Penalty can’t be Levied for Delayed deduction of TDS Amount: ITAT Kolkata [Read Order]

The Income Tax Appellate Tribunal, Kolkata bench recently ordered that the penalty u/s 271C of the Income Tax Act cannot be levied for the delayed deduction of TDS amount.

A division bench comprising of Judicial Member S.S.Viswanethra Ravi and Accountant Member Waseem Ahmed held so while dismissing the Revenue’s appeal.

In instant case the appeal was filed by the revenue against the order of Commissioner of Income Tax (Appeals)-24.

The assessee in the present appeal was a charitable organization and engaged in the development of education, health, medical technologies and pharmaceuticals related to liver diseases.

The assessing during the year has incurred several expenses which were liable for TDS provisions under Section 194J / 194C of the Act but it failed to comply with the same. Therefore, the penalty proceedings u/s 271C of the Act was initiated by the AO.

However, the assessee during penalty proceedings before the AO submitted that subsequently it has deducted the amount of TDS and deposited the same to the Government Exchequer. But in this process the delay occurred due to negligence and unawareness of the provision of law.

Wherein AO degraded the contention of assessee and levied the penalty.

During the hearing none appeared on behalf of assessee though notice of hearing was sent to assessee through RPAD but the court decided to hear the present appeal without appearance of assessee.

The only issue raised by the revenue in this appeal was that CIT (A) erred in confirming the penalty imposed by the AO for Rs. 26, 52,615.00 under section 271C of the Act. On contrary DR vehemently supported the order of AO.

Finally the tribunal clearly mentioned that the assessee had deposited the amount of TDS with the delay of few months. Therefore, it cannot be concluded that the assessee has defaulted the provisions of TDS.

The bench made a considered opinion that the penalty u/s 271C of the Act cannot be levied for the delayed deduction of TDS amount. Thus, the Revenue’s appeal got dismissed.