TaxTMI 
TaxTMI 
2012 (9) TMI 218
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....r the amounts, the assessee raised common grounds and the grounds as given in ITA No. 1691/Hyd/2011 are narrated in the following: 1. The order of the CIT(A)-II, Hyderabad dated 28.4.2011 is erroneous, contrary to law and devoid of merit. 2. a) The CIT(A) erred in sustaining the action of the Assessing Officer in levying penalty of Rs. 49,413/- u/s. 271C stating that the Assessing Officer is justified in levying such penalty. b) The CIT(A) failed to see that penalty proceedings are different from assessment proceedings and therefore not justified in confirming penalty on the TDS payable u/s. 194J as against the applicable provisions of sec. 194C. c) The CIT(A) erred in stating that the appellant should have applied for certifica....
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....the recipient company M/s. Prasad Productions Pvt. Ltd. has already admitted the income in the return of income filed and has paid tax. The CIT (A) also considering the fact that the recipient h as already declared the income and paid the tax reduced interest to Rs. 713. The Assessing Officer issue a notice for imposing penalty u/s. 271C since the assessee has failed to deduct at source as required u/s. 194J of the Act. The assessee submitted its explanation contending that the assessee during the relevant previous year had received large volume of printing and processing work from different producers. Since the assessee was not able to do the work it got the work executed through its holding company M/s. Prasad Productions Pvt. Ltd. It was....
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....ded u/s 194J but only in the nature of a contract of work by utilising the services of sophisticated machinery. In the process of work executed, no technical information is made available to the assessee by the recipient of service charges to term it work for technical services. The assessee in this regard relied on the decision of Hon'ble Madras High Court in the case of Skycell Communications vs. DCIT (251 ITR 53. The assessee further contended that since the recipient of service charges has paid taxes and there is no loss of revenue to the department, penalty should not have been imposed u/s 271C. The CIT (A) after considering the contentions of the assessee came to a finding that the assessee has failed to show any reasonable cause for ....
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....stomers to avail of the benefit of the user of such equipment, does not result in the provision of technical service to the customer. The learned AR further submitted that non deduction of tax at source from payments made to the holding company i.e., M/s. Prasad Productions (P) Ltd. Was not wilful but had occurred only due to the bonafide belief and impression that the holding company M/s Prasad Productions (P) Ltd., is paying due taxes by way of advance tax and self assessment tax and filing its returns regularly, the assessee need not deduct tax at source. It was contended by the learned AR that the department has also accepted the fact that the recipient of the service charges has declared income in its return and paid taxes thereon. The....
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....ges i.e., its holding company M/s. Prasad Productions (P) Ltd., is an assessee of Income-tax Department and filing its returns regularly and paying its legitimate tax by way of advance-tax and self assessment tax, the assessee is not required to deduct tax at source. The AO as well as the CIT (A) have rejected the aforesaid cause shown by the assessee as not reasonable simply on the view that tax is required to be deducted at source and unless it is deducted, penalty u/s 271C is automatic. For holding such a view, the CIT (A) has relied on a decision of Hon'ble Kerala High Court in the case of CIT vs. Dhanalakshmi Weaving Works (supra) wherein it held that the levy of interest u/s 201(1A) is mandatory. In our view, reliance on such decision....