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TMI Blog2016 (6) TMI 485X X X X Extracts X X X X X X X X Extracts X X X X ..... he finding of the Assessing Officer that the TDS have been used for business is an in correct and irrelevant observation. The delay in payment of TDS due to circumstances beyond the control of the your appellant. 6. The authorities below is not justified in not considering the various decisions of Honourable Courts mentioned by your appellant. 7. the Learned CIT is erred in sustaining the penalty levied by the Assessing authority. In view of the above and any other ground urged at the time of hearing it is prayed that the penalty levied u/s. 271C may be quashed. 3. The brief facts of the case are that the assessee is a private limited company carrying on the business of construction of apartments. During the impugned year, the assessee had belatedly deposited the tax deducted at source to the Central Government account and therefore the Addl. Commissioner of Income Tax (TDS) initiated the penalty proceedings and levied penalty of Rs. 12,67,340/- u/s. 271C of the Act. 4. The Ld. CIT(A) after considering the submissions of the Authorised Representative of the assessee confirmed the action of the Assessing Officer. 5. We have heard the rival contentions and perused the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... khs Net current assets : (-) 44.96 lakhs Copy of the Annual report including Audited Financial Statements for the impugned year are placed on record at PB pg. nos. 11-33. In the above situation, there was no positive current ratio in the company, whereas the current ratio for reasonable working capital position should be atleast 1.33 which is a matter of accepted business practice. The assessee had current liabilities which were much higher than the current assets and the assessee had to borrow funds even to pay salary to the staff. During the impugned year, the assessee was facing acute financial crisis and unable to pay the salary to the staff and also to meet the other working capital needs. This is one of the major reasons for the resignation of several staff from the Company including the Accountants and person responsible for statutory compliances of making TDS payments and filing of TDS statements/returns. 8. The management of the Company after the advise of the auditors, immediately took urgent steps to remit the TDS amount and to file returns which were arranged with great difficulty and the entire TDS dues with applicable interest for the 3 quarters amounting to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty, if any, new fact or circumstance is brought to the notice of the Assessing Officer based on observations above or otherwise in terms of section 273B of the Act." 10. It was alleged by the Assessing Officer that the assessee has retained the tax deducted at source during the year and has utilized the same for their business purposes. It was explained and argued by the Ld. AR that it is not the case that the appellant had received money by way of TDS from the employees and retained the money with itself by not paying the TDS to the credit of Central Government within the prescribed time. As a matter of fact, the assessee had raised loans for making the payment to the employees in the form of salary and the assessee's liabilities were much more than the assets and showing negative results as discussed hereinabove. Therefore, there appears to be no utilization of the funds for the business purposes. The assessee has mentioned that the assessee has extended full co-operation to the Department and has appeared all the time and has responded to all the notices issued by the Department. It was also explained that TDS of three quarters which are in dispute were deposited with i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed of against the Revenue and in favour of the assessee. 14. The ITAT, Bangalore Bench 'B' in the case of Indo Nissin Foods Ltd. vs. Joint Commissioner of Income-tax, 3 SOT 495 where the contention raised was that no order has been passed against the assessee-company or Nissin on the liability under the Act in as much as the assessee company had never been held to be an "assessee in default" u/s. 201 or section 221 of the Act. Section 201(1) prescribes liability for failure to deduct tax and declares the assessee 'in default' in cases where good and sufficient reason is found to exist, the action under these sections is mitigated. Ultimately, the ITAT, Bangalore Bench in the case of Indo Nissin Foods Ltd. vs. Joint Commissioner of Income-tax, 3 SOT 495 vide para 24 at PB pg. No.48 held as under: "24. On the issue of not passing order u/s. 201(1) before initiation of proceedings u/s. 271C, we are inclined to agree with the assessee's contention and rely on the decision of the Tribunal Delhi 'C' Bench in Maruberi Corpn. (Liaison Office) vs. Joint CIT (2002) 83 ITD 577 (Del.) and the decision of Tribunal Bangalore Bench in I.T.A. Nos. 137 to 140/Bang/2002. On this ground also, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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