TaxTMI 
TaxTMI 
2025 (4) TMI 2150
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....der dated 14/09/2021 bearing DIN KNP/95/14092021/00182. The penalty of Rs. 1462179/- deserves to be deleted in whole. 4) That Ld CIT(A) completely failed to appreciate the facts that the appellant correctly deducted the TDS within time as prescribed under Law, however, account of non availability of funds and had on continuous disruption in business the same could not deposited in the account of the central government. 5) That the Ld. CIT(A) completely ignored the facts that the appellant sue motto in its audited financial statements, declared the TDS payable as its Liability much before the survey proceedings 133A(2A), which conducted on 23/01/2017. 6) That Ld. CIT(A) failed to appreciate the claim of the appellant that the provisions of section 271C are not attracted in the instant case of the appellant. 7) That the appellant craves the leave to add, modify, alter, delete any of the ground/s of appeal either before or at the time of hearing in the above appeal. 3. The solitary issue in the present case pertains to levy of penalty u/s.271C of the Act. The orders of the authorities below reveal that the penalty was levied for violation on the ....
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.... The relevant provisions are as under: - "Section 201(1A) of the Act Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest, - (i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and (ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub- section (3) of Section 200: Section 271C of the Act 271-C. 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 b....
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....l. 7.6 As per Section 271C(1)(a), if any person fails to deduct the whole or any part of the tax as required by or under the provisions of Chapter XVIIB then such a 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. So far as failure to pay the whole or any part of the tax is concerned, the same would be with respect to Section 271C(1)(b) which is not the case here. Therefore, Section 271C(1)(a) shall be applicable in case of a failure on the part of the concerned person/assessee to "deduct" the whole of any part of the tax as required by or under the provisions of Chapter XVIIB. The words used in Section 271C(1)(a) are very clear and the relevant words used are "fails to deduct." It does not speak about belated remittance of the TDS. As per settled position of law, the penal provisions are required to be construed strictly and literally. As per the cardinal principle of interpretation of statute and more particularly, the penal provision, the penal provisions are required to be read as they are. Nothing is to be added or nothing is to be taken out of the penal provision. Therefore, on pl....
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....s concerned, at the outset, it is required to be noted that the said circular as deals with the circumstances under which Section 271C was introduced in the Statute, for levy of penalty. Paragraph 16.5 of the above Circular reads as follows: "16.5: Insertion of a new section 271C to provide for levy of penalty for failure to deduct tax at source- under the old provisions of Chapter XXI of the Income Tax Act no penalty was provided for failure to deduct tax at source. This default, however, attracted prosecution under the provisions of Section 276B, which prescribed punishment for failure to deduct tax at source or after deducting failure to pay the same to the Government. It was decided that the first part of the default, i.e., failure to deduct tax at source should be made liable to levy of penalty, while the second part of the default, i.e., failure to pay the tax deducted at source to the Government which is a more serious offence, should continue to attract prosecution. The Amending Act, 1987 has accordingly inserted a new Section 271C to provide for imposition of penalty on any person who fails to deduct tax at source as required under the provisions of Chapter XVIIB ....