TaxTMI 
TaxTMI 
2017 (10) TMI 1210
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.... was not deducted on the following payments:- "a) The berth hire charges of Rs. 45,51,891/- was paid by the deductor, but tax deductible on such expenditure as required under section 194-I amounting to Rs. 4,55,189/- was not deducted as on the date of survey. b) An amount of Rs. 34,314/- was made by the deductor to Sakshi Paper towards "advertisements charges, but TDS deductible fo Rs. 686/- was not deducted as required under section 194-C of the Act. c) The assessee-deductor has paid an amount of Rs. 1,30,000/- towards legal expenses but TDS deductible on such expenditure to the tune of Rs. 43,000/- was not deducted as required under section 194-J of the Act. d) During the year, as sum of Rs. 45,05,990/- was paid by the deductor to Dr. K. Nageswara Rao, President of the company towards remuneration and Rs. 1,99,758/- was paid to Smt. K. Krishna Kumari, one of the Directors of the company but tax deductible under section 192 of the Act on such remuneration paid to the deductor amounting to Rs. 13,30,61//- was not deducted. e) The assessee-deductor has paid taxi hire charges to the tune of Rs. 1,76,937/- to different persons but TDS deductible of Rs. 3,539/- was not de....
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....e ld. CIT(A), it was submitted that the provisions of section 271C would not be applicable to a case of non-remittance of TDS, as it deals with the default for non-deduction of tax. It was further submitted before the ld. CIT(A) that the provisions of section 271C would apply for non-remittance of TDS only, when it related to section 115-O or section 194-B of the Act. It was further submitted before the ld. CIT(A) that the decision of the Hon'ble Kerala High Court in the case of US Technologies International P. Ltd., (supra) has no application to the assessee's case. Alternatively, even it applies then the mitigating facts as considered by the Hon‟ble High Court have to be followed in assessee's case also. 5. The ld. CIT(A) after considering the arguments of the assessee's representative observed that so far as non-deduction of TDS, amounting to Rs. 18,06,745/-, the argument of the assessee for non-deduction of TDS was due to oversight by the Finance Manager, the assessee failed to deduct tax and there was no malafide intention. In this regard, it is relevant to note that the above defaults was pointed out during the course of survey conducted in January, 2013, but the a....
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....servations made by the Hon'ble Kerala High Court have no application to the facts of the assessee's case, hence, appeal filed by the assessee was dismissed and confirmed the order of the Assessing Officer. 8. Learned Authorized Representative for the assessee has submitted that section 271C applies only for non-deduction of TDS and no application to TDS deducted and not deposited. Alternatively, he submitted that if the judgment of Hon'ble Kerala High Court is applied, it has to be in toto that mitigating circumstances has to be considered to reduce the penalty. 9. On the other hand, learned Departmental Representative strongly supported the orders passed by the authorities below. 10. We have heard both the sides, perused the material available on record and orders of the authorities below. 11. A search was conducted in the case of the assessee and it is found that the assessee has deducted TDS of Rs. 1,18,91,009/-, but not deposited in the Government account and also noted that the assessee failed to deduct TDS amount of Rs. 18,06,745/-. The Assessing Officer after following due procedure, order was passed by raising demand of Rs. 1,36,94,034/- under section 201(1) and....
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....ut 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 only authorised prosecution for violation. However, section 271C was introduced by the Direct Laws (Amendment) Act, 1987 with effect from 1-4-1989 providing for penalty for failure to deduct or remit tax under Chapter XVII-B, sub-section (2) of section 115-O and section 194B of the Act. For easy reference we extract hereunder section 271C. "271C. Penalty for failure to deduct tax at source.-(1) If any person fails to- (a ) deduct the whole or any part of the tax as required by or under the provisions of Chapter XVII-B; or (b ) pay the whole or any part of the tax as required by or under- (i)sub-section (2) of section 115-O; or (ii )the second proviso to section 194B, then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay as aforesaid. (2) Any penalty imposable under sub-section (1) shall be imposed by....
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....there can be any justifying circumstance for delay in remittance because assessee cannot divert tax recovered for the Government towards working capital or any other purpose. So much so, in our view, defence available under section 273B does not cover failure in payment of recovered tax. However, if there is failure to remit on account of failure to recover for any reason whatsoever, then the case calls for reduction of penalty, if not waiver. Similarly, we feel recovery and remittance of tax, though with delay but with interest, before detection is certainly a mitigating circumstance for waiver or reduction of penalty. Further, if full amount of tax with interest was paid before levy of penalty, we feel quantum reduction is called for by the Assessing Officer. Therefore, we direct the Assessing Officer to reconsider the quantum of penalty by giving one more opportunity to the assessee to furnish facts in the light of our observations above. The appeal is accordingly, disposed of upholding the order of the Tribunal on the levy of penalty, but with direction to the Assessing Officer to grant further reduction in penalty, if any, new fact or circumstance is brought to the notice of t....