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TMI Blog2015 (9) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee by short deducting tax at source from payments made to Job work charges and Transportation charges u/s 194A and 194C for the A.Y. 2003-04 and u/s 194C for the A.Y. 2004-05, which was accepted by the authorized representative before the Bench. Thus short deduction of TDS u/s 194A amounting to ₹ 38,268/- and Job work charges and transportation charges u/s 194C amounting to ₹ 65,555/- for the A.Y. 2003-04 and short deduction of TDS u/s 194C for labour charges and transportation charges amounting to ₹ 40,900/- for the A.Y. 2004-05 is confirmed. - Decided in favour of assessee in part. - ITA No.527/Hyd/2013, ITA No.528/Hyd/2013 - - - Dated:- 12-8-2015 - SHRI B.RAMAKOTAIAH, J. For The Assessee : FrMr. S. Rama Rao For The Revenue : Mr. Rajat Mitra ORDER These two appeals filed by the assessee are directed against the separate orders of the learned Commissioner of Income Tax (Appeals)-II, Hyderabad dated 28.1.2013, for the assessment year 2003-04 and 2004-05 respectively. Since, the issue involved in these two appeals is common, they are heard together and disposed off by common order for the sake of convenience. 2. The assessee rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were made through them. He further, submits that no labourer earns even ₹ 15,000/- during the year as canal works are purely seasonal and the work is executed for 5 to 6 months in a year. He further, argued that there was no written agreement between the assessee and the maistry and in the absence of written agreement the question of applicability of provisions of section 194C does not arise. The AR contended that both labourers and maistry are employed by the company and when both are employees of the company, the assessee is justified in not deducting the tax at source from payments made to the labour charges. The AR, further, argued that the assessee is under the bonafide belief that no tax is to be deducted at source from payments made to charges covered under section 194C or 194J under these circumstances. The AR, further, submits that with regard to job work charges, the assessee has deducted tax at source but, there was only a short deduction of tax at source which is unintentional. The AR, further argued that the lapses have been identified for the first time for the year under considerations and there was no such lapses, either in the past or the future years, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause of which, the requirement of relevant provisions could not be complied with is primarily essential question of fact and it has to be decided in each case on consideration of material placed before the concerned authority. Levy of penalty under s. 271C is not automatic. Before levying penalty, the concerned officer is required to find out that even if there was any failure referred to in the concerned provision the same was without a reasonable cause. The initial burden is on the assessee to show that there existed reasonable cause which was the reason for the failure referred to in the concerned provision. Thereafter the officer dealing with the matter has to consider whether the explanation offered by the assessee or the person, as the case may be, as regards the reason for failure, was on account of reasonable cause. 10. In the instant case, the assessee makes out its case and contended that, it was on the bonafide belief that no TDS is applicable, when payments are made to labourers employed by it on its own without assigning any contract work to the labour contractors. Though, the assessee did not succeed in its arguments in the quantum appeal before the authorities, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r foundation, the prescribed consequences follow. 11. Now coming to the case on hand, I find that it is the contention of the assessee right from the beginning that the assessee had not deducted tax at source on such payments under the bonafide belief that the payments in question being labour charges were in the nature of labour payments paid for its own labourers and therefore, not liable to TDS u/s.l94C, which has also been accepted by the auditor who had issued tax audit report issued u/s 44AB without pointing out any lapses in his report. This explanation of the assessee was not accepted as reasonable cause . But, I am of the opinion that on bonafide belief founded upon reasonable grounds, which assuming them to be true, would reasonably lead any ordinary person, placed in the position of the person concerned, to come to the conclusion that the same was the right thing to do. The assessee in the present case has given explanation before the authorities below that the due to circumstances prevailing and under bonafide belief that tax was not required to be deducted at source U/S.194C on the payments in question. Moreover, no such issue was made out by Revenue in A.Y. 2002- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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