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TMI Blog2023 (8) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... e are as under : The respondent-assessee viz., M/s. Sadashiva Sugars Ltd., is a limited company incorporated under the provisions of Companies Act, 2013, engaged in the business of production and sale of sugar. The Income Tax Officer, TDS, Ward, Belgaum hereinafter called as "TDS Officer" conducted a survey operation under the provisions of Sec. 133A of the Act at the business premises of the respondent-assessee on 17.02.2016 in order to verify the compliance with the TDS/TCS provisions. During the course of survey proceedings, the TDS Officer found that the respondent-assessee made payment of Rs. 13,38,49,376 to harvesting contractors without deducting tax at source, even though single payment is more than Rs. 30,000/- and aggregate payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failed to deduct tax at source under the provisions of Chapter-XVII-B. In response to the show cause notice, the respondent-assessee had filed a letter seeking time for 15 days to offer it's explanation. However, the TDS Officer has proceeded to levy the penalty of Rs. 83,61,409/- u/sec. 271C of the Act vide order dated 13.07.2018. 2.2. Being aggrieved by the levy of penalty, the respondent-assessee filed an appeal before the Ld. CIT(A) who vide impugned order dated 28.02.2020, deleted the penalty by holding that the respondent-assessee was under bonafide belief that no tax at source is required to be deducted on harvesting charges. 3. Being aggrieved, the Revenue is in appeal before the Tribunal. The Learned Sr. DR submits that the Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors rejecting the contention of the assessee that the harvesting charges forms part and parcel of the purchase price of the sugar cane payable to the farmer by the assessee-company. In response to the show cause notice for levy of penalty for non-deduction of tax at source, no explanation was filed by the assessee-company. It is only during the course of appellate proceedings before the learned CIT(A), the assessee had filed a detailed explanation as to how it entertained a bonafide belief that there was no obligation on the part of the assessee-company to deduct tax at source on the harvesting payments. The Ld. CIT(A) considering the explanation of the assessee held that the assessee cannot be treated as an "assessee-in-default" for non-d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal position above, it is clear that the harvesting charges forms part of the purchase price of sugar cane payable to the farmer by the assessee-company and it is well settled law that there is no obligation to deduct tax at source on the purchase of goods. In view of the above settled legal position, we cannot doubt the plea of the assessee-respondent that it had entertained a bonafide belief that no tax is required to be deducted on harvesting charges and, therefore, we are of the considered opinion that the CIT(A) has rightly deleted the penalty as it entertained a bonafide belief that no tax is required to be deducted at source on harvesting charges. We, therefore, find no reason to interfere with the order of the Ld. CIT(A) and accor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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