Not Deducting TDS U/S 194J On Account Of Bonafide Belief, Does Not Attract Levy Of Penalty U/S 271C: Delhi ITAT

The New Delhi ITAT revoked the penalty order passed by the CIT(A) under section 271C of the Income Tax Act, recognizing the assessee's valid reasons for not considering payments on account of 'transactional charges' as falling under section 194J(1)(ba). \r

The bench, comprising Anubhav Sharma and Dr. B.R.R. Kumar, acknowledged the assessee's bonafide belief that no TDS was required on directors' sitting fees and highlighted the provision of section 273B, which exempts penalties if there is a reasonable cause. \r

Regarding transaction charges, the ITAT noted the lack of clarity on the applicable TDS category and the payee's fulfillment of tax obligations. Consequently, the imposition of penalties was deemed unwarranted, leading to the allowance of the taxpayer's appeal. Anand Chaudhuri represented the appellant, while Amit Katoch represented the respondent department.