Case Law Details
Eswar Exports Vs Add. CIT (ITAT Visakhapatnam)
The only issue involved in this appeal is whether section 271C applies in a case where non-remittance of TDS deducted to the Government account or not. In the present case, the assessee has deducted the TDS, but not remitted to the Government account, for that he has not given any satisfactory explanation either before the Assessing Officer nor before the ld.CIT(A). Even before us, the assessee has not given any satisfactory explanation. We find that similar issue came up before this Tribunal in the case of M/s. Esskay Shipping Pvt. Ltd. Vs. JCIT in ITA No. 631/VIZ/2014, dated 18/10/2017 and the Tribunal by considering the judgment of the Hon’ble Kerala High Court in the case of US Technologies P. Ltd. (supra) has held that the provisions of section 271C are applicable not only failure to deduct tax but also failure to remit the tax deducted to the Government account.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-2, Visakhapatnam, dated 13/06/2017 for the Assessment Year 2013-14.
2. Facts of the case, in brief, are that the assessee is a firm engaged in the business of export of rough granite slabs. During the course of TDS inspection in the office premises of the assessee-deductor, it was noticed by the AO (TDS) that the deductor had deducted tax at source u/sec. 194C & 194H during the F.Y. 2012-13, but not remitted the same into the Government account within the stipulated due date, the quantum of such non-remitted TDS was found to be Rs. 6,99,878/-. Hence, the Addl.CIT(TDS) issued a show-cause notice to the assessee-deductor for levy of penalty u/sec. 271C. In response, the assessee vide letter dated 27/02/2014 has submitted that “assessee is in the business of trading of Granite Blocks. The assessee is regularly deducting the tax as and when the payment made to the contractors and commission agents. The assessee generally prepares his books of account on a periodical system the TDS liability, if any, he will be paid immediately after passing the necessary entries in the books of accounts. The assessee has made the payment in late, for which he has paid the interest along with the payment of tax deducted at source but not failed to deduct tax. The penalty u/sec. 271C is not applicable since there is no failure to deduct tax under the Act. During the course of inspection, the statement of the tax deduction has been submitted by the assessee to the inspecting officials and accordingly the tax was paid within the time frame requested by the assessee on the date of inspection. Hence, requested for not to levy penalty u/sec. 271C of the Act.” The Addl. CIT(TDS) has considered the explanation of the assessee and not accepted the same and by following the decision of the Hon’ble Kerala High Court in the case of US Technologies International (P) Ltd. Vs. CIT (195 Taxman 323) noted that once taxes are deducted, the deductor is duty bound to remit the same into the Government account in compliance to section 201(1) of the Act. The Addl. CIT(TDS) also rejected the plea of the assessee that TDS sums would be remitted only after preparation of books. The Addl.CIT (TDS) thus concluded that the assessee–deductor committed default in non-remittance of TDS into Government account within time without any reasonable cause and accordingly levied penalty u/sec. 271C of Rs. 6,99,878/-.
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