SRI AVANTIKA CONTRACTORS(I) LIMITED,HYDERABAD vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE-15(1), HYDERABAD

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ITA 61/HYD/2018Status: DisposedITAT Hyderabad16 December 2021AY 2009-103 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee's reasons for non-compliance, such as lack of knowledge at local construction sites and changes in audit staff, were not valid excuses for mandatory TDS compliance. Therefore, the penalty imposed by the lower authorities was rightly upheld.

What were the facts?

The assessee failed to deduct and remit TDS on various payments including rent, contract, professional, and salary. This failure led to the imposition of a penalty under Section 271C of the Income Tax Act.

What were the issues?

Whether the penalty imposed under Section 271C for failure to deduct TDS is justified, and if the assessee's reasons for non-compliance constitute a reasonable cause.

Which sections of the Income-tax Act were involved?

Section 271C,Section 194I,Section 194C,Section 194J,Section 192

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD ‘ A ‘ BENCH, HYDERABAD.

Before: SHRI A. MOHAN ALANKAMONY & SHRI S.S. GODARA

For Appellant: Shri A. Srinivas, C.A

O R D E R Per Shri S.S. Godara, J.M. : This assessee’s appeal for Asst. Year 2009-10 arises from the Commissioner of Income Tax (Appeals)-8, Hyderabad’s order dt.27.10.2017 passed in case No.0078/CIT(A)/HYD/2010-11 in proceedings under Section 271C of Income Tax Act, 1961 (‘the Act’).

Heard both the parties. Case file perused.

2.

Coming to the assessee's sole substantive grievance that both the lower authorities’ have erred in law and on facts in imposing 271C penalty of Rs.9,99,606; we note that the same pertains to its failure in not deducting/remitting TDS involving rent, contract, professional and salary payments u/s. 194I, 194C, 194J and 192 of the Act; respectively.

There is hardly any dispute that it had failed to deduct TDS on the corresponding payment.

3.

Learned authorized representative vehemently submitted during the course of hearing that both the lower authorities have erred in law and on facts in invoking the impugned penalty. Mr. Srinivas reiterated the assessee's stand in light of its detailed paper book running into 24 pages that foregoing failure was on account of the fact that the corresponding payments had been made at construction sites at local level wherein the work force did not have adequate knowledge of the compliance mechanism under chapter XVII of the Act. And that there was change in assessee's audit / accounts staff as well which forms a very valid reason of the impugned non-compliance. All these arguments fail to evoke our concurrence as it was the assessee's duty to deduct TDS as per the specified provisions and the foregoing twin

alleged reasons hardly deserve to be accepted since going against the mandatory TDS compliance mechanism in the Act. We thus hold in these factual circumstances that both the lower authorities have rightly imposed the impugned penalty u/s.271C of the Act. The same stands affirmed.

4.

This assessee's appeal is dismissed. Order pronounced in the open court on 16th Dec., 2021.

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