TMI Blog2016 (9) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of the assessee has nothing to do with the deposit of the TDS amount, therefore, the plea of financial stringency cannot be a ground to mitigate the rigors of section 221(1) of the Act.Therefore, following the aforesaid decision, we reject the plea of the assessee based on the financial stringency. Second ground as canvassed as ‘good and sufficient reason' the Explanation below section 221(1) of the Act, in our view, is distinguishable, having regard to the facts of the present case. Notably, the Explanation refers to a situation where the tax has been paid “before the levy of such penalty”, whereas the situation before us is qualitatively different inasmuch as in the instant case, assessee has deposited the requisite TDS along with applicable interest into the Government Treasury even before any proceedings under section 201(1) of the Act were initiated by the Assessing Officer. In our considered opinion, considering the penal nature of section 221 of the Act, it would be in the fitness of things to make a distinction between a case where the TDS is deposited suo-motu before any proceedings are initiated by the Assessing Officer and a case where the deposit of the TDS is mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the action of the CIT(A) in sustaining penalty imposed under section 221(1) r.w.s. 201(1) of the Act at ₹ 5,10,000/- and not with respect to the action of the CIT(A) in disposing of the appeal ex-parte. 4.1 In order to appreciate the controversy, the brief facts are that the appellant is a HUF and it was noticed that tax deducted under section 194A of the Act on interest payments was not deposited with the State exchequer within the prescribed period. At the time of hearing, Ld. Representative for the assessee pointed out that the period prescribed to deposit the TDS with the State exchequer was 31st May, 2011, whereas assessee deposited it on 30/6/2011, alongwith requisite interest for late deposit. On 9/1/2013, the Assessing Officer issued a notice under section 221(1) r.w. 201(1) of the Act on the ground that assessee had not paid the requisite tax deducted of ₹ 1,71,88,352/- into the Government treasury within the time allowed in accordance with the provisions of section 201(1) of the Act. In response to the show cause notice, assessee pointed out that the aforesaid TDS was made on the basis of an estimated provision made in the books of account as on 31/03/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries Ltd. vs. ACIT, 106 Taxman 210(Cal) as also the decision of the Amritsar Bench of the Tribunal in the case of M/s. Kapsons Industries Ltd. vs. ITO, in ITA Nos. 262/(Asr)/2012 Others order dated 8/10/2012 and that of Delhi Tribunal in the case of ACIT vs. Catmoss Retail Ltd., 142 TTJ 273(Del). 7. We have carefully considered the rival submissions. Factually speaking, there is no dispute to the fact that the assessee HUF has not deposited the tax deducted at source to the Government Treasury within the stipulated period. In assessment year 2011-12, the delay in deposit is of 30 days and it is also not in dispute that TDS was deposited along with the applicable interest payable for the period of delay. Section 221(1) of the Act, inter-alia, empowers the Assessing Officer to levy penalty in cases where an assessee is in default in making payment of tax deducted at source. In the present case, section 221(1) of the Act has been invoked by the Assessing Officer on the ground that assessee is in default for having delayed the deposit of TDS beyond the stipulated period. On this factual aspect, there is no dispute. The second proviso to section 221(1) of the Act prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time. Case of the assessee before the Asstt.CIT was that he suffered loss and financial stringency therefore, he could not deposit that amount in time. 12. The Asstt.CIT has rightly pointed out that once the TDS is deducted from the income of somebody, assessee is merely a custodian of that TDS amount. He cannot touch that amount. That amount to be deposited within the time prescribed in the Central Government Account and any loss or profit in the business of assessee has nothing to do with deposit of the TDS amount. In view of these aforesaid facts and relevant provisions discussed above, we do not find any merit in this appeal and no case is made out for interim order. 7.1 Therefore, following the aforesaid decision, we reject the plea of the assessee based on the financial stringency. 7.2 The second ground, which has been canvassed as a good and sufficient reason is the fact that assessee bonafidely in a suo-motu action deposited the requisite TDS into the Government Treasury along with interest thereon. It has also been pointed out that assessee deposited the TDS into the Government Treasury even before the corresponding interest payments were made to the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee in the present case, because of the aforesaid distinction. Having considered the entirety of circumstances canvassed by the assessee, which are based on bonafide considerations, it deserves to be construed that there existed good and sufficient reasons to mitigate the default in question, and thus, the first proviso to section 221(1) of the Act clearly comes to the rescue of the assessee, and the penalty levied under section 221(1) r.w.s. 201(1) of the Act by the Assessing Officer deserves to be set-aside. We hold so. 7.4 In the result, the order of the CIT(A) is set-aside and Assessing Officer is directed to delete the penalty of ₹ 5,10,000/- imposed under section 221(1) r.ws. 201(1) of the Act. Thus, appeal of the assessee in ITA NO.4045/Mum/2015 is allowed, as above. 8. It was a common point between the parties that the facts and circumstances in ITA No. 4046/Mum/2015 for assessment year 2012- 13 are pari-materia to those considered by us in ITA No. 4045/Mum/2015 for assessment year 2011-12; thus, our decision therein shall apply mutatis mutandis in the appeal for assessment year 2012-13 also. 9. In the result, both the appeals of the assessee are all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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