| The Tax Publishers2023 TaxPub(DT) 2300 (SC) : (2023) 453 ITR 0644 INCOME TAX ACT, 1961
Section 271C
Where assessee remitted TDS, though belatedly, it was not a case of non-deduction of the TDS at all, and, therefore, assessee was not liable to pay penalty under section 271C.
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Penalty under section 271C - Failure to deposit TDS - Leviability of -
Assessee deducted TDS from various payments made by but TDS was not deposited within the prescribed dates. AO thus levied penalty under section 271C relying on CBDT's Circular No. 551, dated 23-1-1998. Held:CBDT's Circular No. 551, dated 23-1-1998 talks about the levy of penalty on failure to deduct tax at source. It also takes note of the fact that if there is any delay in remitting the tax, it would attract payment of interest under section 201(1A) and because of the gravity of the mischief involved, it may involve prosecution proceedings as well, under section 276B. If there is any omission to deduct the tax at source, it may lead to loss of Revenue and hence remedial measures have been provided by incorporating the provision to ensure that tax liability to the said extent would stand shifted to the shoulders of the party who failed to effect deduction, in the form of penalty. On deduction of tax, if there is delay in remitting the amount to Revenue, it has to be satisfied with interest as payable under section 201(1A), besides the liability to face prosecution proceedings, if launched in appropriate cases, in terms of section 276B. Even CBDT has taken note of the fact. No penalty is envisaged under section 271C for belated remittance/payment/deposit of the TDS. Even otherwise, the words 'fails to deduct' occurring in section 271C(1)(a) cannot be read into 'failure to deposit/pay the tax deducted'. Therefore, on true interpretation of section 271C, there would not be any penalty leviable under section 271C on mere delay in remittance of the TDS after deducting the same by the concerned assessee.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
M.R. SHAH & C.T. RAVIKUMAR, JJ.
US Technologies International (P) Ltd. v. CIT
Civil Appeal No. 7934 of 2011 with Civil Appeal Nos. 1258-1260 of 2019
10 April, 2023
M.R. Shah, J.
1. Feeling aggrieved and dissatisfied with the impugned judgment(s) and order(s) passed by the High Court of Kerala at Ernakulam in confirming the levy of interest/penalty under section 271C of the Income Tax Act, 1961 (hereinafter referred to as the Act) on failure of the respective assessees to deposit the tax deducted at source (TDS) (or belated remittance of the TDS), the respective assessees have preferred the present appeals.
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