2005 (12) TMI 223

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.... the 16th Nov., 2001 for the financial years 1998-99 and 1999-2000 disputing the cancelling the penalties of Rs. 22,90,050 and Rs. 13,38,683, respectively, levied under s. 271C of the IT Act. 2. Since the facts and the issue involved in both appeals are identical, we dispose of both the appeals by a common order for the sake of convenience. 3. The relevant facts giving rise to these appeals ....

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....1999-2000. Being aggrieved, the assessee filed appeals before the first appellate authority. 4. The learned CIT(A) accepted the contention of the assessee that the assessee had not deducted tax at source on a bona fide belief as the assessee was advised that the shares had been allotted to the trust and no perquisite was involved. The learned CIT(A) has deleted the penalties for both the financ....

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....der consideration. It was submitted that if the benefit arising out of ESOS were not taxable perquisites in the financial years under consideration, the question of levy of penalty under s. 271C does not arise. The learned Departmental Representative has not disputed the above facts save and except relying on the orders of the AO. 6. We have carefully considered the orders of the authorities be....

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....articipation in the scheme of ESOS. Accordingly, we hold that no tax was to be deducted at source in the financial years under consideration. Therefore, we agree with the learned Authorised Representative of the assessee that the question of levy of penalty under s. 271C does not arise. In view of the above, we uphold the orders of the learned CIT(A) to cancel the penalties of Rs. 22,90,050 for fi....