Grindly Gases & Petrochemicals P. Ltd. Vs JCIT (ITAT Ahmedabad)
No Penalty u/s 271C for Late Deposit of TDS Already Deducted: ITAT Ahmedabad Remands 271C Penalty – To Verify If TDS Was Deducted or Not
The assessee, Grindly Gases & Petrochemicals Pvt Ltd, was penalised u/s 271C for failure to deduct TDS of ₹4,25,157/- on interest payments of ₹42,51,571/- made to Techtonic Motors Pvt Ltd during FY 2015-16. An order u/ss 201(1)/201(1A) treating assessee as “assessee-in-default” was passed on 04.08.2021, followed by penalty proceedings. Despite notices u/s 274, assessee did not respond, & JCIT levied penalty equal to tax not deducted. CIT(A) upheld the levy, observing no reasonable cause was established.
Before ITAT, Assessee argued that due to financial constraints it had belatedly deposited the TDS along with interest, relying on SC ruling in U.S. Technologies International Pvt Ltd v. CIT, which held that no penalty is leviable u/s 271C for mere late remittance of TDS after deduction.
Tribunal observed that if it was a case of belated remittance after deduction, no penalty u/s 271C could survive in view of the Apex Court’s law. However, the record did not clearly establish whether tax was actually deducted & paid late, or not deducted at all. Since neither AO nor CIT(A) verified assessee’s claim of subsequent compliance, the matter required factual verification with challans, Form 26Q & ledger extracts.
