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2015 (10) TMI 2108 - ITAT HYDERABAD

2015 (10) TMI 2108 - ITAT HYDERABAD - TMI - Penalty levied under S.271C - non deduction of TDS - CIT(A) deleted penalty levy - Held that:- The provisions of S.271C are subject to the provisions of S.273B of the Act. As per S.273B of the Act, no penalty shall be leviable under the sections mentioned therein, if the assessee proves that there was a reasonable cause for the failure under the said provisions.

In the present case the assessee has submitted an explanation for the defaults .....

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er payments, the assessee's explanation that it bona-fidely believed that the TDS provisions are not applicable to the assessee seems to be reasonable. In view of the same, find no reason to interfere with the order of the CIT(A) on this issue, particularly, as also there is no loss to the Revenue, as observed by the CIT(A) since the assessee has remitted the TDS from its own sources and the payees have also not claimed the credit for the same. - Decided in favour of assessee. - ITA No. 1382/Hyd .....

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ome Tax Act,1961. 2. Brief facts of the case are that the assessee company is engaged in the business of transportation. A survey operation under S.133A was conducted in the business premises of the assessee at Hyderabad on 24.3.2009 to verify compliance with TDS provisions. During the course of survey, it was noticed that the assessee has not effected TDS on payments made towards the following items of expenses- Items involved in all the three years 1. Lorry hire chares 2. Truck Operating expen .....

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der S.201(1A) of the Act. The assessee accepted the demand raised by the Assessing Officer under S.201(1) and 201(1A) and remitted the amounts as per the demands raised. 4. Thereafter, the Assessing Officer initiated penalty proceedings under S.271C of the Act for failure to deduct TDS. In reply to the notice under S.271C of the Act, the assessee submitted that the assessee bona-fidely believed that the TDS provisions were not applicable to the payments made by the assessee, as enumerated in the .....

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tract TDS provisions. It was further submitted that the assessee had complied with the demand under S.201(1) of the Act in order to buy peace only and therefore, it does not amount to there being a liability to make TDS and failure on the part of the assessee to deduct taxes at source. The Assessing Officer, however, held that it is a fit case for levy of penalty as per the orders passed under S.201(1) and S.201(1A) of the Act. 5. Aggrieved, the assessee preferred appeals before the CIT(A), givi .....

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to the payees, the assessee paid he TDS amount from its own sources and that the assessee has also not issued any TDS certificates to t e deductees, who also did not claim the credit for the TDS, as the time for the filing of return in their cases was already over. She observed that the TDS remittances made by the assessee lie with the Department, as the deductees could not claim credit for the same, and therefore, there is no loss to the Revenue. She further observed that in most of the cases, .....

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ns made before the lower authorities. 8. Having regard to the rival submissions and the material on record, I find that the assessee has raised the following contentions before the CIT(A). (i) TDS provisions are not applicable to payments towards lorry charges because the assessee hired the trucks as and when required from any person in the open market and such a person was neither a contractor or a sub-contractor to attract the TDS liability under S.194(2) of the Act. (ii) As regards the truck .....

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nd that the names of the persons mentioned in the order under S.201(1) were the names of sales representatives of the assessee who visit customers and submit the bills for expenses incurred, and to whom payments were made. It was submitted that the assessee was under bona fide belief that these expenses do not attract TDS under S.194H as commission payments. (iv) As regards postage expenses, printing and stationery expenses, these payments were made to courier agencies, and there is no contract .....

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pecialised matters like ESI, PF Accounts etc. and therefore, the assessee was under a bona fide belief that the provisions of S.194J are not applicable. (vii) As regards legal expenses, the same were incurred on account of reimbursement of expenses towards filing affidavits, complaints and documentation charges in case of accidents to trucks for all 22 branches and therefore, the assessee was under a bona fide belief that provisions of S.194J are not applicable. As regards the interest on truck .....

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