Tribunal rejects Revenue's penalty appeals, upholds CIT(A)'s decision on tax deduction rates.

Asstt. Commissioner of Income Tax (TDS), Circle 2 (1), Hyderabad Versus Sri Chaitanya Educational Trust

Asstt. Commissioner of Income Tax (TDS), Circle 2 (1), Hyderabad Versus Sri Chaitanya Educational Trust - TMI Issues:
Revenue's appeals against CIT(A)'s order deleting penalty u/s 271C of the I.T. Act for A.Ys 2012-13 to 2015-16.

Analysis:
1. The assessee Trust entered into service agreements with companies for support services related to educational institutions. A survey revealed the need for TDS @ 10% u/s 194J instead of 2% u/s 194C. AO proposed orders u/s 201(1) and 201(1A) for short deductions and initiated penalty proceedings u/s 271C.

2. Assessee claimed the demand u/s 201(1) should not be raised post-amendment to the Finance Act of 2012. AO observed no separate demand u/s 201(1) but charged interest u/s 201(1A) after considering submissions and certificates provided.

3. CIT(A) held that the work performed falls under section 194C, not 194J, and that the assessee correctly deducted tax @ 2%. Relief granted by CIT(A) led to Revenue's appeals for A.Ys 2012-13 to 2015-16.

4. Similar issues were considered in other cases. Tribunal remanded the appeals to AO for verification of transactions requiring different TDS rates. Assessee not treated as 'assessee in default' u/s 201(1), leading to partial relief for Revenue's appeals.

5. Penalty appeals were dismissed as the assessee was not treated as 'assessee in default' u/s 201(1). Tribunal cited relevant case law and upheld CIT(A)'s decision, emphasizing reasonable cause for non-deduction of tax at a higher rate.

6. Tribunal found no need to interfere with CIT(A)'s order, rejecting Revenue's grounds. Appeals of the Revenue were dismissed, and the order was pronounced on 30th May, 2018.