- (1.) In the ITAT, Jodhpur Bench S.R. Chauhan, J.M. &; B.L. Khatri, A.M Income Tax Act, 1961, section 271C; In favour of : assessee (partly) and revenue (partly) Penalty under section 271C Failure to deduct tax at source Penalty under section 271C-Competent authority-Levy of penalty by Dy. CIT Penalty order passed by Dy. CIT on 30th July, 1991 in respect of default occurding in assessment year 1988-89-Valid in view of insertion of sub-section (2) to section 271 C w.e.L 1st April, 1990-CIT v. Onkar Saran &; Sons, 1992) 103 CTR (SC) 293 abundant caution such provision was made, which is evident from the fact that the provision was made under the head "outstanding liabilities" (paper book 7 to 9). Thus, the assessee was not even sure whether the interest has to be paid or not. It was not a case where some deposits/loans were taken and there was an agreement to make payment of interest at a predetermined rate and time. Also it is notable that the revenue has not established that the assessee was responsible for paying" the interest on the basis of some agreement. Simply because of some book entry this onus could not have been discharged.
(2.) It is very pertinent to note that ultimately the assessee had not to pay the interest and the interest which was provided earlier in the relevant year, i.e., assessment year 1988-89, had to be reversed. The assessee accordingly credited the interest relating to these three parties, namely M/s Rajasthan Processors (I) Ltd., Bhilwara, M/s Orient Syntex Ltd. and M/s Shruti Synthetics Ltd., and consequently the entire deduction claimed and allowed earlier stood taxed in a later year. This was duly assessed by the assessing officer in assessment year 1991-92 vide order under section 143(3) dated 30-9-1992 (PB 6). Thus, the assessee already suffered tax on this part of income and it is clear that the assessee was not responsible for paying interest in assessment year 1988-89.
(3.) The assessee thus was not liable to make any deduction under section 194A and hence there was no default as under section 271C to this extent.;