2014 (2) TMI 800

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....peal by the revenue is from a judgment of the Income Tax Appellate Tribunal dated 8 August 2013 insofar as the Tribunal has confirmed the deletion of a penalty that was imposed under Section 271C of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') on the ground that reasonable cause had been shown by the assessee within the meaning of Section 273B of the Act. 2. The revenue has r....

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....ve that no TDS need to be made in the case on hand without considering the fact that the assessee was under legal obligation to deduct the tax from the discount/commission paid to Franchisee owners as provided U/s. 194-H of the I.T. Act. 3. In the present case, there was a short deduction of TDS on account of the payment of trade discount/commission to franchisees and customers of the assessee ....

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....dustan Steel Ltd. Vs. State of Orissa2 which lays down a well settled principle that a penalty will not be imposed merely because it is lawful to do so and the imposition of the penalty lies in the discretion of the authority concerned. The Tribunal has affirmed the view of the CIT(A). 4. Learned counsel appearing for the revenue submits that ignorance of law is no excuse. He relies on a judgme....

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....ed to add the gratuity to its total income, the imposition of a penalty was not warranted. 5. There can be no dispute about the fundamental principle of law that ignorance of law is no excuse. Section 273B of the Act, however, stipulates that notwithstanding anything contained in Section 271C, no penalty shall be imposed on a person or assessee for any failure to deduct tax at source, if it is ....