TaxTMI 
TaxTMI 
2015 (10) TMI 2321
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....unicipal Corporation. As found during the course of inspection, tax at source was not deducted by the assessees from the payments made to the contract workers. In this regard the explanation of the assessee that the contract workers are its employees and the amounts paid to them being less than the taxable limit, in case of every individual, there was no requirement of deduction of tax at source, was not found acceptable by the AO. According to him, there was no employeremployee relationship between the assessee and the concerned workers and since there existed a contract agreement between the assessee and the said workers in the form of work orders, the assessee was liable to deduct tax at source u/s 194C from the payments made to the cont....
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....ral Govt. In respect of earlier period also, on receipt of the notice the assesee deducted that tax and remitted to the account of the Govt. account alongwith interest. Therefore, it was never the intention of the assessee to avoid deduction of tax at source". 4. The above explanation offered by the assessee was not found acceptable by the AO treating the same as after thought and keeping in view the failure of the assessee to deduct tax at source as required by provisions of section 194C, he proceeded to impose penalty u/s 271C amounting to Rs. 14,76,643 and Rs. 14,81,272 being 100% of the tax which the assessees had failed to deduct and pay. 5. The penalties imposed by the AO u/s 271C were challenged by the assessees in the appeals file....
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....s per person and also specifying the number of workers to be engaged for each unit and per shift. The working hours of the workers as well as the shifts are also specified in the notification. From the bills paid to the SHGs also, it is seen that the payment is made on the basis of number of mandays and wages per day and is not a fixed amount per month. Thus, it is clear that the allotment of work by the assessee to the SHGs is not by way of contract but is engagement of workers for a fixed period. The workers are being paid as per the agreed terms and conditions and the aggregate amount is paid to the group and not to any particular person. Therefore, as rightly held by the CIT (A), there is no contractor-contractee relationship but is mor....