The division Bench of the Karnataka High Court has observed that financial stringency would not justify the non-remittance of TDS to the Government, in as much as, it would amount to the utilization of money payable to the appropriate government.
The division bench comprising of Justice Aravind Kumar and Justice Suraj Govindraj rendered this judgment on an appeal petition filed by M/S KBR Infratech Ltd.
On 25.07.2013, a survey came to be conducted under Section 133A of Income Tax Act, 1961 (for short, the Act’) in the business premises of assessee and an order under Section 201(1) of the Act came to be passed on 30.07.2013 enclosing therewith a demand notice. On 02.08.2013, the assessee paid the amount demanded under the notice together with interest as required under Section 201 (1) (A) of the Act.
Subsequently, proceedings under Section 221 of the Act came to be initiated by the issuance of show cause notice to assessee. A reply came to be submitted by the appellant contending that lapse in remittance of the amount collected by way of TDS and retained by the assessee was out of acute liquidity crunch and not deliberate or intentional negligence. Said plea of the assessee did not find favor with the Assessing Officer and as such, assessee came to be rejected and levied a penalty of Rs.77,95,155/-.
The Assessee has preferred this appeal questioning the correctness and legality of the order dated 07.10.2016 passed by Income Tax Appellate Tribunal (ITAT), Bangalore Bench (for the assessment year 2013-14) where under order passed by Commissioner of Income Tax (Appeals)-13, Bangalore dated 14.08.2015 setting aside the levy of penalty of Rs.77,95,155/- came to be modified by restricting the quantum of penalty to Rs.20,55,573/-
While dismissing the appeal court observed that financial stringency is the only plea which was available to assessee in the penalty proceedings is to explain the cause for delay and that would not justify the non-remittance of TDS to the government, in as much as, it would amount to the utilization of money payable to the appropriate government.
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