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M/s. MIR Realtors Private Limited Versus The Addl. Commissioner of Income-tax (TDS) , Kochi

Penalty levied u/s. 271C - short delay in remitting the TDS to the credit of Central Government - Held that:- We find that there is a reasonable cause established by the assessee for remitting the TDS belatedly to the credit of the Central Government account and therefore, we direct the Assessing Officer to cancel the penalty levied u/s. 271C of the Act.- Decided in favour of assessee. - ITA No. 58/Coch/2016 - Dated:- 20-5-2016 - Shri B. P. Jain, AM And George George. K, JM For the Assessee : Sh .....

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hich was clearly explained by your appellant. 3. The learned CIT has conveniently overlooked the genuine reasons which prevented your appellant from paying the TDS on time. 4. It is submitted that there is no deliberate intent to evade paying of TDS and the same was paid along with interest by your appellant. This fact the authorities below should have been considered judicially. 5. The finding of the Assessing Officer that the TDS have been used for business is an in correct and irrelevant obse .....

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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 ₹ 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 th .....

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d for few months which resulted in delay in remitting the TDS and filing of the returns. It was only during the audit and finalization of the accounts that their auditor pointed out these facts that tax could not be remitted in the prescribed time and as soon as the auditor pointed out the mistake, it was deposited. 6. It was argued that the assessee s business is mainly in the area of real estate development and the assessee has been facing lot of issues due to the unfavourable market condition .....

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f the Company was in dark for few months without knowing the status of statutory compliances with regard to payment of TDS and filing of TDS statements etc. as the person responsible for statutory compliances left the service of the Company. During the course of audit, the auditors pointed out that tax deducted at source (TDS) for the first 3 quarters of the financial year 2009-10 were not deposited. They advised that the payment of TDS should be made immediately along with applicable interest a .....

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ssets : (-) 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 .....

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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 ₹ 13,86,718/- was paid voluntarily without receiving any notice from Income Tax Department or levy of any penalty. The payment of TDS and interest due thereon was made in the last quarter which was well within the financial year itself. The delay in payment of TDS is very nominal, on an average of just 5 months. Even t .....

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itting the TDS to the credit of Central Government. 9. The Assessing Officer has relied upon the decision of the Hon ble Kerala High Court in the case of M/s. US Technologies International Private Ltd. vs. CIT (2010) 195 Taxman 323 PB pg. nos. 35-37wherein it was held as under: We are unable to accept this contention because the first part of clause(b) of section 271C(1), i.e., failure to pay whole or any part of tax as required takes in the tax deducted under clause (a) under any of the provisi .....

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ly a mitigating circumstance for waiver or reduction of penalty. Further, if full amount of tax with interest was paid before levy of penalty, we feel quantum reduction is called for by the Assessing Officer. Therefore, we direct the Assessing Officer to reconsider the quantum of penalty by giving one more opportunity to the assessee to furnish facts in the light of our observations above. The appeal is accordingly, disposed of upholding the order of the Tribunal on the levy of penalty, but with .....

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ceived 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 .....

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1(1) r.w.s. 221 of the Act holding the assessee in default. Had there been no good and sufficient reasons for delayed payment of TDS, the Revenue would have treated the assessee company as assessee in default and levied penalty u/s. 221of the Act. 12. The Hon ble High Court of Delhi In the case of CIT vs. Mitsui & Co. Ltd., 140 Taxman 430 (PB pg. no. 39) referred to para 5 where the Tribunal held as under: In the present case admittedly, the Department has neither treated the assessee compan .....

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the Revenue would have treated the assessee company in default and levied penalty u/s. 221 of the Income Tax Act. Moreover, the payment of the amount of short tax deduction and interest thereon was a mitigating factor for not taking action u/s. 221. When no action has been taken by the Revenue for levy of penalty u/s. 221 and delay in payment of tax has been fully compensated by payment of interest no further action is justified u/s. 271C of the Income-tax Act, looking to the ratio of the afore .....

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cord and has arrived at a conclusion. It is not possible for us to say that the finding recorded by the Tribunal is perverse. Therefore, the appeal is disposed 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 h .....

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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 order of penalty stands vacated. Siimilar views were taken by the ITAT, Delhi Bench in the case of Sahara India Financial Corporation Ltd. vs. Addl. Commis .....

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66 taxmann.com 175 at PB pg. Nos. 52&53 reproduced hereinbelow: Kurian Joseph, J. - The short issue pertains to the assessment of penalty u/s. 271-C of the Income Tax Act, 1961. Against the order of Assessing Officer, the respondent took up the matter in appeal and the Commissioner of Income Tax (Appeals) deleted the levy of penalty. 2. The matter was pursued by the Revenue before the Income Tax Appellate Tribunal. The Income Tax Appellate Tribunal vide order dated 31.03.2006 entered the fo .....

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