2022 (9) TMI 823 - AT - Income Tax

Levy of interest for delayed payment of TDS - Interest liability u/s 201(1A) for delayed payment of tax (TDS) to the credit of exchequer and consequential levy of interest thereon u/s 220(2) - whether default or failure to pay the TDS within prescribed time limit is sufficient to hold the appellant as an assessee in default within the ambit of section 201(1) of the Act? - HELD THAT - For reason of delay in paying the amount of deducted tax (TDS) to the ex-chequer, the CPC-TDS by an order u/s 154 of the Act, held the appellant as the assessee in default in terms of provision of section 201(1) r.w.s. to 191 and consequently computed the compensatory interest u/s 201(1A) which remained uncontroverted by the appellant during the proceedings before CPC-TDS as well before both the appellate proceedings. Thus, in the present case, admittedly there was exfacie delay in depositing the deducted tax (TDS) within the stipulated due dates, for the reasons interest u/s 201(1A) found charged and such levy being automatic and without escapement finds force very same decision in Hindustan Coca-Cola Beverages Pvt. Ltd 2007 (8) TMI 12 - SUPREME COURT which was relied by the Ld. AR and which reads as under this will not alter the liability to charge interest u/s 201(1A) of the Act till the date of payment of taxes by the deductee-assessee. Since the said default de jure is outside the exclusion carved out by the proviso to section 201(1) of the Act and the levy of interest u/s 201(1A) for the aforestated default being automatic liability of interest u/s 220(2) being consequential one, finds no shelter, for the reasons the orders of tax authorities below being flawless, needs to be sustained. We find no merit in the grounds raised by the appellant consequently there remained no iota of doubt in confirming the orders appealed against in pleno, ergo ordered accordingly.

Summary

Issues:
Challenging separate orders of CIT(A) passed u/s 250 of Income-Tax Act, 1961 arising from intimation orders u/s 154 of the Act for five assessment years 2011-12 to 2015-16.

Analysis:

1. Identical Legal Issue:
The bunch of appeals challenged the orders of the CIT(A) arising from intimation orders u/s 154 of the Income-Tax Act for various assessment years. The legal issue was whether the default in paying TDS within the prescribed time is sufficient to hold the appellant as an 'assessee in default' under section 201(1) of the Act. The matter was heard together due to the identical legal issue involved in all appeals.

2. Facts and Background:
The appellant, a Municipal Council assessed to income tax, challenged the levy of interest u/s 201(1A) & u/s 220(2) and late fees u/s 234E before the CIT(A). The FAA confirmed the levy of interest but granted partial relief by deleting the late fees. The appellant then appealed to the Tribunal, arguing against the interest levied for delayed TDS payment.

3. Legal Arguments and Contentions:
The appellant argued that contractors must have declared TDS payments as income, thus should not be deemed 'assessee in default.' The department contended that interest u/s 201(1A) is automatic and justified. The Tribunal considered the arguments, legal provisions, and case laws cited by both parties.

4. Legal Interpretation and Decision:
The Tribunal analyzed section 201 of the Act, emphasizing that a person is deemed 'assessee in default' for failure to deduct or pay TDS. The exclusion under the proviso applies to failure to deduct TDS, not failure to pay after deduction. In this case, the appellant failed to pay TDS within the due dates, leading to interest u/s 201(1A) being charged automatically.

5. Conclusion and Order:
The Tribunal found no merit in the appellant's grounds, upholding the tax authorities' orders. The appeals were dismissed, affirming the levy of interest for delayed TDS payment. The judgment was pronounced on September 9, 2022, in accordance with ITAT Rules.

This detailed analysis of the legal judgment highlights the key issues, arguments, legal interpretations, and the final decision made by the Tribunal regarding the appellant's challenge to the interest levied for delayed TDS payment.