RAVI PLANT BIOTECHNOLOGIES LTD.,VADODARA vs. THE ADDL. CIT, TDS, VADODARA

This appeal is filed by the assessee against order dated 15.05.2024 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2016-17.

The assessee has raised the following grounds of appeal :-

The assessee Company is engaged in manufacture and sale of Pesticides and Agrochemicals. A survey under Section 133A(2A) of the Income Tax Act, 1961 was conducted by the TDS Range at the premises of the Company on 18.02.2016 wherein the Revenue observed that TDS deducted from various payments was not deposited with the Department. Accordingly, the Assessing Officer (ITO, TDS) passed order under Section 201(1) of the Act treating the assessee as assessee in default and proposed for initiation of penalty proceedings. The penalty proceedings under Section 271C of the Act was initiated by issuing notice dated 09.11.2017. The assessee failed to appear or provide any explanation before the Assessing Officer (TDS), therefore, penalty of Rs.12,38,565/- was imposed as the assessee failed to deduct or pay tax as required under TDS provisions.

Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

The Ld. AR submitted that there was a delay of 371 days in filing the appeal before the CIT(A) for which the Managing Director of the assessee Company has filed the affidavit dated 27.05.2024. The said affidavit submitted that the said Managing Director was looking after the day-to-day matters of the assessee since Financial Year 2015-16 as majority of Unit Heads such as Finance, Marketing as well as majority of the Subordinate Staff left the services of the Company due to severe fund crunch resulting from the failure of Drip Irrigation business. Since the assessee could not forward the penalty order dated 08.02.2017 to the Company’s Tax Advisor for filing the appeal, attributing to severe pressure relating to making payments to the suppliers. The assessee requested that the delay should be condoned before the CIT(A) and since the assessee Company deposited due TDS alongwith interest and late fees at the time of passing of the Penalty Order, the same may be taken on record.

The Ld. DR submitted that the delay before the CIT(A) should have been explained with the bonafide intention of the assessee company to respond to the notices issued under Section 271C of the Act. But the assessee has not appeared before the Authorities during the penalty proceedings and substantiated his claim of not imposing the penalty.

We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee was in default under Section 201 of the Act, but at the same time the assessee paid the total TDS liability with applicable rates alongwith interest and late fees prior to the finalisation of the penalty under Section 271C of the Act. This fact was not taken into account by the Assessing Officer/ Addl. CIT (TDS) as well as by the CIT(A). Though there was a delay of 371 days in filing the appeal before the CIT(A), the assessee through its Managing Director has given the details that due to his own circumstances and severe pressure could not forward the Penalty Order to his Tax Advisor for filing the appeal before the CIT(A). Thus, it will be appropriate to condone the delay in filing the appeal before the CIT(A) and the matter may be remanded back to the file of the CIT(A) for proper adjudication of the issues on merit. Needless to say, the assessee be given opportunity of hearing by following the principles of natural justice. It is further directed to the assessee that the assessee will fully co-operate with the proceedings before the CIT(A) and file the details promptly as and when called for by the CIT(A).

In the result, appeal of the assessee is partly allowed for statistical purpose.