2006 (4) TMI 349 - AT - Income Tax

Summary

Issues Involved:
1. Recalculation of interest under Section 201(1A) for delay in TDS payment.
2. Levy of penalty under Section 272A(2)(g) for non-issuance of Form 16A.

Issue-Wise Detailed Analysis:

1. Recalculation of Interest under Section 201(1A):

The revenue appealed against the CIT(A)'s order directing the Assessing Officer to recalculate the interest charged under Section 201(1A) from the date of TDS deduction to the date of assessment of the payee or the date of actual TDS payment, whichever is earlier. The CIT(A) had restricted the levy of interest up to the date of completion of the assessment of the payees, arguing that since the payees had filed their returns and paid due taxes, there was no loss of revenue to the department. The CIT(A) relied on the Hyderabad Tribunal's decision in the case of Voltas Ltd. v. ITO, which held that interest is chargeable only up to the date of assessments of the payees if the assessments resulted in refunds.

The revenue contended that there is no provision in the Act allowing the withholding of deducted tax and argued that interest should be charged for the entire period of delay. The Tribunal upheld the CIT(A)'s decision, stating that the directions given by the CIT(A) were in accordance with the Voltas Ltd. case. The Tribunal noted that the CIT(A) had directed the Assessing Officer to verify the facts regarding the assessments in the hands of the payees and charge interest accordingly.

2. Levy of Penalty under Section 272A(2)(g):

The revenue also appealed against the CIT(A)'s order deleting the penalty levied under Section 272A(2)(g) for non-issuance of Form 16A. The assessee argued that the penalty was wrongly levied as they did not have the requisite information to fill up Form 16A, and that the TDS could not be deposited due to financial crunch. The CIT(A) accepted the assessee's plea, stating that in the absence of basic information for determining the penalty, the quantum of penalty could not be worked out. The CIT(A) also noted that the legislature had provided for charging interest for delayed payment of tax under Section 201(1A).

The revenue argued that non-availability of particulars regarding deposit of tax cannot be a ground for cancellation of penalty and that the assessee had a statutory obligation to deduct and deposit tax. The Tribunal agreed with the revenue, stating that the assessee could issue TDS certificates by mentioning that TDS had not been deposited till date. The Tribunal held that non-deposit of TDS itself is a default and the assessee cannot take shelter of that non-deposit for non-levy of penalty. The Tribunal referred to the decision of the Gujarat High Court in CIT v. J.L. Trivedi & Sons, which held that the doctrine of double jeopardy does not apply to income-tax proceedings.

The Tribunal concluded that the penalty was rightly levied by the Assessing Officer and that the CIT(A) was wrong in deleting the same. However, the Tribunal directed that the penalty should be restricted to the period of default up to which levy of interest had been upheld.

Conclusion:

- The appeals regarding the recalculation of interest under Section 201(1A) were dismissed, upholding the CIT(A)'s order to charge interest only up to the date of assessment of the payees or the date of actual TDS payment, whichever is earlier.
- The appeals regarding the levy of penalty under Section 272A(2)(g) were allowed, reversing the CIT(A)'s order and directing the Assessing Officer to levy penalty for the period of default up to which levy of interest had been upheld.