Assistant Controller F&A Directorate of Industries Vs ITO (TDS) (ITAT Chandigarh)
ITAT dismissed the appeal and upheld penalty u/s 271C for failure to deduct TDS on payments routed through a Government nodal agency. Though delay in filing appeal before CIT(A) was condoned adopting a liberal approach, the Tribunal held on merits that mere routing of Government funds through another agency (HPSIDC) does not absolve the assessee from statutory obligation to deduct tax u/s 194C.
ITAT observed that tax is required to be deducted at the time of credit or payment, whichever is earlier, and administrative confusion or bona fide belief cannot constitute reasonable cause u/s 273B. As the assessee failed to produce conclusive evidence showing discharge of TDS liability by the executing agency, penalty was held justified and the appeal dismissed.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
This appeal is directed against the order dated 21.05.2024 passed by the Ld. CIT(A), NFAC, Delhi for the Assessment Year 2017-18.
2. In the present appeal Assessee has raised the following grounds:
1. That in the facts and circumstances of the case, the Ld. CIT(A), is not justified in passing an ex-parte order and thereby dismissing the appeal of the assessee / appellant by treating the same and maintainable.
2. That in the facts and circumstances of the case, the learned Authorities below are not justified in treating the assessee in default and thereby creating a demand of Rs. 86,74,688/- against the assessee and also not allowing the benefit of the provision to the section 201 of the Income Tax Act, 1961.
3. That the order of the Ld. CIT(A) is bad in law and facts.
4. That in the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals), is not justified in not conducting the delay in filing of the appeal. The non-condoning of the delay is bad in law and facts.
3. Briefly stated, the facts are that the assessee is a nodal agency of the Government of Himachal Pradesh. Penalty under section 271C of the Income-tax Act, 1961 was levied for alleged failure to deduct tax at source. The appeal filed before the Ld. CIT(A) came to be dismissed without adjudication on merits, primarily on the ground that there was delay in filing of the appeal and that the assessee failed to respond to the notices issued by the Ld. CIT(A).
