Section 271C of the Income-tax Act, 1961 – Penalty – In ignorance of Rule 29, assessee did not make TDS on the interest paid on the land acquisition compensation which comprises an inadvertent mistake and amounts to a mere technical breach, for which the penalty in question ought not to have been levied.

Facts: The sole issue involved relates to levy of penalty under section 271C for failure to deduct tax under section 194A.

Held, that Rule 29C of the I.T. Rules came into force w.e.f. 1/4/2010 and, the years under consideration were the initial years in which the applicability of the said rule came into effect. It was, undoubtedly under a bona fide belief, in ignorance of Rule 29C that the assessee did not make TDS on the interest paid on the land acquisition compensation. This, evidently, comprises an inadvertent mistake and amounts to a mere technical breach, for which the penalty in question ought not to have been levied. Though it has been argued on behalf of the Department that nothing has been brought on record by the assessee to show that the belief entertained by the assessee was a bona fide belief, we find the position to be just reverse. It is the Department, which has remained unable to produce anything on record to prove that the belief entertained by the assessee was a mala fide belief. It cannot be gainsaid that in matters like ones at hand, no element of personal profit to the assessee, is attributable. Too, it is undeniable that the compensation as well as interest on delayed payment thereof has been made over to the farmers voluntarily.Thus, the penalties were deleted. In the result, the appeals of the assessee are allowed – ADDITIONAL DISTRICT MAGISTRATE LAND ACQUISITION V/s JT. CIT [2020] 181 ITD 576 (ITAT-LUCKNOW)