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TMI Blog2018 (11) TMI 1126X X X X Extracts X X X X X X X X Extracts X X X X ..... h, Agra preferred by the assessee Bank for the assessment year 2012- 13 and by the Additional Commissioner, Income Tax (TDS) Kanpur for the assessment year 2013-14, the tribunal dismissed the appeal of the assessee Bank and allowed that of the revenue. In the net result, the order of penalty passed under Section 271 C of the Act for both the assessment years 2012-13 and 2013- 14 stood affirmed. Thus, aggrieved the assessee Bank has preferred these two appeals. Both the appeals were admitted vide order dated 1.8.2017. The appeal in relation to the assessment year 2012-13 was admitted on the following two substantial questions of law:- (i) Whether the Tribunal was correct to confirm the penalty under Section 271 C of the Act in not deducting TDS on two ID's out of 9 ID's which has not found to be false or frivolous by the authority below when the error was bonafide not intentional; and (ii) Whether the appellant having deposited the TDS on 01.03.2013 as soon as mistake was noticed and also the interest under Section 201 (1 A) of the Act having paid for delayed payment prior to the passing of the assessment order dated 15.03.2015under Section 201 (1)/201(1A) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty could have been levied in view of Section 273 B of the Act. Sri Subham Agrawal to counter the above submissions had argued that deduction and deposit of tax within the financial year concerned under Section 194 A (4) of the Act would not absolve the assessee Bank from its liability to pay interest and penalty for not deducting and paying the tax in time. The deduction of tax at source in time and its payment under Section 194 A (1) of the Act is a distinct act then that of deduction of tax for adjustment under Section 194 A (4) of the Act. Since admittedly tax at source was not deducted and deposited within time, the assessee Bank is liable for interest as well as penalty both. The tribunal as of fact has not accepted the cause for the failure or delay in making deduction of tax at source to be reasonable. Therefore, Section 273 B of the Act has rightly not been applied. In view of the respective submissions of the parties and in the light of the substantial questions of law on which the appeals were admitted, only the following two substantial questions of law actually arise in these appeals and it is on these two questions that the counsel for the parties have addresse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this section for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the financial year." The aforesaid sub-section enables the person responsible for making payment of interest as provided under Sub-section 1 of Section 194 A of the Act to make necessary adjustments for any excess or deficiency arising out of previous deduction or failure to deduct it during the financial year before the close of the relevant financial year. This is an enabling provision to adjust any discrepancy or shortcoming in deduction of tax on interest income during the year,but it does not shifts the time/point of deduction and payment of such tax. In other words, the person responsible to make the payment of interest has been given latitude to adjust any short fall in previous deduction or failure in deduction to be adjusted by making appropriate deduction in the financial year. The aforesaid provision does not envisage any shifting or change of time for making deduction of tax at source on the income of interest payable by the person concerned provided under Subsection (1) of Section 194 A of the Act . The time for deduction of tax on int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s able to satisfy that there was a reasonable cause for failure to deduct tax at source on the interest income. Section 273 B of the Act provides that notwithstanding the provisions contained under Section 271 C of the Act no penalty shall be imposable upon the person or the assessee for any failure referred to in the aforesaid provision if the person or the assessee concerned proves there was reasonable cause for the said failure. In this regard the assessee Bank contends that the failure to deduct tax at source on interest income in time was due to the fact that the Agra Development Authority had obtained certificates under Section 197 of the Act permitting the assessee Bank not to deduct tax at source on its interest income. It is in view of the above and the improper feeding in the computer system or updation of the software that the authorization was for limited period and not for the financial/assessment years concern that the assessee Bank could not deduct tax at source on interest income in the relevant period. The tribunal has not found the aforesaid cause to be reasonable as in the earlier year no certificate under Section 197 of the Act was submitted by the Agra Devel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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