The petitioner challenged the imposition of liability under section 201(1) of the 1961 Act on the ground that the petitioner had failed to deduct tax at source upon interest on enhanced compensation under section 28 of the 1894 Act.  Allowing the petition the Court held that the Department had not denied that the Land Acquisition Officer and his Department had at the time of enquiry submitted the reasons for non-deduction of tax and therefore, the Land Acquisition Officer was not at fault. He had genuinely followed the advice given to him by his superior, the District Revenue Officer, whose directions of not deducting tax were based on legal advice. The legal advice was given on the basis of the directions of this court. While this court may have passed order which was not in conformity with some other orders passed by the High Court, it was not available for the Land Acquisition Officer to ignore or flout the court’s orders, which were to be presumed to be correct till they were set aside in appeal. Thus, no fault could be attributed on the Land Acquisition Officer or on his officials. In the absence of there being any fault and there being a genuine belief based on the judgment of the High Court that tax was not required to be deducted on the interest paid, the action of the Land Acquisition Officer was wrong or illegal. The action of releasing the interest amount without deducting tax at source, therefore, could not be a reason for imposing penalty under section 201(1) and 201(1A) of the 1961 Act and could not be justified. The Land Acquisition Officer could not be made to suffer on account of the orders passed by the court. Penalty imposed on him by the Assistant Commissioner (TDS) was set aside.