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2021 (12) TMI 974 - ITAT BANGALORELevy of penalty u/s. 221 - AO passed, orders u/s 201(1) and 201(1A) treating the appellant as assessee in default - appellant's main arguments before the AO were that it was facing severe financial hardship and that the same constitutes a 'good and sufficient reason' for not levying the penalty - As contented AO levied exorbitant penalty for non-remitting of TDS within the stipulated time which requires to be deleted - HELD THAT:- The only reason now shown is financial difficulties which under these circumstances does not appeal to be sufficient. It is no doubt that a mere default is not sufficient for levy of penalty but as the lower authorities pointed out that the assessee has been using the deducted TDS amount for meeting various business commitments and assessee continuously default the payment of TDS to the government account which is very serious in nature. Being so, the assessee cannot escape its consequences, it had kept back the tax deducted at sources with it. One can understand the financial difficulties of assessee is facing, if it was in defaulter for a short period. But in the present case, conduct of the assessee is that it continuously defaulting the payment of TDS amount to the government account by one was other reasons without remitting the same to the government account and these action of defaulter cannot be condoned by deleting the penalty. Accordingly, levy of penalty is confirmed. However, the Assessing Officer levied penalty at very exorbitant rate that 5% pm for which there is no legal sanction when the department itself has paid interest at 6% pa to the assessee on the refund due to the assessee. Being so, in our opinion, it is reasonable and fair to levy penalty at 1% pm i.e. 12% pa instead of 5% pm levied by AO. Accordingly, we direct the AO to recompute the penalty for both Assessment Years at 1% pm or 12% pa. Accordingly, the appeal of the assessee is partly allowed.
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