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(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".

ITA 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".

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."

ITA 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.