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2019 (8) TMI 506

..... that he has not given any satisfactory explanation either before the Assessing Officer nor before the 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 [2017 (10) TMI 1210 - ITAT VISAKHAPATNAM] and the Tribunal by considering the judgment of the Hon'ble Kerala High Court in the case of US Technologies P. Ltd. [2009 (6) TMI 966 - KERLA HIGH COURT] has held that the provisions of section 271C are applicable not only failure to deduct tax but also failure to remit the tax deducted to the Government account. We find no infirmity in the order passed by the ld. CIT(A) - Decided against assessee. - ITA No. 462/VIZ/2017 - 7-8-2019 - Shri V. Durga Rao, Hon ble Judicial Member And Shri D.S. Sunder Singh, Hon ble Accountant 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 .....

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..... cted TDS therefore there is no failure on the part of the assessee to deduct TDS, therefore section 271C has no application. The ld. CIT(A) after considering the explanation of the assessee observed that the assessee-deductor has not given any explanation for the impugned default committed and no reasonable cause was shown. Accordingly, penalty levied by the Addl.CIT (TDS) was confirmed. 4. On appeal before us, ld.AR has submitted that section 271C applies only for non-deduction of TDS and not for remittance to the Government account. He relied on the judgment of the Hon'ble Bombay High Court in the case of Reliance Industries Vs. CIT & Ors. in Income Tax Reference No. 13/2000, dated 20/17/2015. 5. On the 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 .....

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..... es for failure to deduct tax at source or/and failure to deposit the deducted tax in Government account. The Hon'ble Kerala High Court in the above referred to case, has considered and held that both will attract penalty under section 271C of the Act. For the sake of convenience, the relevant portion of the order is extracted as under:- 2. The first question raised is whether penalty could be levied under section 271C of the Act for non-payment of tax deducted at source. The contention of counsel for the appellant is that section 271C provides for penalty only for failure to deduct tax as required under Chapter 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 o .....

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..... nd proviso to section 194B of the Act. 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 provisions of Chapter XVII-B. So much so, in our view, failure to deduct or failure to remit recovered tax, both will attract penalty under section 271C of the Act. So much so, the contention of the appellant fails 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 .....

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..... as, non-deduction of TDS is concerned, it is submitted that due to mistake of the Finance Manager, TDS was not deducted. In this context, ld. CIT(A) has observed in his order that default committed by the assessee was pointed out during the survey in January, 2013, but assessee did not choose to make payment immediately, some amounts have been paid only after passing of the order 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. Accord .....

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