2025 (9) TMI 1673

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....57/- levied under section 271C of the Income-tax Act, 1961 [hereinafter referred to as "the Act"]. The penalty had been imposed by the Joint Commissioner of Income-tax, TDS Range, Vadodara vide order dated 28.02.2023, in proceedings initiated for failure to deduct tax at source on interest under section 194A of the Act. 2. Facts of the Case 2.1 The brief facts, as culled out from the penalty order under section 271C passed by the Joint Commissioner of Income-tax, TDS Range, Vadodara, are that during the Financial Year 2015-16 the assessee made payment of interest amounting in aggregate to Rs. 42,51,571/-. On verification of records, it was noticed that no tax had been deducted at source on the said payment as required by section 194A.....

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....ng to section 271C, it was observed that since the assessee had not deducted and deposited tax on the interest payments as required under section 194A, it was liable for penalty. The CIT(A) further held that the assessee did not demonstrate any reasonable cause for the lapse and had offered no satisfactory explanation for the default. Accordingly, the CIT(A) dismissed the appeal. 3. Aggrieved by the order of CIT(A) the assessee is in appeal before us raising following grounds: 1. The Learned CIT (Appeals) erred in disregarding the decision of the Honourable Kerala High Court contested by U.S. Technologies Pvt.Ltd. before the Hon'ble Apex Court filed during the course of appellate proceedings and further erred in confirming t....

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....squarely governs the issue. The Hon'ble Apex Court has held that "on mere belated remitting the TDS after deducting the same by the concerned person/assessee, no penalty shall be leviable under Section 271C. It is further explained that the "words 'fails to deduct'... cannot be read into 'failure to deposit/pay the tax deducted'." 5.2 In view of the above authoritative pronouncement, if in fact the assessee had deducted tax and only remitted it belatedly with interest, penalty under section 271C would not be attracted. Conversely, if the default is one of non-deduction itself under section 194A, the Assessing Officer would have to examine the assessee's claim of financial difficulties and the plea of subsequent compliance on the touchsto....