TMI Blog2019 (8) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... untant Member For the Assessee : Shri Samuel Nagadesi CA. For the Department : Shri D.K. Sonawal Sr.DR ORDER PER V. DURGA RAO, JUDICIAL MEMBER This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-2, Visakhapatnam, dated 13/06/2017 for the Assessment Year 2013-14. 2. Facts of the case, in brief, are that the assessee is a firm engaged in the business of export of rough granite slabs. During the course of TDS inspection in the office premises of the assessee-deductor, it was noticed by the AO (TDS) that the deductor had deducted tax at source u/sec. 194C 194H during the F.Y. 2012-13, but not remitted the same into the Government account within the stipulated due date, the quantum of such non-remitted TDS was found to be ₹ 6,99,878/-. Hence, the Addl.CIT(TDS) issued a show-cause notice to the assessee-deductor for levy of penalty u/sec. 271C. In response, the assessee vide letter dated 27/02/2014 has submitted that assessee is in the business of trading of Granite Blocks. The assessee is regularly deducting the tax as and when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other hand, ld.DR has submitted that the coordinate bench of this Tribunal has already considered the issue and by following the judgment of the Hon'ble Kerala High Court in the case of US Technologies P. Ltd. (supra) has held that the provisions of section 271C are applicable not only for failure to deduct tax but also failure to remit the tax deducted to the Government account and submitted that the same may be followed. 6. We have heard both the parties, perused the material available on record and gone through orders of the authorities below. 7. The only issue involved in this appeal is whether section 271C applies in a case where non-remittance of TDS deducted to the Government account or not. In the present case, the assessee has deducted the TDS, but not remitted to the Government account, for that he has not given any satisfactory explanation either before the Assessing Officer nor before the ld.CIT(A). Even before us, the assessee has not given any satisfactory explanation. We find that similar issue came up before this Tribunal in the case of M/s. Esskay Shipping Pvt. Ltd. Vs. JCIT in ITA No. 631/VIZ/2014, dated 18/10/2017 and the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... XVII-B and for non-payment of tax, penalty provided is only for violation of sub-section (2) of section 115-O or section 194B of the Act. In other words, according to him if the assessee has made deduction from source on payments like salary, payment to contractors, payment on rent, etc. under various provisions of Chapter XVII-B, then no penalty could be levied if the assessee failed to remit the recovered tax. According to him failure to remit tax attracts penalty under section 271C only in respect of tax payable under sub-section (2) of section 115-O or section 194B of the Act. Standing counsel for the revenue contended that section 271C provides for penalty both for failure to deduct or to remit recovered tax and for both. In other words, according to him, penalty provided under section 271C also covers the situation where the assessee after deduction at source retains the recovered amount without payment to the department. In our view, the Tribunal while considering the appeal recast the section in its own way completely distorting its meaning. Originally there was no provision for penalty for failure to deduct tax or remit the deducted tax and the provision under section 276B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and we uphold the finding of the Tribunal dismissing the challenge against levy of penalty. 4. The next question to be considered is the quantum of penalty which in this case is above ₹ 1.1 crore. Counsel for the appellant referred to section 273B of the Act authorising the officer to waive or reduce the penalty if the defaulted assessee proves that there was reasonable cause for such failure which attracts penalty. Standing Counsel has referred to the findings on cash flow and the application of funds by assessee for other purposes and contended that there was no reasonable cause justifying the failure on the part of the assessee. He has further contended that even for earlier year assessee had remitted recovered tax with delay. In our view, the Tribunal has not considered challenge against quantum of penalty in so much details probably because in the penalty order it is stated that only minimum penalty is levied. So far as failure on the part of the assessee to remit the tax recovered at source is concerned, we do not think there can be any justifying circumstance for delay in remittance because assessee cannot divert tax recovered for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 201(1) 201(1A) of the Act on 27/02/2013. Only thereafter in the month of March, further payments have been made. The corresponding interest under section 201(1A) has not been paid till date. The survey was conducted on 22/01/2013, the assessee only paid the amounts in the month of March after passing of the order under section 201(1) 201(1A) and therefore, it cannot be considered that non-deduction of tax by oversight of the Finance Manager, even it came to the notice of the assessee, it has paid only after two months. Therefore, in our opinion, the observations made by the Hon'ble Kerala High Court have no application to the assessee s case. In view of the above, we find no infirmity in the order passed by the ld. CIT(A) and accordingly interference is not called for. Accordingly, appeal filed by the assessee is dismissed. 8. We find no infirmity in the order passed by the ld. CIT(A). Insofar as judgment relied on by the assessee in the case of Reliance Industries Ltd., (supra) is concerned, facts are entirely different and not related to the issue involved in this appeal, therefore, no application to the present case. Thus, this appeal filed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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