TMI Blog2011 (3) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had been deducting tax from the payments payable to CFA under Section 194C on a consolidated basis towards different heads. There is no reason to disbelieve the assessee that the same was being done by its employees on misconceived professional advice given by the Chartered Accountants. Since the payment were to be deducted from CFA no benefit was to be derived by the assessee for making lesser or inaccurate deductions. No malafide intention of any kind can be attributed to the assessee for deducting tax under one provision of law than the other. - It can not be said that the assessee has failed to comply with the provision of Section 194I and 194J of the Act without reasonable cause. - Decided in favor of assessee. - ITA Nos.139 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment proceedings in the assessment years held that the assessee was wrongly deducting tax at source under Section 194C of the Act on payment of rent and CFAs remuneration, whereas deduction was to be made under Section 194I and 194J of the Act, respectively. The Assessing Officer further held that payments made to outside agencies supplying manpower was liable for tax deduction at source @ 2% especially when the assessee itself was deducting the same in this manner with effect from 1st April, 2003. The Assessing Officer held the assessee to be in default under Section 201(1) and 201 (1A) of the Act. A consolidated order in this regard was passed by the Assessing Officer for all the three assessment years whereby the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute to the fact that the assessee was deducting tax u/s 194 C of the Act. If the intention of the assessee would have been different, naturally nothing prevented him even to deduct under the aforementioned section. However, it may be good ground for addition but here we are dealing with the penalty, which is penal in nature, therefore, it should be construed strictly. At the same time, the assessee was deducting as per professional advice. The scope of expression reasonable cause has been deliberated upon by the Hon‟ble Madras High Court in the case of Kalakriti vs ITO (2002) 253 ITR 754 (Madras). Since the assessee was deducting under the advice of the Chartered Accountant, therefore, we are of the view, that there is a reasonable ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 715 dated 8th Aug 1995, Circular No. 718 dt 22.8.95 and Circular No. 720 dt 30.8.95, issued by CBDT, are very much clear. Even otherwise for imposition of penalty, the general presumption is that definite finding about concealment is necessary. The Hon‟ble Punjab Haryana High Court in the case of Hari Gopal Singh vs CIT (258 ITR 85) clearly held that penalty cannot be levied when income has been estimated. The identical ratio will be applicable that no penalty may be imposed when there is a difference of opinion. Even the Hon‟ble Apex Court in the case of Anwar Ali (76 ITR 696) (SC) clearly held that finding in the assessment proceedings are not conclusive, therefore, the argument of the ld DR that quantum proceedings ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofessional advice and due to bona fide belief thereon by the employees of the assessee that the TDS was being deducted under Section 194C for all counts from the payments being made to the CFAs. On the other hand, leaned counsel for the Revenue submitted that in the quantum proceedings the assessments have been accepted by the assessee for all these years and the same having become final, the assessee was liable to pay the penalty imposed by the Assessing Officer. 5. With regard to the contention of learned counsel for the Revenue regarding quantum proceedings having become final, it may be noted, that the same was also raised before the Tribunal who dealt with the same relying upon the case of Apex Court in Anwar Ali (76 ITR 696) (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame was without a reasonable cause. The initial burden is on the assessed 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 Explanationn offered by the assessee or the person, as the case may be, as regards the reason for failure, was on account of reasonable cause. "Reasonable cause" as applied to human action is that which would constrain a person of average intelligence and ordinary prudence. It can be described as a probable cause. It means an honest belief founded upon reasonable grounds, of the existence of a state of circumstances, which assuming them to be true, would reasonably lead any o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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