During survey action carried out at the premises of the assessee that the default in TDS on interest payment came to the fore. The AO initiated penalty proceedings u/s. 271C of the Act. In the meantime, the assessee deposited the entire amount that was required to be deducted as tax at source on interest payment to DHFL along with interest to the Government Exchequer.  The Tribunal  held that since payments were made to NBFC, the omission to comply with TDS provisions was under bonafide belief that TDS was not required to be deducted. After coming to know of the default, paid the taxes and started deducting tax at source on future payment. Levy of penalty is not justified. (ITA 1729/1730/M/2022 Dt:09/08/2023,  (AY. 2017-18,18-19)