Penalty Under Section 271C Deleted For Bona Fide Short TDS Deduction On LFC Reimbursements To Employees

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....The ITAT deleted the penalty imposed under s.271C for short deduction of TDS on LFC reimbursements to employees. The Tribunal found that the assessee, a public sector undertaking, acted under a bona fide belief that reimbursements for journeys with ultimate destinations in India would be exempt under s.10(5), a position temporarily supported by an interim order from the Madras HC. The ITAT determined this was a genuinely debatable issue ultimately settled by the SC, not a deliberate attempt to evade tax obligations. Applying the principle from Pricewaterhouse Coopers that penalties are unwarranted for inadvertent, bona fide errors absent intent to conceal income, the Tribunal also opined that the CIT(A) should have condoned the 961-day appeal delay given the recurring nature of the issue.....