US Technologies International Pvt. Ltd. Vs CIT (Supreme Court of India)
BELATED REMITTANCE OF THE TDS AFTER DEDUCTING THE TDS WHETHER SUCH AN ASSESSEE IS LIABLE TO PAY PENALTY U/S 271C
The Apex Court decision is on appeal against order passed by the High Court of Kerala confirming the levy of interest/penalty under Section 271C.
In this case, ITO had levied penal interest u/s 201(1A) for the belated remittance of the TDS. Addl CIT had levied penalty u/s 271C ( amount equal to TDS ) and the said penalty order came to be confirmed by the Kerala High Court.
At the very outset it is to be noted that this is a case of belated remittance of the TDS though deducted by the assessee and not a case of non deduction of TDS at all.
The Court considered as to what is the meaning and scope of the words “fails to deduct” occurring in Sec 271C(1)(a) and whether an assessee who caused delay in remittance of TDS deducted by him, can be said a person who “fails to deduct TDS”. The Apex court held that the words used in Sec 271C(1)(a) are very clear & the relevant words used are “fails to deduct.” It does not speak about belated remittance of the TDS. As per settled position of law, the penal provisions are required to be construed strictly and literally. As per the cardinal principle of interpretation of statute and more particularly, the penal provision, the penal provisions are required to be read as they are. Nothing is to be added or nothing is to be taken out of the penal provision. Therefore, on plain reading of Sec 271C, there shall not be penalty leviable on belated remittance of the TDS after the same is deducted by the assessee. Sec 271C is quite categoric. Its scope and extent of application is discernible from the provision itself, in unambiguous terms. The Apex Court concluded that even otherwise, the words “fails to deduct” occurring in Section 271C(1)(a) cannot be read into “failure to deposit/pay the tax deducted.” Section 276B which talks about “fails to pay,” the words which are missing in Sec 271C .
It was held that on true interpretation of Sec 271C, there shall not be any penalty leviable u/s 271C on mere delay in remittance of the TDS after deducting the same by the concerned assessee. The consequences on nonpayment/belated remittance of the TDS would be u/s 201(1A) & 276B. Court held that as the assessee was not liable to pay the penalty u/s 271C, any question on applicability of Section 273B of the Act is not required to be considered any further.
The order passed by the Kerala High Court was thus quashed and set aside. The question of law on interpretation of Sec 271C was answered in favour of the assessee specifically observing & holding that on mere belated remitting the TDS after deducting the same by the concerned assessee, no penalty shall be leviable u/s 271C.
Also Read HC Judgment: Section 271C Penalty applies to both Non-Deduction & Non-Payment of TDS: Kerala HC
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