SHRI ASHOKKUMAR DEVICHAND LODHA,,AHMEDABAD vs. THE ACIT, TDS RANGE,, AHMEDABAD

The brief facts of the case is that during the course of assessment proceedings u/s 143(3) the assessing officer has made disallowance of Rs. 6,86,697/- u/s. 40(a)(ia) of the act for not deducting of tax on interest payment as per provision of section 194A of the act. Thereafter the assessing officer has referred the case to the JCIT,TDS Range for initiation of penalty u/s 271 C of the act. During the course of penalty proceedings, the assessee has brought to the

Aggrieved assessee filed appeal before the ld. CIT(A).The Ld.CIT(A) has sustained the impugned penalty.

We have heard the rival contentions and perused the material on record carefully. After perusal of facts on record we observe that the assessee has not deducted tax on the interest payment made to M/s. Citi Financial Consumer (I) Ltd on the ground that application of the recipient of interest for issuance of certificate u/s. 197(1) of the act which was pending before the assessing officer. The certificate u/s. 197(1) was issued on 18/08/2008 to be effective from 18/08/2008 to 31/03/2009. It was also brought to our notice by the ld. counsel that even in the next financial year nil rate of deduction of tax certificate u/s. 197(1) of the act was issued on 29/06/2009. After considering the above fact, we consider that there appears to be a reasonable cause for not deducting tax for diminutive period during the year under consideration due to non-clarity on the date of effectiveness of the certificate. In view of the above facts, we are not inclined with the decision of the ld. CIT(A) therefore we delete the impugned penalty levied in the case of the assessee .

In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 14-05-2018 Sd/- Sd/- (RAJPAL YADAV) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER