COMMISSIONER OF INCOME TAX TDS vs. GLOBAL INFOSYSTEMS LTD.

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ITA - 703 / 2007HC Delhi06 August 20075 pages
For Petitioner: P.L.BANSAL
AI SummaryDismissed

What did the High Court hold?

The High Court held that the quantum of penalty should not be imposed mechanically but with discernible reasons, reserving the maximum penalty for exceptionally bad cases. The authorities had exercised their discretion in accordance with law.

What were the facts?

The Revenue is aggrieved by an ITAT order regarding the quantum of penalty for the assessee's failure to deposit TDS. The Assessing Officer had imposed a 100% penalty, which was reduced by the appellate authorities.

What were the issues?

The primary issue was the quantum of penalty for failure to deposit TDS and whether the maximum penalty should be imposed without valid explanation.

Which sections of the Income-tax Act were involved?

Section 221

AI-generated summary — verify with the full judgment below

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HIGH COURT OF DELHI: NEW DELHI

ITA No. of 703/2007

% Judgment delivered on: August 06, 2007

Commissioner of Income Tax (TDS)

Delhi-XVII, Mayur Bhawan, New Delhi ..... Appellant

Through: Ms. P.L. Bansal, Advocate.

Versus

Global Infosystems Limited B-26, Shivalik, Malviya Nagar,

New Delhi -110017

Through: None.

.... Respondent

CORAM:

HON'BLE MR. JUSTICE MADAN B. LOKUR HON'BLE DR. JUSTICE S. MURALIDHAR

1.

Whether the Reporters of local papers may

be allowed to see the judgment? Yes

2.

To be referred to Reporter or not? Yes

3.

Whether the judgment should be reported in the Digest? Yes

Page No. 1 of 5

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MADAN B. LOKUR, J. (ORAL)

CM No. 9929/2007

Exemption allowed subject to all just exceptions.

Application stands disposed of.

The Revenue is aggrieved by an order dated 27th October, 2006 passed by the Income Tax Appellate Tribunal, Delhi Bench 'D' in ITA Nos. 2260/Del/2004 and 2261/Del/2004 for the financial years 2001-02 and 2002-03.

2.

The only issue that arises in this case is with regard to the quantum of penalty for failure on the part of the Assessee to deposit TDS. The Assessing Officer required the Assessee to pay 100% penalty under Section 221 of the Income Tax Act, 1961. According to learned counsel for the Revenue this was because the Assessee did not offer any valid explanation for failure to deposit the TDS.

(Kerala) took the view that the maximum penalty should not be imposed mechanically but only for discernible reasons. The Gauhati High Court held:

"The quantum of penalty, subject to the maximum fixed by the statute, has been left to the discretion of the authority concerned and the said discretion being a judicial discretion must be exercised on a consideration of all the relevant facts and circumstances of the case, including the degree of contumaciousness involved. The maximum penalty should be reserved only for exceptionally bad cases."

- 6. We are satisfied, having gone through the record, that there was no illegality committed by the Commissioner as well as by the Tribunal in imposing the penalty of only 10%, as there were no special reasons warranting imposition of the maximum penalty. The authorities have exercised their discretion in accordance with law and have committed no error. - 7. No substantial question of law arises.

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8.

Dismissed.

Madan B. Lokur, J

S, Muralidhar, J

August 06, 2007

Certified that the corrected copy of the judgment has been transmitted in the main Server.

. ITA No. 703/2007

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