Appeal granted, penalty under Income Tax Act Section 271C deleted. Failure to deduct taxes deemed genuine mistake.

The Tribunal allowed the appeal, deleting the penalty imposed under Section 271C of the Income Tax Act. It was determined that the assessee's failure to deduct taxes at source was a bona fide mistake, as the sellers had disclosed income and paid taxes, causing no loss to the Revenue. The Tribunal concluded that the penalty was unwarranted due to the assessee's genuine belief and reasonable cause, citing precedents to support this decision.

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Issues Involved:
1. Validity of the CIT(A), NFAC's order.
2. Imposition of penalty under Section 271C r.w.s. 201(1) of the Income Tax Act, 1961.
3. Adequacy of opportunity for the assessee to be heard.
4. Consideration of the first proviso to Section 201(1) of the Income Tax Act, 1961.
5. Requirement of an order under Section 201(1) before initiating proceedings under Section 271C.
6. Consideration of replies filed in response to the show cause notice.
7. Consideration of the adjournment sought by the appellant.
8. Legality and adherence to principles of natural justice.

Summary:

1. Validity of the CIT(A), NFAC's order:
The assessee challenged the order of the learned CIT(A), NFAC, claiming it to be "bad in law and contrary to the facts of the case."

2. Imposition of penalty under Section 271C r.w.s. 201(1) of the Income Tax Act, 1961:
The CIT(A), NFAC upheld the penalty of Rs. 4,53,400/- imposed under Section 271C. The assessee argued that the sellers had disclosed the income from the sale of properties and paid taxes, and a certificate from a chartered accountant was provided. However, the Assessing Officer rejected this contention, stating that non-deduction of tax made the assessee liable for penalty and interest.

3. Adequacy of opportunity for the assessee to be heard:
The assessee claimed that the CIT(A), NFAC passed the order without giving adequate opportunity of being heard. However, the CIT(A) noted that sufficient opportunities were provided but not availed by the assessee.

4. Consideration of the first proviso to Section 201(1) of the Income Tax Act, 1961:
The CIT(A) did not accept the argument that the sellers' payment of taxes should protect the assessee from penalty, emphasizing the requirement to deduct tax at source as per Section 194IA.

5. Requirement of an order under Section 201(1) before initiating proceedings under Section 271C:
The assessee argued that no order under Section 201(1) was passed before initiating penalty proceedings under Section 271C. The CIT(A) upheld the penalty, indicating that the failure to deduct and deposit tax warranted the penalty.

6. Consideration of replies filed in response to the show cause notice:
The CIT(A) upheld the penalty, noting that the assessee did not provide a satisfactory explanation for the default despite filing replies to the show cause notice.

7. Consideration of the adjournment sought by the appellant:
The assessee contended that the adjournment sought for the hearing was not considered. The CIT(A) maintained that sufficient opportunity was provided.

8. Legality and adherence to principles of natural justice:
The CIT(A) upheld the penalty, stating that the assessee failed to show reasonable cause for the default, and the order was not against the principles of natural justice.

Judgment:
The Tribunal observed that there was a bona fide mistake by the assessee in not deducting taxes at source. The recipients had reflected the sale consideration in their returns and paid taxes, causing no loss to the Revenue. Citing precedents, the Tribunal concluded that the penalty under Section 271C was not warranted due to the assessee's bona fide belief and reasonable cause. The appeal was allowed, and the penalty was deleted.

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