9911796707
TMI Blog2012 (5) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 2. The assessee is a joint venture formed by two concerns, namely PES Engineers Pvt. Ltd. and Karamchand Thapar & Bros (Coal Sales Ltd) (KCT). The assessee is an income-tax assessee having PAN and also a tax deductor having TAN. During the financial years relevant to AY 2001-02 & 2002-034, the assessee made payments to sub-contractors for carrying out the contract works obtained by it amounting to ₹ 7,51,62,896/- and ₹ 9,17,87,450/-. The AO scrutinized the details furnished by the assessee and passed orders u/s 201(1) and 201(1A) on 29/11/2002 raising demands u/s 201(1) and 201(1A) for the two years as under:- Asstt. Year 201 (1) (Rs.) 201(1A) (Rs.) 2001-02 8,26,791/- 2,95,821/- 2002-03 9,36,232/- 1,67,856/- 2.1 Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A), the assessee is in appeals before us raising the following grounds of appeal:- "1. The CIT(A) erred on facts and in law in upholding the penalty levied u/s 271C of the IT Act. 2(a) The learned CIT(A) did not take notice of the relevant facts while upholding the penalty u/s 271C of the Act. The CIT(A) failed to take notice of the relevant facts that both the members of the Joint Venture were entitled to refunds even without deduction of taxes from the payments made to them by the assessee. (b) Having noticed that the assessee fell in line and complied with demands u/s 291(1), the learned CIT(A) failed to notice that the conduct of the assessee was not contumacious or in defiance of law. (c) The CIT(A) failed to take into consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring the parties, the said additional grounds of appeal challenging the jurisdiction of the Assessing Officer are not admitted as the same have not been raised before the lower authorities and we shall adjudicate upon the merits of the appeal. 6. The learned counsel for the assessee Mr. V. Raghavendra Rao, at the outset submitted that there has been an extension of the definition of the word 'person' by inserting an explanation u/s 2(31) of the Act, with effect from 01/04/2002. According to the Notes on clauses and the Memorandum explaining the provisions of the finance bill (254 ITR (St) 120-01, 231-2) it has been stated that the definition of the person is clarified to be not only the AOP formed with the object of making income but also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d u/s 201 and 201(1A). The SC however held that penalty u/s 271C was not leviable because the failure of the assessee to deduct the tax was on account of bonafide belief to the contrary. 10. In the case of CIT Vs. Viswapriya Financial 303 ITR 122, the Madras High Court held that as there was bonafide doubt about the relationship of borrower and lender/debtor and creditor, there was reasonable cause for non-deduction of tax and, therefore, penalty u/s 271C was rightly held by the ITAT as not leviable. In the present case also, the relationship of contractor and sub-contractor between the JV and one of its own members is in doubt, hence, the ratio of the said decision in 303 ITR 122 is applicable in the assessee's case. 11. In the case of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the assessee was under bona-fide belief that division of the contract receipts at source between the members of the JV, would not constitute payments to sub-contractors. Hence, the decision of the co ordinate bench is inapplicable considering the facts of the case before us. 15. We are of the opinion that when the contractor companies, who are big tax payers, regularly effect TDS on all payments made by them to various sub-contractors, there could be no reason why they should effect TDS unless on a bona-fide belief that TDS was not required to be made. We are of the view that the difference in perception of the provisions of law based on the opinion of practicing Chartered Accountant led to the bona-fide belief for non-payment of TDS and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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