2016 (6) TMI 739

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....e Tribunal upheld the order passed by the Commissioner of Income Tax (Appeals), by which the Commissioner cancelled the penalty levied under Section 271C of the Income Tax Act. It is in this background, this appeal is filed with the following questions of law: "1. Whether, on the facts and in the circumstances of the case the Tribunal is right in law and fact in upholding the cancellation of penalty order by the Commissioner of Income Tax (Appeals). 2. Whether, on the facts and in the circumstances of the case, i) did the assessee discharge the burden of proof that lay on it. ii) did the assessee prove that there was reasonable cause for the failure to deduct tax at source? 3. Whether, on the facts and in the circ....

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....concerning the assessment year in question, it was found that the assessee had not deducted tax at source as required under Section 194A on the payments of interest it made to its sister concerns. Therefore, proceedings under Section 271C were initiated. In the reply filed, the assessee admitted its lapse and requested that a lenient view should be taken for the technical lapse. However, by Annexure A order, penalty of Rs. 10,45,000/-under Section 271C was levied. This was cancelled by the Commissioner of Income Tax (Appeals) by Annexure B order where he concluded thus: "Since the Assessing Officer has not established the absence of reasonable cause in this case, I am of the view that the penalty cannot be sustained legally. Considering ....