Income Tax Appellate Tribunal - Mumbai
Dcit(Tds)-1(3),Mumbai, Mumbai vs Logicash Solutions Private Limited, ... on 23 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "A", MUMBAI
BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER AND
SHRI ANIKESH BANERJEE, JUDICIAL MEMBER
ITA No.992/Mum/2026 (Assessment year: 2017-18)
ITA No.993/Mum/2026 (Assessment year: 2018-19)
ITA No.1066/Mum/2026 (Assessment year: 2016-17)
DCIT(TDS)-1(3), Mumbai vs Logicash Solutions Pvt. Ltd.
Room No. 420, Old MTNL 6th floor, Sharda Terrace, Sector 11,
Exchange Cumballa Hill, CBD Belapur, Navi Mumbai 19,-
Peddar Road, Mumbai-400026 400614
PAN: AABCL6882F
APPELLANT RESPONDENT
Assessee by : None
Revenue by : Shri Surendra Mohan (Sr. DR)
Date of hearing : 20/04/2026
Date of pronouncement : 23/04/2026
ORDER
Per Bench :
A bunch of appeal of the same assessee were filed by the revenue against the order of the NFAC [for brevity the "Ld. CIT(A)"], order passed under section 250 of the Income Tax Act 1961 (for brevity 'the Act') for Assessment Year 2016- 17 to 2018-19, date of orders 11.11.2025. The impugned order emanated from the orders of the Ld. Joint Commissioner of Income Tax TDS Range 1(3), Mumbai 2 ITA No.992,993 and 1066/Mum/2026 Logicash Solutions Pvt. Ltd.
(for brevity the 'Ld. AO') order passed under section 271C of the Act date of orders 23.01.2020.
2. When the appeal was called for hearing, no one appeared on behalf of assessee to represent the case. There is no application for seeking adjournment either. On perusal of record, we find that the hearing was scheduled on 16/04/2026. But the appeals were adjourned and the date of hearing is fixed on 20/04/2026. In view of the above and considering the nature of dispute, we proceed to dispose the appeal ex-parte qua the assessee after hearing the Ld. DR and on the basis of material available on the record.
3. All three appeals pertains to the same assessee and arises out from a common fact. All the appeals have taken together, heard together and for convenience disposed of by a common order. ITA 992/Mum/2026 is taken as lead case and the decision rendered therein shall be applied mutatis mutandis to the other appeals.
4. The revenue has taken the following grounds:
"I hereby direct the DCIT (TDS) Cir 1(3) Mumbai, to file an appeal to the Appellate Tribunal, Mumbai against the order of National Faceless Appeal Centre (NFAC) Delhi vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1082460425(1) D1 11.11.2025, In the above case for AY 2017-18 on the following ground(s):-
(iv) "Whether on the facts & in the circumstances of the case and in law, the Ld.CIT(A) was right in deleting the penalty u/s.271C of the I.T. Act, 1961 for non-deduction of tax at source even though the assessee deductor has failed to deduct the tax at source".
(v) "Whether on the facts & in the circumstances of the case and in law, the Ld.CIT(A) was right in deleting the penalty u/s.271C of the I.T. Act, 1961 without appreciating that 2nd proviso to section 201(1) provides exemption to the assessee deductor only from levy of penalty u/s.221 on satisfaction of Assessing officer of good and sufficient reasons and it does not provide any exemption from levy of penalty u/s.271C of the IT Act".
3ITA No.992,993 and 1066/Mum/2026 Logicash Solutions Pvt. Ltd.
(vi) "Whether on the facts & in the circumstances of the case and in law, the Ld. CIT(A) was right in deleting the penalty u/s.271C of the I.T. Act, 1961 In contradiction to the decision of Hon'ble SC in the case of Hindustan Coca Cola Beverages (P) Ltd V Commissioner of Income-tax (2007) 293 ITR 226 (SC) wherein it has been clearly held in para 10 that the payment of taxes by deductee will not alter the liability for penalty u/s.271C".
5. The brief facts of the case are that the assessee is a deductor company and is a service provider of cash management services for various financial institutions on verification of compliance of the provisions of Chapter XVIIB of the Act a survey action u/sec. 133A(2A) of the Act was conducted in the case of assessee. During the course of survey action it was found that the deductor company has not deducted tax at source on expenses claimed as service delivery payment to M/s. Transtreasures Service India Pvt. Ltd. to whom contract was given. The amount for eligible for deduction u/sec. 194C amount to Rs.1,04,22,03,326/- and the TDS was deductible amount to Rs.2,08,44,066/-. Accordingly, the penalty proceedings u/sec. 271C was initiated for failure to deduction of TDS amount to Rs.2,08,44,066/-. The assessee participated in the penalty proceedings and submitted that the assessee is not treated as assessee in default as per first proviso to section 201(1) as inserted by Finance Act 2012 with effect from 01.07.2012. Provided that any person including the Principal Officer of the Company who fails to deduct the whole or any part of the tax in accordance with the provision of this chapter on the sum paid to the residents or on the sum credited to the account of resident shall not be deemed to be an assessee in default in respect of such tax if such residents:
(i) has furnished his return of income u/sec. 139
(ii) has taken into account such sum for computing income in such return of income; and 4 ITA No.992,993 and 1066/Mum/2026 Logicash Solutions Pvt. Ltd.
(iii) has paid the tax due on the income declared by him in such return of income.
6. During the penalty proceeding the assessee submitted all the relevant documents including the form 26A duly certified by the Charted Accountant that the deductee has filed the return before the due date and taken into account the payment made by the assessee. But without considering the same the Ld. AO rejected the penalty u/sec. 271C of the Act amount to Rs.2,08,44,066/-. Aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) allowed the appeal of the assessee. Being aggrieved the revenue filed an appeal before us.
