ITO v. Pushpanjali Hospital and Research Center (P) Ltd.

INCOME TAX ACT, 1961

--Penalty under section 271C--Failure to deduct tax at sourceAssessee failed to deposit tax deducted at source within time----Where assessee failed to deposit tax deducted at source within time because concerned person who was looking into taxation matter had left the job which was a reasonable cause, no penalty under section 271C was leviable.--During the course of survey under section 133A, it was found that assessee had deducted tax at source but failed to deposit same within time to the government account. Action under section 201(1)/201(1A) was taken and also action to levy penalty under section 271C was initiated. Assessee pleaded that tax deducted could not be deposited because concerned person who was looking into taxation matter had left the job. AO, however, levied penalty. Held: Measured on the touchstone of the definition of reasonable cause as explained in Woodward Governors India (P) Ltd. v. CIT (2002) 253 ITR 745 (Del-HC), CIT(A) had rightly held that the explanation offered by the assessee that the resignation of the manager handling the taxation matter of the assessee, supported by the affidavit of the manager, constituted reasonable cause for committing the default. When the same reason was found to constitute reasonable cause for not levying penalty under section 272(A)(2)(k) by the Jt.CIT (TDS) it could not be held otherwise for the purpose of levying penalty under section 271C. It was held that in view of the reasonable cause adduced by the assessee, no contumacious conduct could be attributed to the assessee and therefore, no penalty under section 271C was leviable.

Income Tax Act, 1961 Section 271C

Relied:CIT v. Bank of Nova Scotia [Civil Appeal No. 1704 of 2008, dt. 7-1-2016].

REFERRED : Woodward Governors India (P) Ltd. v. CIT (2002) 253 ITR 0745 (Del-HC).