Penalty u/s 271CA for non collection of TCS on Parking Lot quashed by ITAT

Penalty u/s 271CA for non collection of TCS on Parking Lot quashed by ITAT

In a recent judgment, ITAT Delhi has quashed penalty u/s 271CA for non collection of TCS on Parking Lot by Nagar Palika as it was a non-profit organization and has constraints in correct understanding of tax laws

ABCAUS Case Law Citation:
4217 (2024) (08) abcaus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) National Faceless Appeal Centre (NFAC) in confirming penalty under Section 271CA and 271C for non collection of TCS on Parking Lot.

The appellant assessee was a local authority which works in coordination with the State Govt. In the course of survey proceedings under section 133A of the Act, the Assessing Officer found that assessee has failed to collect tax at source (TCS) on parking lot being given on license.

Show Cause Notice under section 271CA of the Act was were passed seeking to impose penalty for failure to collect tax at source required under provision of Chapter XVII-BB of the Act. Finally, the penalty u/s 271CA of the Act was imposed.

Before the Tribunal, the assessee submitted that as soon as the discrepancy and deficiency came to the notice of the assessee, the mistake was cured and assessee duly collected the TCS and deposited the same to the Govt. account for which the copy of challan was also furnished before the lower authorities.

The assessee submitted that there was no willful default in compliance of the TCS provisions and the breach was technical in nature. It was mentioned that the assessee was a Nagar Palika Parishad. It was pointed out that the money from contract on parking lot was collected on behalf of the Govt. from citizens and the same was expended on the welfare of the citizens of the town.

It was argued that the assessee is a non-profit organization and has constraints, at times, in correct understanding of tax laws. No advise was received towards collection of TCS on such payment and as soon as the default was pointed out, the assessee made swift compliance.

The Tribunal opined that in the light of submission made, the assessee cannot be treated as assessee in default per se in the circumstances and there exists reasonable cause giving rise to such technical default.

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