Tribunal grants relief to assessee, deletes penalties for failure to deduct tax on MICR cheques.

The tribunal allowed the appeals filed by the assessee, granting relief from penalties for A.Ys. 2003-04 to 2006-07. The penalty imposed for failure to deduct tax at source on payments made for MICR cheques clearance was deemed unwarranted due to the debatable nature of the issue and the assessee's good faith actions. The tribunal cited 'reasonable cause' and directed the deletion of penalties for all years under consideration, following a similar case precedent.

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Issues:
Appeal against penalty u/s. 271C for A.Ys. 2003-04 to 06-07 arising from orders of CIT(A)-I, Surat.

Analysis:
- In A.Y. 2003-04, the appellant contested the penalty imposed for failure to deduct tax at source on payments made to State Bank of India for MICR cheques clearance. The appellant argued that the charges were recovered from the participating bank and not considered as 'payment' under Section 194J. However, the Assessing Officer insisted on TDS deduction, leading to the penalty. CIT(A) upheld the penalty.
- The appellant referred to a similar case in Amritsar Bench where relief was granted under comparable circumstances. The appellant highlighted the mechanized nature of MICR cheque clearing and cited relevant case laws to support the argument that the issue was debatable, justifying relief from penalty.
- The tribunal acknowledged that the issue was debatable at the relevant time and that the appellant acted in good faith. Considering the concept of 'reasonable cause,' the tribunal concluded that the penalty was unwarranted and directed its deletion for A.Y. 2003-04.
- The same reasoning was applied to A.Ys. 2004-05 to 2006-07, leading to the deletion of penalties for these years as well.
- Ultimately, the tribunal allowed the appeals filed by the assessee, granting relief from penalties in all years under consideration. The judgment was pronounced on February 26, 2015.

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