2019 (8) TMI 506 - AT - Income Tax

Penalty u/s 271C - non-remittance of TDS deducted to the Government account - HELD THAT - In the present case, the assessee has deducted the TDS, but not remitted to the Government account, for that he has not given any satisfactory explanation either before the Assessing Officer nor before the CIT(A). Even before us, the assessee has not given any satisfactory explanation. We find that similar issue came up before this Tribunal in the case of M/s. Esskay Shipping Pvt. Ltd. Vs. JCIT 2017 (10) TMI 1210 - ITAT VISAKHAPATNAM and the Tribunal by considering the judgment of the Hon'ble Kerala High Court in the case of US Technologies P. Ltd. 2009 (6) TMI 966 - KERLA HIGH COURT has held that the provisions of section 271C are applicable not only failure to deduct tax but also failure to remit the tax deducted to the Government account. We find no infirmity in the order passed by the ld. CIT(A) - Decided against assessee.

Issues Involved:
1. Applicability of Section 271C for non-remittance of TDS deducted to the Government account.
2. Assessment of reasonable cause for non-remittance of TDS.
3. Consideration of mitigating circumstances for non-deduction and non-remittance of TDS.

Issue-wise Detailed Analysis:

1. Applicability of Section 271C for Non-remittance of TDS Deducted to the Government Account:
The primary issue in this appeal is whether Section 271C applies to cases where the TDS has been deducted but not remitted to the Government account. The assessee argued that Section 271C applies only to the non-deduction of TDS and not to the non-remittance of TDS. However, the Tribunal, following the judgment of the Hon'ble Kerala High Court in the case of US Technologies International (P) Ltd. Vs. CIT, held that Section 271C applies to both the failure to deduct tax and the failure to remit the deducted tax to the Government account. The Tribunal emphasized that the deductor is duty-bound to remit the deducted taxes into the Government account in compliance with Section 201(1) of the Act.

2. Assessment of Reasonable Cause for Non-remittance of TDS:
The assessee contended that the delay in remittance was due to the periodic preparation of books of accounts and financial constraints. However, the Tribunal noted that no satisfactory explanation was provided either before the Assessing Officer or the CIT(A). The Tribunal cited the case of M/s. Esskay Shipping Pvt. Ltd. Vs. JCIT, where it was held that financial crisis does not constitute a reasonable cause for non-remittance of TDS. The Tribunal upheld the CIT(A)'s observation that the assessee failed to show any reasonable cause for the default committed.

3. Consideration of Mitigating Circumstances for Non-deduction and Non-remittance of TDS:
The assessee also raised an alternative plea regarding mitigating circumstances for non-deduction of TDS, attributing it to an oversight by the Finance Manager. The Tribunal referred to the Hon'ble Kerala High Court's observation that there can be no justifying circumstances for the delay in remittance of deducted tax. The Tribunal found that the assessee did not make immediate payments even after the default was pointed out during the survey, and only made payments after the order under Section 201(1) & 201(1A) was passed. Therefore, the Tribunal concluded that the mitigating circumstances claimed by the assessee were not applicable in this case.

Conclusion:
The Tribunal dismissed the appeal filed by the assessee, affirming that Section 271C applies to both the failure to deduct tax and the failure to remit the deducted tax to the Government account. The Tribunal found no reasonable cause or mitigating circumstances for the non-remittance of TDS and upheld the penalty levied by the Addl. CIT(TDS). The judgment of the Hon'ble Bombay High Court in the case of Reliance Industries Ltd. was found to be not applicable to the present case due to differing facts. Thus, the appeal filed by the assessee was dismissed, and the order of the CIT(A) was upheld.

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