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TMI Blog2017 (10) TMI 1210X X X X Extracts X X X X X X X X Extracts X X X X ..... made. The corresponding interest under section 201(1A) has not been paid till date. The survey was conducted on 22/01/2013, the assessee only paid the amounts in the month of March after passing of the order under section 201(1) & 201(1A) and therefore, it cannot be considered that non-deduction of tax by oversight of the Finance Manager, even it came to the notice of the assessee, it has paid only after two months. Therefore, we find no infirmity in the order passed by the ld. CIT(A) and accordingly interference is not called for. Accordingly, appeal filed by the assessee is dismissed. - ITA No. 631/VIZ/2014 - - - Dated:- 18-10-2017 - Shri V. Durga Rao, Hon ble Judicial Member And Shri D. S. Sunder Singh, Hon ble Accountant Member Assessee by : Shri C. Subrahmanyam FCA Department By : Smt. V. Madhuvani CIT DR ORDER Per V. Durga Rao, Judicial Member This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), Visakhapatnam, dated 14/11/2014 for the Assessment Year 2013-14. 2. Facts of the case, in brief, are that there was a survey conducted in the case of the assessee under section 133A of the Income Tax Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company is facing acute financial crisis due to changes in the shipping industry by privatization of Visakhapatnam port berths to M/s. Vedanta Group, M/s. Vizag Sea Port and M/s. Adani Group, etc. As a result the orthodox stevedoring operation gradually decreased in port and 100% mechanization of stevedoring operations of cargo discharges from vessels are in place by offering mega cranes and is being shifted conveyors. Hence the logistics, operations are being minimized. In addition to the above deep water port M/s. Gangavaram Port Ltd, started operations with 100% mechanization. Due to heavy traffic and congestion in Visakhapatnam Port our major coal importers have shifted to Gangavaram Port. It was badly affected our bulk coal stevedoring operation of the company. Further to this due to recession in the shipping Industry and ban of iron ore exports our other equipment operations bills are not realized as per the schedule and it was badly effected on our cash flows of the company. As a result we could pay the salaries to the staff, defaulting paying interest on bank loans and other statutory obligations as per schedule. Hence the company is default the payment of TDS for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of TDS amounting to ₹ 18,06,745/-. 6. Insofar as penalty levied for non-remittance of TDS deducted, the ld. CIT(A) has observed that the Hon'ble Kerala High Court on similar factual matrix as that of the assessee s case, has specifically rejected the contention that non-remittance would not fall within the purview of section 271C and has held that the first part of clause (b) of section 271C is failure to pay whole or any part of tax as required, takes the tax deducted under section clause (a) under any of the provisions of Chapter XVII-B, and therefore failure to deduct or failure to remit recovered tax, both will attract penalty under section 271C of the Act. Accordingly, he confirmed the order of the Assessing Officer. 7. So far as alternative argument raised by the assessee on the ground that non-remittance of tax was due to financial crunch faced by the assessee and which constitutes a reasonable cause against levy of the impugned penalty. The ld. CIT(A) has observed that assessee has not explained properly with necessary evidence that what is financial crunch being faced by the assessee that net profit disclosed was ₹ 2.42 crores for Financial Year 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal, ld. CIT(A) confirmed the order passed by the Assessing Officer by following the decision of the Hon'ble Kerala High Court in the case of US Technologies International P. Ltd., (supra). We find that whether section 271C applies for failure to deduct tax at source or/and failure to deposit the deducted tax in Government account. The Hon'ble Kerala High Court in the above referred to case, has considered and held that both will attract penalty under section 271C of the Act. For the sake of convenience, the relevant portion of the order is extracted as under:- 2. The first question raised is whether penalty could be levied under section 271C of the Act for non-payment of tax deducted at source. The contention of counsel for the appellant is that section 271C provides for penalty only for failure to deduct tax as required under Chapter XVII-B and for non-payment of tax, penalty provided is only for violation of sub-section (2) of section 115-O or section 194B of the Act. In other words, according to him if the assessee has made deduction from source on payments like salary, payment to contractors, payment on rent, etc. under various provisions of Chapter XVII-B, then n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-remittance of tax deducted at source under the provisions of Chapter XVII-B, the levy of penalty is unauthorised. Counsel contended that penalty under section 271C(1) for non-remittance is only of tax, whether recovered or not, under sub-section (2) of section 115-O or second proviso to section 194B of the Act. We are unable to accept this contention because the first part of clause (b) of section 271C(1), i.e., failure to pay whole or any part of tax as required, takes in the tax deducted under clause (a) under any of the provisions of Chapter XVII-B. So much so, in our view, failure to deduct or failure to remit recovered tax, both will attract penalty under section 271C of the Act. So much so, the contention of the appellant fails and we uphold the finding of the Tribunal dismissing the challenge against levy of penalty. 4. The next question to be considered is the quantum of penalty which in this case is above ₹ 1.1 crore. Counsel for the appellant referred to section 273B of the Act authorising the officer to waive or reduce the penalty if the defaulted assessee proves that there was reasonable cause for such failure which attracts penalty. Standing Counsel has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court has held that tax deducted and not remitted to the Government account, there are no justifying circumstances. Therefore, alternative plea raised by the assessee has no application so far as default in respect of failure to remit the tax deducted to the Government account. Insofar as, non-deduction of TDS is concerned, it is submitted that due to mistake of the Finance Manager, TDS was not deducted. In this context, ld. CIT(A) has observed in his order that default committed by the assessee was pointed out during the survey in January, 2013, but assessee did not choose to make payment immediately, some amounts have been paid only after passing of the order under section 201(1) 201(1A) of the Act on 27/02/2013. Only thereafter in the month of March, further payments have been made. The corresponding interest under section 201(1A) has not been paid till date. The survey was conducted on 22/01/2013, the assessee only paid the amounts in the month of March after passing of the order under section 201(1) 201(1A) and therefore, it cannot be considered that non-deduction of tax by oversight of the Finance Manager, even it came to the notice of the assessee, it has paid only a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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