AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (9) TMI 904
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....of the case, the Appellant respectfully submits that the learned Assessing Officer erred in passing an order under section 271C of the IT Act, 1961 (ITA) for assessment year 2007-08 on the following grounds. 1. The Assessing Officer failed to appreciate that the Appellant was under a "genuine and bonafide" belief on the non-applicability of section '194J of the ITA to payments made by the appellant to the hospitals under the cashless hospitalization scheme. 2 The Assessing Officer failed to appreciate that the Appellant was under a genuine and bonafide belief on the non-applicability of .section 194J of the IT A to payments made to the hospitals because of the various Judicial precedents confirming that the hospitals do not render....
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....r failed to appreciate that there was no judicial precedent directly on the applicability of payments made to the hospital by third party administrators its determination was at a "nascent' stage and therefore the penal provisions of section 271C of the IT Act could not be imposed against the Appellant. 8 The Assessing Officer tailed to appreciate that the practice of not deducting tax at source under Section 194J for the payments made by the Third Party Administrators directly to the hospital under the cashless hospitalization scheme was an established industry practice and therefore the penal provisions of section 271C of the ITA could not be imposed against the Appellant. 9. The Assessing Officer erred in imposing penalty under....
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....t, 1961 on 05-11-2009 thereby, raising a demand of Rs. 4,76,39,992/- being the short deduction on account of payments made to hospitals. The order passed u/s 201(1) of the IT Act was subsequently, rectified u/s 154 on 30-03-2010 and the total short deduction u/s 201 was held to be Rs. 21.39,048/-. The assessee filed appeal with the CIT(A) and the CIT(A) after hearing both the parties has held that the payment made to hospitals nursing homes is liable for deduction of tax at source as per the provisions of sec.194J of the IT Act, 1961 Thereafter, the penalty proceedings u/s 271C of the IT Act on account of default of the assessee as per the provisions of Sec. 201(1), 201(1A) of the Act, were initiated. The AO after considering the contenti....
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....the parties and we have also perused the material placed on record as well as the orders passed by the revenue authorities. 11. The moot question before us, for our consideration is as to whether the CIT(A) has erred in deleting the penalty imposed u/s 271C of the IT Act levied by Addl.CIT(TDS)? In this connection, after hearing both the parties and perusal of the orders passed by the revenue authorities and after going through the judicial pronouncements, we found that the issue with regard to applicability of sec.194J of the IT Act has already been decided by the Hon'ble Bombay High Court in the case of Dedicated Health Services TPA (India) Pvt.Ltd and Others Vs ACIT & Others 324 ITR 3465(Bom.) which decided the matter as under; "H....
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....to be made u/s 194J or not and hence the appellants were under bonafide belief that they are not required to deduct tax. The appellant has then also pleaded that though Assessing Officer has relied upon this very decision of Hon'ble' Bombay High Court for levying penalty only for the reason that the case was decided against them, but he has not considered the decision given regarding applicability of CBDT Circular which was set aside for the purpose levying penalty u/s 271C. I have also considered this aspect and after going through these facts available on record. I am of the considered view that penalty u/s 271C was not leviable in this case for the reason that appellant did not deduct tax following favourable decision available to th....