Case Law Details
ITO Vs. M/s Liver Foundation (ITAT Kolkata)
The penalty was levied by the AO u/s 271C of the Act on the ground that the assessee failed to deduct the TDS under the provisions of section 194J and 194C of the Act. However, the Ld CIT(A) reversed the order of AO by observing that the assessee has deposited the amount of TDS in the account of Government Exchequer with the delay of few months, therefore there was no default on the part of the assessee under the provisions of TDS. From the above discussion, it is clear that the assessee has deposited the amount of TDS with the delay of few months. Therefore, it cannot be concluded that the assessee has defaulted the provisions of TDS. Thus, in our considered view the penalty u/s 271C of the Act cannot be levied for the delayed deduction of TDS amount.
Full Text of the ITAT Order is as follows:-
This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-24, Kolkata dated 30.12.2015. Assessment was framed by ITO Ward- 58(3)/TDS, Kolkata u/s 201(1)/201(1A) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 26.12.2009 for assessment year 2009-10. Penalty levied by JCIT(TDS), Range-58, Kolkata u/s 271C of the Act.2. At the time of hearing none appeared on behalf of assessee though notice of hearing was sent to assessee through RPAD. So we decided to hear the present appeal without appearance of assessee or by Ld. Authorized Representative for the assessee and after hearing ld. DR.
3. The only issue raised by the Revenue in this appeal is that Ld CIT(A) erred in confirming the penalty imposed by the AO for Rs. 26,52,6 15.00 u/s 271C of the Act
4. Briefly stated facts are that the assessee is a charitable organization and engaged in the development of education, health, medical technologies and pharmaceuticals related to liver diseases. The assessing during the year has incurred several expenses which were liable for TDS provisions u/s 1 94J / 1 94C of the Act but it failed to comply the same. Therefore, the penalty proceedings u/s 271C of the Act was initiated by the AO. However, the assessee during penalty proceedings before the AO submitted that subsequently it has deducted the amount of TDS and deposited the same to the Government Exchequer. But in this process the delay occurred due to negligence and unawareness of the provision of law. However, the AO disregarded the contention of the assessee and levied the penalty for Rs. 26,52,6 15.00 u/s 271C of the Act.
5. Aggrieved, assessee preferred an appeal to Ld CIT(A) who deleted the penalty by observing as under:-
“4. There is no dispute about the deduction of tax deduction at source s is apparent from the order u/s 271 C date 27.04.2015 and the order u/s. 201 (1)/(1A) of the Income Tax Act, 1961, date 26.03.2012. The only point for which the penalty was levied is the delay of few months in payment of taxes deducted at source. Since no default of deduction has been recorded in the order u/s. 201()/(1A) and order u/s 271C, date 27.04.2015 the question to be seen is whether penalty can be levied on late payment of taxes. Sec. 271C is reproduced as under:-
‘Penalty for failure to deduct tax at source
271C. [(1) if any person fails to:
(a) Deduct the whole or any part of the tax as required by or under the provisions of Chapter XVII-B: or
(b) Pay the whole or any part of the tax as required by or under:-
(i) Sub-section (2) of Section 115-O; or
(ii) The second provision to section 1 94B
Then, such persons shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay as aforesaid].
[(2) Any penalty imposable under sub-section (1), shall be imposed by the [Joint] Commissioner
From the above it is apparent that the penalty u/s 271C can be levied only for non-deduction. In case of failure to pay the tax as required u/s. 115-O (2) and Second proviso Sec. 194B the penalty u/s. 271C can also be imposed. In the appellant’s case the AO has only objected to the late payment of deductions. Deposits u/s 115-O (2) and Sec. 194B only are hit by Sec.2 71 C. From the above it thus becomes apparent that the AO is not empowered to levy penalty. The penalty therefore cannot be sustained and is therefore cancelled.”
The Revenue, being aggrieved, is in appeal before us.
6. The Ld DR before us vehemently supported the order of AO and he left the issue to the discretion of the Bench.
7. We have heard the Ld DR and perused the material available on record. The penalty was levied by the AO u/s 271C of the Act on the ground that the assessee failed to deduct the TDS under the provisions of section 194J and 194C of the Act. However, the Ld CIT(A) reversed the order of AO by observing that the assessee has deposited the amount of TDS in the account of Government Exchequer with the delay of few months, therefore there was no default on the part of the assessee under the provisions of TDS. From the above discussion, it is clear that the assessee has deposited the amount of TDS with the delay of few months. Therefore, it cannot be concluded that the assessee has defaulted the provisions of TDS. Thus, in our considered view the penalty u/s 271C of the Act cannot be levied for the delayed deduction of TDS amount. Thus, we find no reason to interfere with the findings arrived by the Ld. CIT(A). We hold accordingly. Consequently, Revenue’s appeal is dismissed.
8. In the result, Revenue’s appeal stands dismissed.
Order pronounced in open court on 15/11/2017
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