9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (3) TMI 525 - AT - Income TaxLevy of penalty u/s 272A(2)(g) and section 271C - not depositing TDS in time and also for not furnishing requisite TDS returns in time Default of non-deposit of TDS within the time prescribed in law u/s 271C - HELD THAT - As going through the decisions of the Hon ble Apex Court in US Technologies 2023 (4) TMI 418 - SUPREME COURT we see no reason to disagree with assessee that the Hon ble Apex Court has categorically held that default for delayed remittance of TDS does not attract any penalty u/s 271C of the Act. The language of section 271C of the Act is very clear and it attracts the levy of penalty only for the default to deduct tax at source. The Hon ble Apex Court noted that it does not speak about the belated remittance of TDS and noting that penalty provisions are to be strictly and literally read and nothing is to be added or taken out the Hon ble Court held that there could not be any penalty leviable on belated remittance of TDS after the same is deducted by the assessee under section 271C. Apex Court also referred to CBDT Circular No.551 dated 23.1.1998 and noted that it talked about the levy of penalty on failure to deduct TDS and noted that even the CBDT has taken note of the fact that no penalty is envisaged under section 271C of the Act for belated remittance of TDS. Considering all of the above the Hon ble Apex Court categorically held that no penalty under section 271C of the Act is leviable for default of not depositing TDS deducted. Penalty u/s 272A(2)(g) for the delayed filing of quarterly TDS returns in Forms 24Q and 26Q - When the matter was ultimately heard on 25th February 2025 both the parties admitted to the position of law noted by us that no penalty was leviable for the default in non/ delayed filing of TDS returns u/s 272A(2)(k) in the impugned year. That the same was leviable u/s 271H and the quantum of penalty also was at variance as against that provided u/s 272A(2)(g) of the Act. Accordingly since admittedly the penalty for default in furnishing of quarterly returns has been levied by invoking the provision of law which was not applicable in the impugned year at all the same we hold is not sustainable. Penalty levied for the delay in furnishing returns in Form No.24Q and 26Q was wrongly levied and confirmed by the ld.CIT(A) for all the reasons noted above. The order of the ld.CIT(A) is therefore set aside and the appeal of the assessee is allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment were: (i) Whether the penalty under section 271C of the Income Tax Act, 1961, is applicable for the delayed remittance of tax deducted at source (TDS) by the assessee. (ii) Whether the penalty under section 272A(2)(g) of the Act is applicable for the delayed filing of quarterly TDS returns in Forms 24Q and 26Q. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Penalty under Section 271C for Delayed Remittance of TDS Relevant Legal Framework and Precedents: Section 271C of the Income Tax Act provides for penalties in cases where there is a failure to deduct tax at source. The Tribunal considered the precedent set by the Supreme Court in the case of "US Technologies P. Ltd. vs. CIT," where it was held that section 271C does not impose penalties for mere delays in remittance of TDS after deduction. Court's Interpretation and Reasoning: The Tribunal noted that both the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] had relied on the Kerala High Court decision in "US Technologies vs. CIT" to justify the penalty. However, this decision was overturned by the Supreme Court, which clarified that section 271C does not cover penalties for delayed TDS remittance. Key Evidence and Findings: The Tribunal acknowledged that the assessee had indeed deducted TDS but failed to remit it within the prescribed time. However, the Supreme Court's decision was pivotal in determining that such a delay does not attract penalties under section 271C. Application of Law to Facts: The Tribunal applied the Supreme Court's interpretation, concluding that the penalty under section 271C was not applicable for the delayed remittance of TDS. Treatment of Competing Arguments: The Tribunal found the Department's reliance on the overturned Kerala High Court decision unpersuasive, given the Supreme Court's clear ruling. Conclusions: The Tribunal concluded that no penalty under section 271C could be levied for the delay in TDS remittance, directing the deletion of the penalty amount of Rs. 26,33,867/-. Issue (ii): Penalty under Section 272A(2)(g) for Delayed Filing of TDS Returns Relevant Legal Framework and Precedents: Section 272A(2)(g) deals with penalties for failing to furnish TDS certificates, not for delayed filing of quarterly returns. The Tribunal also considered section 272A(2)(k), which pertains to delays in filing TDS returns, and noted the applicability of section 271H for defaults occurring after July 1, 2012. Court's Interpretation and Reasoning: The Tribunal found that the penalty was incorrectly levied under section 272A(2)(g) for delayed filing of returns, which should have been considered under section 272A(2)(k) or section 271H. Key Evidence and Findings: The Tribunal noted that the delay in filing was related to TDS returns, not the certificates covered by section 272A(2)(g). The default occurred in financial years 2014-15 and 2015-16, post-July 1, 2012, when section 271H became applicable. Application of Law to Facts: The Tribunal determined that the penalty was not sustainable under section 272A(2)(g) due to the misapplication of the provision and the subsequent legal framework under section 271H. Treatment of Competing Arguments: The Tribunal acknowledged the Department's position but emphasized the correct legal provisions and the inapplicability of section 272A(2)(g) for the specific default. Conclusions: The Tribunal set aside the penalty under section 272A(2)(g), allowing the assessee's appeal. 3. SIGNIFICANT HOLDINGS Core Principles Established: The judgment reinforced that section 271C penalties are not applicable for delayed TDS remittance, aligning with the Supreme Court's interpretation. It also clarified the applicability of section 271H for post-July 2012 defaults in filing TDS returns, distinguishing it from section 272A(2)(g). Final Determinations on Each Issue: The Tribunal directed the deletion of the penalty under section 271C for delayed TDS remittance and set aside the penalty under section 272A(2)(g) for the delayed filing of TDS returns, allowing all appeals by the assessee.
|
