2021 (10) TMI 38 - HC - Indian Laws

Quantum of penalty - wrongful adjustments of the amount deposited by the petitioner towards Tax Deducted at Source (TDS) recovered from various parties including the respondents - non-issuance of TDS certificates to the respondents - arbitrary action of the Income Tax Department which is pending adjudication before the Jammu and Kashmir High Court - HELD THAT - The attempt of the petitioner throughout has been to delay execution proceedings by filing various petitions/applications on frivolous grounds. It has rightly been contended by the counsel for the respondents that the respondents are not concerned with the dispute between the petitioner and the Income Tax Department. If the TDS had been deducted by the petitioner from the payments made to the respondents, the petitioner is bound to furnish TDS certificates to the respondents. In the event the petitioner is unable to furnish TDS certificates, it would have to pay the said amounts to the petitioner. Nothing has been furnished by the petitioner to show that the amount deducted by it towards TDS has been deposited with the Income Tax Department. The petitioner has unjustifiably failed to make the payment of ₹ 5,60,000/- and ₹ 1,80,000/- to the respondents respectively, and it was only after the abovesaid order was passed by this Court on 1st September, 2021 that the said amounts have been paid to the respondents. The petitioner was well aware of the penalty imposed by the Executing Court by the impugned orders and despite the same, contested the same unsuccessfully for over two years. If the petitioner felt that the penalty being imposed was excessive, the petitioner should have challenged the impugned orders immediately. Petition dismissed.

Summary

Issues:
Challenge to penalty imposed in execution orders; Dispute with Income Tax Department affecting payments; Delay in challenging orders; Non-payment of penalty and costs; Failure to furnish TDS certificates; Justification for penalty imposition; Refund of amounts upon proof of TDS deposit.

Analysis:
The judgment deals with petitions under Article 227 challenging execution orders directing payment of sums to decree holders and imposing penalties. The petitioner contested the penalty as excessive due to a dispute with the Income Tax Department, which wrongfully recovered amounts, hindering TDS certificate issuance. The respondents argued for payment or proof of tax deposit, disassociating themselves from the tax dispute. The court noted the delay in challenging orders, with the petitioner filing petitions only after a recent order set payment deadlines. The petitioner's failure to pay penalties and costs promptly was highlighted, indicating a pattern of delaying tactics in execution proceedings.

The court emphasized the petitioner's obligation to furnish TDS certificates or pay the deducted amounts to the respondents. The petitioner's belated compliance with payment orders was noted, along with non-payment of imposed costs. The judgment underscored the petitioner's awareness of penalties and the need for immediate challenge if deemed excessive. The petitioner's actions led to the penalty escalation, justifying its imposition despite objections. The court rejected the petitioner's attempts to evade penalty payments, emphasizing the need for timely compliance with court orders and execution proceedings.

The respondents offered to refund amounts upon proof of TDS deposit or certificate issuance, demonstrating fairness in handling the matter. Ultimately, the court found no merit in the petitioner's challenges, affirming the penalty imposition and emphasizing the importance of fulfilling financial obligations promptly. The judgment serves as a reminder of the legal responsibilities in execution proceedings and the consequences of delaying compliance with court orders.