9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (6) TMI 1160 - AT - Income TaxPenalty u/s 271C - assessee did not remit the TDS on the due date - Genuine hardship due to accumulated loss - amount with interest was deposited before issuance of notice - HELD THAT - As the major part of the TDS relates to remuneration to the Directors credited to the unsecured loan account - TDS was payable on that amount also, but the same could not be remitted due to acute fund shortage for the assessee-company. The assessee-company had incurred huge loss during the relevant financial year and accumulated losses as on 31.03.2010. In addition to the heavy losses, the assessee had huge liability towards bank loan and other borrowings, which is evident from the balance sheet placed on record. In the subsequent years, the bank had taken action under SARFAESI Act and taken possession of the resort and the resort was kept closed for a long time. It was also submitted that after bank had taken possession of the property, one of the NRI Directors had brought in additional funds and settled the dues to the bank and reopened the resort. After reopening due to Covid pandemic, resort was again closed in the month of March 2020. Therefore, the total accumulated losses as per the books of account as on 31.03.2021 is Rs.32,17,77,436. Only because of these hardships there was delay in remitting the TDS. Therefore, there is reasonable cause as envisaged u/s 273B for the delayed remittance of TDS. Moreover, the assessee had paid the entire TDS amount along with interest on 30.04.2011, much prior to notice u/s 274 r.w.s. 271C of the I.T.Act was issued to the assessee-deductor on 05.03.2013. Therefore, for the aforesaid reasoning and the judgment of Lakshadweep Development Corporation Ltd. 2019 (3) TMI 333 - KERALA HIGH COURT we delete the penalty imposed u/s 271C - Assessee appeal allowed.
Issues involved:
Delay in filing appeal, Justification of penalty under section 271C of the Income Tax Act. Analysis: 1. Delay in filing appeal: The appeal was filed with a delay of one day, and the assessee submitted a petition for condonation of delay citing financial problems as the reason. The Tribunal found no fault on the part of the assessee and accepted the reasons provided for the delay. Consequently, the delay was condoned, and the appeal was heard on its merits. 2. Justification of penalty under section 271C: The primary issue raised in the appeal was whether the penalty imposed under section 271C of the Income Tax Act was justified. The Additional CIT had imposed a penalty of Rs. 9,12,060 for the delay in remitting TDS. The assessee argued that there were reasonable causes for the delay, such as financial difficulties and the majority of TDS being related to directors' remuneration. However, the CIT(A) upheld the penalty, stating that the assessee was a habitual defaulter in depositing taxes and that the provisions of section 273B were not applicable in this case. 3. Judicial Interpretation and Precedents: The Tribunal referred to the Full Bench judgment of the Hon'ble Kerala High Court in the case of Lakshadweep Development Corporation Ltd. v. Addl.CIT & Anr., which overturned previous judgments and clarified the application of penalties under section 271C. The Full Bench held that penalties under section 271C for non-remittance of TDS are limited to specific circumstances, as outlined in the Income Tax Act. 4. Decision and Rationale: After considering the facts of the case and the legal interpretations provided by the Full Bench judgment, the Tribunal concluded that the penalty imposed under section 271C was not justified. The Tribunal noted that the delay in remitting TDS was due to severe financial hardships faced by the assessee, leading to accumulated losses and other liabilities. Additionally, the assessee had paid the entire TDS amount along with interest before the notice of penalty was issued. Based on these reasons and the precedent set by the Full Bench judgment, the Tribunal decided to delete the penalty imposed under section 271C. In conclusion, the appeal was allowed, and the penalty under section 271C of the Income Tax Act amounting to Rs. 9,12,060 was deleted.
|
