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Asstt. Commissioner of Income-tax (TDS) , Circle 1 (1) , Hyderabad Versus M/s. Image Health Care Ltd.

2015 (12) TMI 1175 - ITAT HYDERABAD

Levy of penalty u/s 221 - Delay in the remittance of TDS to the Government (TDS) Account - Held that:- In the instant case, in these appeals, the plea of the assessee all along was there was a genuine cash crunch because of the fact that most of the payments were received under several schemes after a gap of two to six months, whereas the assessee has to make some urgent payments for the purpose of running its day-to day business on account of which the assessee could not have sufficient liquid .....

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We therefore, uphold the same and dismiss these appeals of the Revenue - Decided in favour of assessee - ITA No.658/Hyd/2015, ITA No.659/Hyd/2015 - Dated:- 1-12-2015 - SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER For The Appellant : Shri M.Sitaram For The Respondent : Shri S.Rama Rao ORDER Per D.Manmohan, Vice President : These two appeals, filed at the instance of the Revenue, are directed against the common order passed by the Commissioner of Income-tax(Appeals) 8 .....

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the same into the Government of India account. Since there was delay in the remittance of TDS to the Government (TDS) Account, assessee was deemed to be in default in respect of such tax and simple interest was levied on the defaulted amount. Thereafter, penalty proceedings were initiated under S.221 of the Act, by stating that the amount, which was not remitted to the Government Account was ₹ 1.15 crores and interest thereon under S.201(1A) worked out to ₹ 14,23,879, and since the .....

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enalty, and accordingly levied a penalty of ₹ 10 lakhs. In this regard, he relied upon the decision of ITAT (Amritsar Bench) in the case of Kapsons Industries Ltd. V/s. ITO, wherein the Bench held that tax deposited belatedly after the due date will not absolve the default for which penalty is imposed. 3. Similarly, in the financial year 2012-13, the amount which was not remitted to the Government Account, though tax was deducted, was quantified at ₹ 62,61,048 and interest under S.20 .....

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Railway etc.; while normal credit period for collection from insurance companies, is around three months, from government entities it is four to six months; delay in realisation of the revenue is further aggravated by the pressure from the creditors for drugs and disposables for which the assessee was granted a credit period of only two months (In fact, most of the suppliers were not interested in offering credit); assessee suffered from severe cash flow problem and had to struggle to make funds .....

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where the assessee has reasonable cause or excuse for the delay in remittance of TDS, penalty could not be levied under S.221 of the Act. (a) CIT V/s. Smt. Vijayanthimala (108 ITD 882)-Mad. (b) CIT V/s. Dadu Vala & Co. (170 ITR 491)-Raj. Detailed arguments were advanced before the CIT(A), explaining as to how the assessee company had to suffer on account of cash crunch in the form of delay in payment of salaries, professional fee to doctors and staff by which assessee could not retain quali .....

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was & Sons V/s. ITO (96 ITR 562)-Cal. 5. The learned CIT(A) observed that second proviso to S.221 provides for non-levy of penalty; if the assessee is able to give good and sufficient reason for non-remittance of tax and in the given circumstances, the assessee is prevented by good and sufficient cause in which event penalty should not be levied. In this regard, the learned CIT(A) relied upon the following decisions- (1) CIT V/s. Bhikaji Ramchandra (183 ITR 478)-Bom (2) CIT V/s. Chembara Pea .....

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in a bona fide manner, penalty should not be levied, more particularly, when the amount remaining to be paid was only interest component. Thus, she deleted the penalty levied by the Assessing Officer for both the years. 6. Aggrieved, Revenue is in appeal before us. 7. Learned Departmental Representative submitted that mere cash crunch cannot be considered as a reasonable cause and the Assessing Officer is justified in levying penalty under S.221 of the Act, which is only in addition to the arre .....

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d as a valid cause because assessee has deducted tax at source. 8. Learned counsel for the assessee, on the other hand, submitted hat it was only a notional deduction and the assessee has not received the amount, which is very much evident from the fact that it was dealing with various patients covered under schemes such as ESI, Arogya Sree, etc. and there was a genuine cash crunch, because of which assessee could not make the remittance on time, and the same having been considered by the learne .....

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