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Issues involved: Appeal against orders u/s 201(1) and 201(1A) for assessment years 2001-02 & 2002-03, penalty proceedings u/s 271C r.w.s. 274, and additional grounds challenging the jurisdiction of the Assessing Officer.
Assessment u/s 201(1) and 201(1A): The appellant, a joint venture, made payments to sub-contractors for contract works. The AO raised demands u/s 201(1) and 201(1A) for both years. CIT(A) and ITAT upheld the orders. The appellant argued no sub contract existed between the members. CIT(A) confirmed the penalty order, leading to the appeal. Penalty Proceedings u/s 271C: Additional CIT proposed penalties for failure to deduct tax u/s 194C. Assessee argued compliance post-demand u/s 201(1) showed cooperation. CIT(A) upheld the penalty. Appellant contended penalties were unjustified due to reasonable belief and cooperation. Additional Grounds: Appellant raised grounds challenging the jurisdiction of the Assessing Officer, citing limitation issues. The Tribunal did not admit these grounds due to not being raised before lower authorities. Legal Arguments: Appellant argued the joint venture did not aim to earn income collectively, thus not falling under AOP. Citing Supreme Court decisions, appellant claimed a reasonable cause existed for non-deduction of tax. Various case laws were relied upon to support the argument. Tribunal Decision: After hearing both parties and considering cited decisions, the Tribunal found the appellant's belief in not deducting tax to be bonafide. Comparisons were drawn with similar cases where penalties were not levied due to reasonable causes. The Tribunal concluded that the conduct of the appellant did not appear contumacious, leading to the deletion of the penalty imposed u/s 271C. Conclusion: The Tribunal allowed the appeals of the appellant, pronouncing the decision on 04/05/2012.
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