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2020 (3) TMI 177 - HC - Income Tax


Issues:
1. Correctness and legality of the order dated 07.10.2016 passed by Income Tax Appellate Tribunal, Bangalore Bench 'C', Bangalore.
2. Levy of penalty under section 221 of the Income-tax Act, 1961.
3. Financial difficulties leading to non-remittance of TDS by the assessee.
4. Assessment of penalty amount and its modification by the Income Tax Appellate Tribunal.

Analysis:

Issue 1: Correctness and legality of the tribunal's order
The appellant challenged the order passed by the Income Tax Appellate Tribunal, Bangalore Bench 'C', Bangalore, dated 07.10.2016, regarding the levy of penalty. The tribunal modified the penalty amount from ?77,95,155/- to ?20,55,573/-, which was the primary contention in this appeal.

Issue 2: Levy of penalty under section 221 of the Income-tax Act
The penalty was initiated under section 221 of the Income-tax Act due to the non-remittance of TDS by the assessee. The Assessing Officer levied a penalty of ?77,95,155/-, which was challenged by the appellant. The Commissioner of Income Tax (Appeals) set aside the penalty, citing financial difficulties faced by the assessee and subsequent remittance of TDS as reasons.

Issue 3: Financial difficulties leading to non-remittance of TDS
The appellant contended that the non-remittance of TDS was due to acute liquidity crunch and not deliberate negligence. The Commissioner of Income Tax (Appeals) found merit in this argument, considering the financial difficulties faced by the assessee during the relevant period. However, the tribunal reversed this finding, emphasizing that financial stringency does not justify non-remittance of TDS to the government.

Issue 4: Assessment of penalty amount and its modification
The tribunal, while acknowledging the financial challenges faced by the assessee, restricted the penalty to ?20,55,573/- instead of the initial amount levied by the Assessing Officer. The tribunal's decision was based on a thorough evaluation of the facts and materials available, concluding that the financial stringency plea was not substantiated. The tribunal directed the Assessing Officer to reduce the penalty amount, considering the default status of the assessee under section 201(1) of the Act.

In conclusion, the High Court dismissed the appeal, noting that the tribunal's decision was well-founded, and there were no substantial grounds to challenge the penalty modification. The court upheld the tribunal's decision, emphasizing the default status of the assessee and the lack of challenge to the initial order.

 

 

 

 

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