J.K. Ranka, J. - (1.) THE substantial question which emerges for consideration is: "whether in the facts and circumstances of the case, the ITAT was justified in law and has not acted perversely in holding that the payments made by the assessee to Channel Providers were liable for deduction of tax at source u/sec. 194C and not u/sec. 194J of the Income Tax Act, 1961 when the said issue was not before them and the assessee has only assailed the penalty -
(2.) WITH the consent of the parties, we have heard the appeal on merits. Instant Income Tax Appeal u/sec. 260A of the Income Tax Act, by the appellant -Revenue is directed against order dt. 30/01/2009 passed by the ITAT and relate to the assessment year 2005 -06.
(3.) BRIEF facts, which are relevant for disposal of the present appeal, are that a survey operation was conducted on the business premises of the respondent -assessee (a partnership firm) on 16/02/2005. The assessee deals in the transmission of channels through cable network and during the course of survey, it was found that the assessee is making huge payments to pay channel providers against airing fee as per the agreed rates and as per the officers of the survey team, the assessee was required to deduct TDS u/sec. 194J. The assessee was avoiding and prior to that there were complaints that the assessee was though making huge payments but was not deducting tax at source at all and consequently, a survey came to be conducted. It was found that the assessee was liable to deduct tax at source. It was admitted by the assessee that they were not aware of the provisions relating to deduction of tax at source and after the survey, deposited the entire amount admitting tax liability on 25/03/2005 to 22/07/2005. Notice u/sec. 271Cwas issued as to why penalty may not be imposed. However, explanation was offered that the assessee was not aware of the provisions of TDS and default, if any, was bona fide and immediately when the officers brought to the notice of the assessee, the entire tax was deposited. Thus penalty ought not to have been levied but the AO imposed the penalty.;