TMI Blog2021 (12) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... culties of assessee is facing, if it was in defaulter for a short period. But in the present case, conduct of the assessee is that it continuously defaulting the payment of TDS amount to the government account by one was other reasons without remitting the same to the government account and these action of defaulter cannot be condoned by deleting the penalty. Accordingly, levy of penalty is confirmed. However, the Assessing Officer levied penalty at very exorbitant rate that 5% pm for which there is no legal sanction when the department itself has paid interest at 6% pa to the assessee on the refund due to the assessee. Being so, in our opinion, it is reasonable and fair to levy penalty at 1% pm i.e. 12% pa instead of 5% pm levied by AO. Accordingly, we direct the AO to recompute the penalty for both Assessment Years at 1% pm or 12% pa. Accordingly, the appeal of the assessee is partly allowed. - ITA. Nos. 1283 & 1284/Bang/2017 (Assessment Years: 2013-14 & 2014-15) - - - Dated:- 22-11-2021 - SHRI N.V. VASUDEVAN, VICE-PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER Assessee by : Shri Suresh Muthukrishnan, CA Revenue by : Shri Priyadarshi Mishra, Addl. CIT (DR) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices; in industry parlance, it is known as 'charter services' such services were provided by using helicopters and fixed winged aircraft. [ii]The appellant had serious financial constraints during the impugned assessment year 2013- 14, wherein several factors were beyond the control of the appellant which contributed to such awkward situation, which actual led to irregular disbursement of salaries to its employees including the pilots. Disbursement of payments were not made on due dates but belatedly depending upon the availability of funds. It is submitted that disbursements of salaries were not made to all the employees on same day, different employees were paid on different dates and that too payments were not of the full amount of salary. [iii] As mentioned earlier since the appellant is engaged in the business of providing charter services using helicopters and aircraft and for running the same pilots are required to fly the same. Pilots will not fly the helicopters and aircraft if they are not paid their salaries, yet the appellant could not disburse the salaries promptly to its employees as the appellant was bleeding with losses and was not able to manage funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of interest payable under sub-section (2) of section 220, be liable, by way of penalty, to pay such amount as the [Assessing] Officer may direct, and it1 the case of a continuing default, such further amount or amounts as the [Assessing] Officer may, from time to time, direct, so, however, that the total amount of penalty does not exceed the amount of tax in arrears : Provided that before levying any such penalty, the assessee shall be given a reasonable opportunity of being heard : [Provided further that where the assessee proves to the satisfaction of the [Assessing] Officer that the default was for good and sufficient reasons, no penalty shall be levied under this section.] Explanation For the removal of doubt, it is hereby declared that an assessee shall not cease to be liable to any penalty under this sub-section merely by reason of the fact that before the levy of such penalty he has paid the tax.] (2) Where as a result of any final order the amount of tax, with respect to the default in the payment of which the penalty was levied, has been wholly reduced, the penalty levied shall be cancelled and the amount of penalty paid shall be refunded. 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t automatic. It has also held that discretion has to be exercised by the AO keeping the relevant factors in mind. [v] Thus, from the act of the learned authorise below one can clearly state that the levy of penalty is without any application of mind, arbitrary, based on suspicion and surmises and not based on merits of the matter or proper application of mind. 15. Whether the financial difficulty and paucity of funds constitute good and sufficient reasons for not imposing penalty under section 221 of the Act: [i] It is submitted that as per the second proviso to section 221 of the Act there is an exception as regard to levy and imposition of penalty under section 221 of the Act, which reads as under: [Provided further that where the assessee proves to the satisfaction of the [Assessing] Officer that the default was for good and sufficient reasons, no penalty shall be levied under this section.] [ii] It is submitted that the learned authorities have stated that the financial stringency cannot be accepted as a 'good and sufficient reason' since the default is on account of non remittance of TDS, are different footing vis-a-vis cases of default involving other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Image Health Care Limited, in ITA No. 658/Hyd/2015, order dated 01/12/2015. [ix] In view of the above submissions and also the parity of reasoning of the judicial precedents as set out above it is humbly prayed before this Hon'ble Tribunal to vacate the erroneous finding rendered by the learned authorities below and consequently levy and imposition of penalty under section 221 of the Act requires to be deleted in toto for the advancement of substantial cause of justice. 16. Whether the finding of Commissioner of Income-tax (Appeals] that there is no financial difficulty in the case of the appellant is justified: [i]. The learned Commissioner of Income-ta;( [Appeals] has erroneously held as under: that the there was a huge availability of cash as at 31/03/2013; that there was huge net cash generated from investing activities [sic] Operational activities; and that the payments have been made to unsecured loans i.e. to the related parties and consequently there is no financial stringency. [ii] In this regard the appellant wishes to state and submit that the finding of the learned Commissioner of Income-tax [Appeals] is erroneous and has failed to un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of financial crunch is far from truth. In this regard the appellant wishes to state and submit that the appellant has not made any payments to its related party transactions. The appellant has allotted shares to the related parties from whom the appellant had availed loans and no actual payments have been made to such persons as alleged by the learned Commissioner of Income-tax. The finding of learned Commissioner of Income-tax is baseless and far from actual fact. Thus, the learned Commissioner of Income-tax [Appeals] is not justified on facts in erroneously holding that the appellant has made payments to its related parties and the same requires to be deleted for the advancement of substantial cause of justice. [vi] In view of the above submissions the appellant humbly prays before this Hon'ble Tribunal to vacate the erroneous findings given by the learned Commissioner of Income-tax [Appeals] as regard to huge availability of cash as at 31/03/2013; that there was huge net cash generated from investing activities [sic] Operational Activities; and that .the payments have been made to unsecured Loans i.e. to the related parties and consequently there is no financial stringenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e used government money for its business purpose to clear of its dues which shall not be appreciated and the levy of penalty should be confirmed. 5. We have heard both the parties and perused the material on record. In the present case, it is an admitted fact that the assessee deducted the TDS from various payments made by assessee and the TDS has been recovered from various parties which requires to be deposited to the government account within the stipulated time. The amounts were not remitted to the government account within the stipulated time. The default in non-remittance was detected during the course of survey that the tax deducted at sources were remitted only after the survey and after the assessee was declared as an assessee in default u/s. 201(1) of the IT Act. There is no dispute regarding the quantum of TDS to be remitted to the government account. The assessee has also not filed any appeal against the order u/s. 201(1) and 201(1A) of the IT Act. Now the contentions here is that the Assessing Officer levied exorbitant penalty for non-remitting of TDS within the stipulated time which requires to be deleted. In this case, department is only asking the assessee to rem ..... 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