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2. The Ld. CIT(A), NFAC has erred on facts and in confirming the levy of penalty of Rs. 57,940/- u/s 271C of the IT. Act, 1961.
3. The appellant craves to alter, amend & modify any ground of appeal.
4. Necessary cost be awarded to the assessee."

3. Succinctly, the fact as culled out from the records is that in this case, the return of income was e-filed on 30.09.2014 declaring total income at Rs. 10,47,410/-. The return of income was processed u/s 143(1) of the Act, 1961 on 11.04.2015. This case was selected for scrutiny through CASS for 'Complete Scrutiny'. Accordingly, a notice u/s 143(2) of the Income Tax Act, 1961 was issued on 28.08.2015 and case fixed for hearing on 08.09.2015. This notice was duly served upon the assessee. The notice was duly complied with by the assessee. Thereafter, a notice u/s 142(1) along with a detailed questionnaire was issued on 17.06.2016. Simultaneously, due to change of incumbent a fresh opportunity vide notice u/s 143(2) of the I.T. Act dated 17.06.2016 was provided to the assessee. Assessment order was passed on 31.10.2016 under section 143(3) of the Act. 3.1 After culmination of the assessment in this case the ACIT, Circle-2, Ajmer referred letter no. 197 dated 30.07.2019 that the revenue audit party has raised minor audit objection in this case that the assessee has Sh. Swapnil Agarwal vs. ITO purchased a property for purchase consideration of Rs. 57,94,000/- but failed to deduct TDS @ 1% i.e. 57,940/- as per provision of section 194IA the assessee was liable to deduct TDS @ 1% but failed to do so. Therefore, the case was transferred to the office of the Additional Commissioner of Income Tax, TDS Range, Udaipur. Based on these set of facts a show cause notice under section 274 read with section 271C of the I.T. Act, 1961 was issued on 21.01.2020 to the deductor by the office of the Addl. CIT requesting to show cause why penalty should not be levied for the default fix the hearing of case on 28.01.2020. In response to above, the A/R of the assessee requested for adjournment by filing a letter on 11.02.2020. Again, Second notice under section 274 read with section 271C of the I.T. Act, 1961 was issued on 17.02.2020, fixing the date of hearing on 24.02.2020. In response to this, the assessee filed a letter by e-mail on 24.02.2020 in which he asked to intimate him about the default for which penalty u/s 271C is leviable. Therefore notice under section 274 read with section 271C of the I.T. Act, 1961 was issued on 02.03.2020, fixing the date of hearing on 06.03.2020 and intimated the assessee about objection raised by revenue audit party on TDS default on purchase consideration of property purchase of Rs. 57,94,000/- by the assessee during F.Y 2013-14, but neither submitted any written reply nor presented himself in the office of the Addl.

Sh. Swapnil Agarwal vs. ITO CIT for determining TDS default and to pass the order u/s 201(1)/201(1A) of the I.T. Act, 1961, the case was forwarded to the ITO (TDS), Ajmer vide letter No. 1337 dated 12.03.2020. Later, the ITO(TDS), Ajmer referred vide letter no. 229 dated 02.11.2020 that order u/s 201(1)/201(1A) of the I.T. Act, 1961 was passed on 28.10.2020. The copy of same was endorsed to the office of undersigned for initiating penalty proceedings u/s 271C of the I.T. Act, 1961. It was reported that deductor has not deducted tax at source u/s 194IA of the I.T. Act, 1961 on immovable property worth Rs. 57,94,000/- at the time of purchase of property from Sh. Indrajeet S/o Sh. Girdhari Lal resident of Dholabhata, Ajmer on 05.08.2013. The deductor assessee was treated as assessee in default as per provisions of section 201(1) of the Act, 1961 for not deducting of TDS amount of Rs. 57,940/- on the payment made of Rs. 57,94,000/- at the time of purchase of immovable property. Therefore order u/s 201(1)/201(1A) of the I.T. Act, 1961 was passed on 28.10.2020 by creating demand of Rs. 57940/- of TDS default u/s 201(1) and Rs. 49828/- u/s 201(1A) as interest @ 1.00% per month of the I.T. Act, 1961. Therefore, penalty notice u/s 271C of the I.T. Act, 1961 issued on 24.11.2020 to the deductor by the office of the undersigned fixing date of hearing on 01.12.2020. Despite giving due opportunities the assessee failed to represent its case. No compliance made by the assessee till date, Sh. Swapnil Agarwal vs. ITO which shows that the assessee has nothing to say in this regard and default of the assessee is established. From the above, it is clear that the deductor has to deduct TDS of Rs. 57,940/- @ 1% u/s 194IA of the IT Act, 1961 at the time of payment of sale consideration to the seller and deposit the same in Central Govt. Account, but deductor failed to do so. Relying on the case of Classic Concepts Home India (P) Ltd. vs. CIT of the Kerala High Court, IT Appeal No. 89, 90, 91 & 92 of 2015 dated 21 May, 2015, wherein it is held that the tax was deducted at source and the same was remitted belatedly, though with interest, authorities were fully justified in levying penalty u/s 271C of the I.T. Act, 1961 and thereby imposed penalty of Rs. 57,940/- which is equivalent to the amount of TDS which the deductor failed to deduct and deposit into Central Govt. A/c within the stipulated time as prescribed under the Chaper XVII-B of the I.T. Act, 1961.

3. The Addl. CIT-TDS initiated penalty proceedings u/s 271C vide notice dt. 21.01.2020. Penalty u/s 271C is independent of assessment proceedings and thus the limitation for levy of penalty u/s 271C would be governed by clause (c) of section 275(1). This clause provides that no order imposing the penalty shall be Sh. Swapnil Agarwal vs. ITO passed after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. In the present case, since penalty u/s 271C has not been initiated during the course of any proceedings, first part of sec. 275(1)(c) would have no application and it is only the second part which would apply. Thus the penalty order ought to have been passed within a period of six months beginning from the end of the month in which the action for imposition of penalty was initiated. Since the show cause notice u/s 271C was issued on 21.01.2020, the period of six months would have to be reckoned from 01.02.2020 that would end to 31.07.2020. Therefore, penalty order passed on 16.12.2020 is barred by limitation.

7. The ld. DR is heard who has relied on the findings of the lower authorities and also submitted that ignorance of law is not an excuse. Ld. Sh. Swapnil Agarwal vs. ITO has not jurisdiction for levy of TDS and as pointed by the revenue audit party the demand and penalty has rightly been levied as the assessee failed to demonstrate the voluntary compliance of law which is mandate to the assessee.

8. We have heard the rival contentions and perused the material placed on record. The bench noted from the records that Addl.CIT-TDS initiated penalty proceedings u/s 271C vide notice dt. 21.01.2020. The Penalty in question u/s 271C is independent of assessment proceedings and thus the limitation for levy of penalty u/s 271C would be governed by clause (c) of section 275(1). This clause provides that no order imposing the penalty shall be passed after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. In the present case, since penalty u/s 271C has not been initiated during the course of any proceedings, first part of sec. 275(1)(c) would have no application and it is only the second part which would apply. Thus the penalty order ought to have been passed within a period of six months beginning from the end of the month in which the action for imposition of Sh. Swapnil Agarwal vs. ITO penalty was initiated. Since the show cause notice u/s 271C was issued on 21.01.2020, the period of six months would have to be reckoned from 01.02.2020 that would end to 31.07.2020. Therefore, penalty order passed on 16.12.2020 is barred by limitation and therefore, the same is quashed.