special acumen to unravel its mystique. One can only wonder as to how the ordinary taxpayers, most of whom are laymen, can keep abreast of such laws. Yet the maxim is that every one is presumed to know the law. The one redeeming feature is that the above pattern was given up after 1959. From 1960 to 1964 there was another pattern. Since 1965 the charge of super-tax has been discontinued and the rates of income-tax have been so increased as to absorb fully the former levy of super-tax.

.....

Thus, keeping in view the entire factual matrix of the case as discussed and detailed above, we are of the considered view that the assessee has demonstrated a reasonable cause under section 273B for not deducting income-tax at source under the provisions of Section 194IA, and hence the penalty levied by AO under section 271C and confirmed by ld. CIT(A) is not sustainable in the eyes of law, and is hereby ordered to be deleted. We order accordingly".

Case: Arrone Ceramic v. Jt. CIT 2023 TaxPub(DT) 5136 (Rjt-Trib)