PR.COMMISSIONER OF INCOME TAX vs. CORONATION INFRASTRUCTURE LTD.

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The applications are disposed of. ITA Nos. 505/2015, 506/2015, 507/2015 & 514/2015

These are appeals by the Revenue under Section 260A (1) against orders of the Income Tax Appellate Tribunal (‘ITAT’) for various Assessment Years (‘AYs’) on issue of penalty under Section 271C of the Income Tax Act, 1961 (‘Act’).

A survey operation undertaken on 12th November 2008 under Section 133A of the Act revealed that the Respondent Assessee made payments of interest on loans borrowed from four Non-Banking Financial Companies (‘NBFCs’) without deducting tax at source. It was also found that the Respondent had not collected tax collected at source under Section 206C of the Act on the sale of scrap. In that context that the penalty was levied under Section 271-C of the Act.

The Assessee succeeded both before the Commissioner of Income Tax (Appeals) [CIT(A)] as well as the ITAT who concurrently held that the non- deduction of TDS was for bonafide reasons. Among the factors that weighed with both the CIT (A) and the ITAT were that the NBFCs in question had in their returns accounted for the interest amount earned and had paid the taxes thereon. Further, the repayment schedule was fixed and post-dated cheques were collected upfront which included the principal amount together with the interest.

It was urged by Mr. Sahni, learned Senior Standing counsel for the Revenue that it was only on account of the survey operation undertaken that the above lapse was detected and it is only thereafter that the Assessee made This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 04/04/2026 at 21:59:24

The Court is of the view that where two authorities have, in the context of penalty proceedings under Section 271 C of the Act, been convinced with the reasons offered by the Assessee and have concluded that the failure to deduct TDS was for bonafide reasons, no substantial question of law arises for determination by the Court.

The appeals are dismissed.