2023 (2) TMI 852 - AT - Income Tax

Tribunal upholds penalties for late TDS deposits by companies, assessees fail to justify delays

M/s. Meghalaya Minerals & Mines Ltd., M/s. Barak Valley Cements Ltd. Versus Income Tax Officer, TDS-1, Guwahati

The Tribunal upheld penalties under section 221 of the Income Tax Act for delayed TDS deposits by two companies, with penalties of Rs. 70,000 and Rs. ... Levy of penalty u/s 221 - delay in deposit of tax deducted at source (TDS) - HELD THAT:- As the case of assessee M/s. Barak Valley Cements Ltd., during the financial year 2016-17, assessee was required to deposit TDS arrears. As per the chart indexed with the order u/s 221 there is a delay of one month to twelve months in depositing such tax. Similarly, in case of M/s. Meghalaya Minerals & Mines Ltd., the TDS liability which the assessee was liable to deposit during various dates during the year. There is a delay of two months to twelve months. Details of such delay are also forming part of the order u/s 221. During the proceedings u/s 221 of the Act, no plausible reason was given by both the assessees for the said delay and even before the CIT(A), the assessees failed to appeal nor could place any evidence on record towards the reasons for such delay. We fail to find any infirmity in the findings of the ld. CIT(A) confirming the penalty u/s 221 - All the grounds of appeal raised by the assessees in these two appeals are dismissed. Issues:Levy of penalty under section 221 of the Income Tax Act for delay in depositing tax deducted at source (TDS).Analysis:Issue 1: Levy of penalty under section 221 of the Income Tax Act for delay in depositing TDSThe appeals were filed by the assessee against the orders of the Commissioner of Income Tax (Appeals) confirming the penalty under section 221 of the Income Tax Act for the delay in depositing TDS for the Assessment Year 2017-18. The appeals were heard together as the issues were identical. The undisputed fact was that the assessee companies had delayed the deposit of TDS arrears, with delays ranging from one to twelve months for M/s. Barak Valley Cements Ltd. and two to twelve months for M/s. Meghalaya Minerals & Mines Ltd. The assessee failed to provide any plausible reasons for the delays during the proceedings under section 221 of the Act and also before the Commissioner of Income Tax (Appeals).The Tribunal found no infirmity in the Commissioner's findings confirming the penalty under section 221 of the Act. The penalty was upheld at Rs. 70,000 for M/s. Meghalaya Minerals & Mines Ltd. and Rs. 2,70,000 for M/s. Barak Valley Cements Ltd. The grounds of appeal raised by the assessees were dismissed, and both appeals were consequently dismissed. The order was pronounced in the Court on 20th February 2023 at Guwahati.In conclusion, the Tribunal upheld the penalties imposed under section 221 of the Income Tax Act due to the delays in depositing TDS arrears by the assessees, as they failed to provide any valid reasons for the delays. The decision of the Commissioner of Income Tax (Appeals) was affirmed, and the appeals by the assessees were dismissed.