The Tax Publishers2019 TaxPub(DT) 5479 (Bang-Trib) : (2019) 179 ITD 0178 : (2020) 204 TTJ 0118

INCOME TAX ACT, 1961

Section 271C

It was undisputed that as against the order of Tribunal holding the assessee to be in default for non-deduction of tax at source, assessee has preferred appeal before Karnataka High Court and the question of law was whether assessee was guilty of non-deduction of tax at source or not, and admission of substantial question of law by High Court led credence to bona fide of assessee and therefore, penalty was not exigible under section 271C as the issue was certainly debatable.

Penalty under section 271C - Leviability - Non-deduction of tax at source - Debatable issue

Assessee bank did not deduct tax from LTA reimbursement made to employees even when travel was out of India to a destination in India through a long circuitous route. AO treated the assessee as one in default in respect of taxes not deducted at source and also liable for interest on such tax not deducted at source and accordingly levied penalty under section 271C. Assessee's case was that assessee failed to deduct tax as it was under bona fide impression that if destination was India, irrespective of the fact that enroute the journey was out of India, the entire LTA was exempt.Held: It was undisputed that as against the order of Tribunal holding the assessee to be in default for non-deduction of tax at source, assessee had preferred appeal before Karnataka High Court and the question whether assessee was guilty of non-deduction of tax at source or not and admission of substantial questions of law by High Court led credence to bona fide of assessee and therefore, penalty was not exigible under section 271C as the issue was certainly debatable.

Relied on:CIT v. Ankita Electronics Pvt Ltd. (2015) 379 ITR 50 (Kar) : 2015 TaxPub(DT) 5139(Kar-HC)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :



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