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2019 (3) TMI 333 - HC - Income TaxPenalty u/s 271C - delay in paying the tax deducted at source from the bills of the contractors - violation to Section 273B - mandate of sub-section (2) of Section 115-O as well as the 'second proviso' to Section 194B - Tax on distributed profits of domestic companies and Winnings from lottery or crossword puzzle - HELD THAT:- On deduction of tax, if there is delay in remitting the amount to Revenue, it has to be satisfied with interest as payable under Section 201(1A) of the Act as mentioned above, besides the liability to face the prosecution proceedings, if launched in appropriate cases, in terms of Section 276B of the Act. This alone has been sought to be explained in the said Circular issued by the CBDT. Even according to the CBDT, no penalty is envisaged under Section 271C of the Income Tax Act for non payment of the tax deducted at source. Once the burden is discharged by the person/assessee as to the existence of good and sufficient reason for not complying with the stipulation under Section 271C, it is for the authorities to consider with proper application of mind, whether the penalty is to be waived or reduced, based on the facts and circumstances. Section 271C of the Income Tax Act is quite categoric. Its scope and extent of application is discernible from the provision itself, in unambiguous terms. When the non-deduction of the whole or any part of the tax, as required by or under the various instances/provisions of Chapter XVII-B would invite penalty under Clause 271C(1)(a); only to a limited extent, involving sub-section (2) of Sec.115-O(coming under Chapter XIID) or covered by the 'second proviso' to Section 194B (coming under Chapter XVIIB) alone would constitute an instance where penalty can be imposed in terms of Section 271C(1)(b) of the Act. Since there is no obscurity in the above provision, it is not for the Court to read something more into it, contrary to the intent and legislative wisdom, which stands to be a forbidden field for the Court. It is settled law that the rule of 'strict interpretation' is the relevant one in so far as the fiscal statute is concerned. We find support from the ruling rendered by the Apex Court in Sneh Enterprises vs. Commissioner of Customs, New Delhi [2006 (9) TMI 179 - SUPREME COURT OF INDIA]. The finding of the Division Bench in U.S.Technologies International Pvt. Ltd. vs. Commissioner of Income Tax [2009 (6) TMI 1016 - KERALA HIGH COURT] and Classic Concepts Home India Pvt. Ltd. vs. Commissioner of Income Tax [2015 (6) TMI 399 - KERALA HIGH COURT] to the effect that Section 271C(1)(b) will take in Section 271C(1)(a) as well, to attract penalty for non-payment of the tax deducted at source, does not reflect the correct provision of law. They stand overruled. The finding and reasoning in U.S.Technologies International Pvt. Ltd vs. Commissioner of Income Tax and Classic Concepts Home India Pvt. Ltd. vs. Commissioner of Income Tax that the benefit of waiver/reduction of penalty [once good and sufficient reason is established in terms of Section 273B of the Income Tax Act] is not attracted in a case covered Section 271C(1)(b) (involving failure as to non-deposit of the tax deducted at source) is not correct. It also stands overruled. Whether anything survives to be considered? - It is quite open for this Court to decide the merit as well, by virtue of the specific power conferred under 'Section 7' of the Kerala High Court Act, instead of having the case sent back to the same/appropriate Bench for further consideration, after answering the reference. In view of our declaration that nonremittance of tax deducted at source as in the instant case (which comes under Section 194C of Chapter XVIIB of the Act) is not covered by Section 271C(1)(b) of the Act to attract penalty, nothing remains to be considered further, either by the Tribunal or by this Court since the verdict passed by the departmental authorities and the Tribunal (copies of which have been produced as Annexures A, B and C) stand contrary to the declaration as above. The said orders stand set aside.
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