Court Quashes Penalty Proceedings for TDS Defaults on External Development Charges Due to Legal Ambiguity.

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....Penalty u/s 271C - failure to deduct TDS u/s 194C on External Development Charges - The High court noted that the applicability of Section 194C had been explicitly raised in counter-affidavits, providing sufficient notice to the petitioners. Therefore, the court declined to interfere with the show-cause notices at this stage. - Regarding the treatment of the petitioners as an assessee-in-default and the imposition of penalties u/s 221 and 271C of the Act, the court observed that such penalties were not inevitable consequences of default. - In this case, the court found that there was a genuine and bona fide legal issue surrounding the applicability of Section 194C to the supplementary commission. Therefore, the court quashed the penalty proceedings under Section 271C.....