2011 (9) TMI 638

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.... examination of the Income-tax Officer's order dated 25-2-2009, it was seen that the assessee firm had not deducted tax on interest of Rs. 9,50,05,000/- as required to be made u/s.194A of the I.T. Act. The tax to be deducted is Rs. 95,00,500/-. Therefore, the Jt.CIT(TDS) slapped the penalty notice u/s.271C on the assessee. Assessee vide its letter dated 24-6-2009 submitted that non deduction of tax was not deliberate and that there was a bonafide omission on their part in not deducting the tax. Further it was submitted that since the recipient concerns have already included the interest amount and paid tax on the same, technically there is no loss of revenue to the Government. It was the further submission that assessee has also paid intere....

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....rities below. On the other hand, the ld. Jr.DR would submit that all the accounts are audited by the experienced auditors. The ld. CIT(Appeals) remanded the matter for fresh consideration. Before the Assessing Officer the malafide has been established. Assessee repeated the same method of non deduction. There was no reasonable cause for non-deduction. The ld. CIT(Appeals) has already distinguished the decisions relied upon by the ld. counsel. Therefore it is not a plea to be accepted that there was ignorance on the part of the assessee. Assessee is repeating the same default. The observation of the Hon'ble Jurisdictional High Court in the case of assessee's sister concern as relied upon by the ld. counsel in the case of CIT v. Muthoot Banak....

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....eted, is the argument of the ld. counsel for the assessee. 5. We have considered rival submissions and perused the materials available on record. Deduction of tax at source is a convenient method of tax collection. Since it effects early realization and is less painful to the person from whose income such tax is deducted. Moreover, it saves time on the part of the I.T. Department inasmuch as of all calculations and other attendant to work or perform by the person responsible for payment. The person responsible for paying in this case is the assessee u/s.194A under the head interest other than 'Interest on securities'. So normally, the assessee is under an obligation to deduct tax and the person making the deduction of tax at source is requ....

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....t except in cases where the recipient furnish the requisite declaration or certificate to show less deduction or no deduction. 8. As we have already stated that the deduction of tax at source is only one of the modes of recovery of tax. In this case as contended by the ld. counsel for the assessee all the recipients paid the tax within the time. The argument of the ld. counsel even the assessee has deducted the TDS, the time for remitting to the exchequer of such TDS can be upto the month of October of each year, which is the time prescribed for the payment to the exchequer, so there is no loss to the Government also. Further the bonafide of the assessee has to be seen. This payment of interest portion has been disclosed in the assessee's ....