Cognizant Technology Solutions India Private Limited Vs ACIT (Madras High Court)
Material Facts
The petitioner had made provisions in its books of account for services availed across multiple assessment years and deducted tax at source (TDS) later while making payments to the suppliers. Assessment orders were passed holding that there was delayed deduction and remittance of TDS. By a common order dated 22.01.2025, the Income Tax Appellate Tribunal held that the petitioner had deducted TDS belatedly and directed payment of interest on delayed deduction and remittance. Thereafter, penalty proceedings under Section 271C of the Income Tax Act, 1961 were initiated, and penalty orders dated 30.09.2025 were passed. The petitioner challenged these penalty orders before the Commissioner of Income Tax (Appeals), where the appeals remained pending.
Procedural History
Pending disposal of the appeals before the CIT(A), the petitioner sought stay of recovery under Section 220(6) of the Income Tax Act. The impugned orders required payment of 20% of the penalty demand. The petitioner challenged these stay orders before the Madras High Court.
Legal Issues
The Court considered:
- Whether the petitioner had made out a prima facie case regarding the applicability of Section 271C to delayed deduction and remittance of TDS.
- Whether the authorities were justified in directing payment of 20% of the penalty demand while considering the application under Section 220(6).
Relevant Statutory Provisions
- Sections 220(6) and 271C of the Income Tax Act, 1961.
- Chapter XVII-B of the Income Tax Act.
Parties’ Submissions