7. The Ld. DR contended that the assessee is in default for failure to deduct tax at source and has thereby violated the provisions of Section 201 of the Act. Accordingly, it was argued that the levy of penalty under Section 271C is justified. The Ld. DR strongly relied upon the order passed by the Ld. AO.
8. We have heard the submissions of the Ld. DR and perused the material available on record, including the impugned appellate order. It is an undisputed position that the assessee has duly complied with the conditions prescribed under the first proviso to Section 201(1) of the Act, as inserted by the Finance Act, 2012 w.e.f. 01.07.2012. The assessee has furnished Form No. 26A, duly certified by a Chartered Accountant, evidencing that the deductee has declared the impugned receipts in its return of income and has paid the due taxes thereon. Considering the observation made by the Ld. CIT(A) in para no.5 page 8 to 9 is reproduced as below:
"5. FINDINGS AND DECISION:
(i) I have considered the material available on record which includes the Penalty order passed by the AO, the Form No. 35 filed by the appellant, the Statement of Facts and the Grounds of Appeal. I have also carefully considered the submissions made by the appellant.5
ITA No.992,993 and 1066/Mum/2026 Logicash Solutions Pvt. Ltd.
(ii) In the submissions filed by the appellant, it is contended by the appellant that the Appellant is not an assessee in default under the provisions of section 201(1) of the Income Tax Act, 1961. Further the AO has failed to appreciate that the assessee has complied with all the requirements as per the first proviso to section 201(1). In this regard, appellant has submitted copy of Form 26A along with Annexure A certified by the Chartered Accountant and copy of return filed/computation sheet of the deductee. M/s Transtreasure Services India Pvt. Ltd. It is seen that the deductee, M/s Transtreasure Services India Pvt. Ltd has filed its return of income within the due date and has paid tax on the amount paid by the deductor.
The Appellant has further stated that-
"There can be no penalty under section 271C as per decision of tribunal judgement in the case of H.P State Electricity Board (177 TT) 18 (Chandigarh) [2016] Penalty u/s. 271C is not leviable on an assessee who is not treated as an assessee-in-default as per section 201 of the Act more so when there was a reasonable cause for not deducting tax on payment made by the assessee.
The above decision has been rendered post insertion of proviso to section 201(1). The Tribunal, having noted the provisions of section 271C of the Act and also the ratio of the decision of the Karnataka High Court in the case of Remco (BHEL) House Building Co- operative Society Ltd. vs. ITO (2015) 273 CTR 57 (Kar), and observed that the assessee has not been treated as assessee in default as per section 201 of the Act, and is therefore neither liable to deduct nor pay any tax as per Chapter XVII-B. It held that in such circumstances, the question of levy of penalty u/s. 271C does not arise. It observed that this view has been upheld by the Hyderabad Bench of the Tribunal, in the case of ACIT vs. Good Health Plan Ltd. in ITA No. 155/Hyd/2013, wherein penalty levied u/s. 271C was deleted, since the assessee was not held to be an assessee in default. The Tribunal held that no penalty u/s. 271C could be levied in the case of the assessee. We are also relying on a recent judgement by the honorable members of Delhi Appellate Tribunal. We are enclosing herewith a copy of the order for your reference."
In view of the above discussion and considering the fact of the case and the ratio of decisions on this issue. I am of the considered opinion that no penalty can be levied when tax on the amount paid by the deductor/ appellant to the deductee/receipient is already paid by the deductee/recipient, i.e. M/s Transtreasure Services India Pvt. Ltd, and return of income filed by the latter within the due date, thus fulfilling all the conditions of first proviso to section 201(1) of the Act. Therefore, the penalty levied under section 271C it totally uncalled for and is hereby deleted. The order of the penalty passed by AO is accordingly stands cancelled. The grounds of the appeal of the assessee accordingly allowed."
6ITA No.992,993 and 1066/Mum/2026 Logicash Solutions Pvt. Ltd.
9. In such circumstances, the assessee cannot be treated as an "assessee in default" under Section 201(1) of the Act. Once this foundational condition fails, the consequential levy of penalty under Section 271C of the Act does not survive. The Ld. CIT(A), after duly appreciating the factual matrix and relying on the settled judicial position, has rightly held that no penalty is leviable where the tax liability has already been discharged by the deductee and the conditions of the proviso to Section 201(1) stand satisfied. We find no infirmity in the well-reasoned findings of the Ld. CIT(A), which are in consonance with the statutory provisions as well as the judicial precedents relied upon therein. Accordingly, we uphold the order of the Ld. CIT(A) deleting the penalty levied under Section 271C of the Act. In the result, the appeal of the revenue is dismissed.
10. In the net result, the appeals of the revenue bearing ITA Nos.992, 993 and 1066/Mum/2026 are dismissed.
Order pronounced in the open court on 23rd day of April 2026.
Sd/- Sd/-
(OM PRAKASH KANT) (ANIKESH BANERJEE)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai,िदनां क/Dated: 23/04/2026
SAUMYASr.PS
Copy of the Order forwarded to:
1. अपीलाथ /The Appellant ,
2. ितवादी/ The Respondent.
3. आयकरआयु CIT
4. िवभागीय ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT,
Mumbai
7
ITA No.992,993 and 1066/Mum/2026
Logicash Solutions Pvt. Ltd.
5. गाडफाइल/Guard file.
BY ORDER,
//True Copy//
(Asstt. Registrar), ITAT, MUMBAI