Technical TCS default and reasonable cause led to deletion of penalty for parking lot receipts.

Penalty for failure to collect tax at source on parking lot receipts was held unsustainable where the assessee promptly corrected the lapse, deposited the tax, and showed reasonable cause. The default was treated as technical rather than wilful or contumacious, and the assessee's status as a local authority acting for public purposes supported the conclusion that it should not be treated as an assessee in default. On these facts, the penalty under Sections 271CA and 271C was deleted and the matter was decided in favour of the assessee.

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Issues: Whether penalty for failure to collect tax at source on parking lot receipts was sustainable when the tax was subsequently collected and deposited and the default was asserted to be technical and supported by reasonable cause.

Analysis: The assessee rectified the lapse on being pointed out and deposited the tax to the Government account. In the circumstances, the default was treated as technical and not indicative of a wilful or contumacious breach. The surrounding facts, including the assessee's character as a local authority functioning for public purposes, were accepted as supporting reasonable cause. On that basis, the assessee was not to be treated as an assessee in default for the purpose of the impugned penalty provisions.

Conclusion: The penalty under Sections 271CA and 271C was deleted and the issue was decided in favour of the assessee.

Final Conclusion: The appeals succeeded because the levy of penalty for the TCS lapse was held unsustainable in the facts and circumstances of the case.

Ratio Decidendi: Where a TCS default is promptly cured, the tax is deposited, and reasonable cause is shown, a penalty for failure to collect tax at source may not survive if the lapse is only technical and not a wilful breach.

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