The assessee claimed labour expenses of Rs. 19,29,390 and in support filed copies of the bills issued by the labourers. The Assessing Officer found that some of the bills filed by the assessee amounting to Rs.13,45,356 pertained to the assessment year 2006-07. Therefore, he disallowed the expenses. The Commissioner (Appeals) held that the assessee failed to furnish the details for the movement of jewellery to the labourers for carrying out the necessary job work. All the fresh bills issued by the labours were dated March 31, 2009. The assessee had not deducted tax at source in the manner as prescribed under the provision of law. On appeal ITAT held the assessee had deducted the tax at source from the payment of the labour charges to the labourers. If tax had not been deducted in the manner as provided under the statute, the Department is empowered to initiate the proceedings under Chapter XVII of the tax deduction at source. However, the non-compliance on account of late deduction of tax at source could not be the basis for disallowance. Thus, the assessee could not be penalised if the labourers had raised the bills at the end of the accounting year.