2018 (8) TMI 840

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....ite order. For convenience, the facts are being taken from ITA No.203/Agra/2018, for A.Y. 2012-13. 3. The ld. CIT(A), while cancelling the penalty levied has held as follows: "9.2 As regards grounds no. 4, 5, 6 and 7, it is observed that the appellant's objection to the levy of penalty under section 271C of the Act is that there existed a reasonable cause with it for not deducting TDS on interest paid to Agra Development Authority and so it should be given benefit of the provisions of section 273B of the Act. I notice that it is a fact that Agra Development Authority is a body formed and run by the state government, and it is also a fact that a copy of registration certificate under section 12A dated 24.09.2003 was ....

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....xisted a reasonable cause with the appellant not to deduct TDS in respect of payments made by it to Agra Development Authority and hence the levy of the impugned penalty of Rs. 14,97,690/- under section 271C of the Act is not justified and it is liable to be cancelled. Grounds no. 4, 5, 6 and 7 are allowed accordingly." 4. Challenging the impugned orders, the ld. DR has contended that the ld. CIT(A) has erred in law and on facts in deleting the penalty levied for a sum of Rs. 14,97,690/- U/s 271C of the Act without appreciating the facts of the case as also without considering the interpretation by the Hon'ble Supreme Court in the case of 'Hindustan Coca Cola Beverage Pvt. Ltd. Vs. CIT', 293 ITR, 226 (SC) that the Circular dated 29.1....

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.... of non deduction of tax during financial years 2010-11 & 2011-12 was not intentional, rather, it was due to wrong interpretation and impression drawn by the deductor and the said mistake was rectified during F.Y. 2012-13. 7. Section 273B of the IT Act provides for non-levy of penalty in the case of presence of a reasonable cause. The ld. CIT(A) has cancelled the penalties, as he found the belief of the assessee bank regarding its non-liability to TDS, to be constituting a reasonable cause within the meaning of section 273B. It is undisputed that the Agra Development Authority, a body formed and run by the State Government, had provided a registration Certificate dated 24.09.2003, regarding registration of the Agra Development Authority ....