2018 (3) TMI 53 - HC - Income Tax

Interest payable for the belated payment in terms of Section 201(1A) - Held that - Admittedly, the petitioner has paid only ₹ 3 lakhs and defaulted in payment of monthly instalments. Therefore, the indulgence shown by the Department vide its communication dated 31.3.2017 does not, any longer, appear to enure to the benefit of the petitioner. As rightly pointed out by the learned Senior Standing Counsel appearing for the respondent, teachers would become liable for payment of interest under Section 234A, B and C, which should also be fastened on the petitioner. There is no error in the impugned communication dated 01.1.2018, which is one more opportunity granted to the petitioner. The Department has rightly initiated prosecution and it appears that the petitioner has challenged the same on certain technical grounds by filing, which have been entertained, an order of interim stay has been granted and the personal appearance of the directors has been dispensed with. Thus, considering the facts and circumstances of the case, no indulgence can be granted to the petitioner and the impugned communication does not call for interference.

Summary

Issues:
Non-remittance of tax deducted at source within stipulated time under Income Tax Act, 1961; Granting of instalment scheme by respondent Department; Default in payment of instalments by petitioner; Liability of interest under Section 234A, B, and C on petitioner; Challenge to prosecution initiated by Department.

Analysis:
The judgment pertains to a case where the petitioner, an educational institution, failed to remit tax deducted at source within the prescribed time under the Income Tax Act, 1961. The respondent Department had initially granted the petitioner an indulgence by allowing them to clear the outstanding amount in 10 monthly instalments, subject to payment of interest chargeable under Section 220(2) of the Act. However, the petitioner defaulted by paying only &8377; 3 lakhs and missing subsequent instalments. Consequently, the Department issued a communication dated 01.1.2018, providing another opportunity to the petitioner. The court noted that the Department had rightly initiated prosecution against the petitioner, who had challenged the same on technical grounds. The court found no error in the impugned communication and dismissed the writ petitions, stating that no further indulgence could be granted to the petitioner.

The judgment highlights the importance of adhering to tax payment obligations and the consequences of defaulting on instalment schemes granted by tax authorities. It underscores the liability of interest under Section 234A, B, and C on the petitioner, emphasizing the legal obligations of educational institutions in fulfilling their tax responsibilities. The court's decision to dismiss the writ petitions signifies the strict approach towards non-compliance with tax laws and the limited scope for leniency once opportunities for compliance have been provided. The judgment also acknowledges the petitioner's right to approach the Authorities for further recourse, indicating the availability of legal remedies despite the dismissal of the writ petitions.