M/S COBRA KCL JV,,RAJKOT-GUJARAT vs. THE ASSTT. COMMR. OF INCOME TAX, TDS- CIRCLE,, RAJKOT-GUJARAT

This appeal is filed by the Assessee against order dated 12.07.2019 passed by the CIT(A), Jamnagar for the Assessment Year 2011-12.

The Assessee has raised the following grounds of appeal:-

The Assessing Officer while perusing the details furnished during the course of assessment proceedings under Section 143 of the Income Tax Act, 1961 observed that the assessee has belatedly deposited TDS deducted in the previous year relevant to A.Y. 2011-12. The delay was between 7 to 20 days. Accordingly,

Being aggrieved by the Order under Section 221 (1) of the Act, 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 45 days in filing the present appeal for which affidavit was filed on behalf of the assessee. The reasons stated therein appear to be genuine and hence the delay is condoned.

The Ld. AR submitted that the assessee is engaged in the business of development of infrastructure facility i.e. construction of roads, dams, water supply etc. on behalf of Government and the assessee is assessed to tax since long. The assessee has already deposited TDS amount of Rs.51,24,468/- in the Government account and the period of default is of few days. Due to circumstances beyond the control the amount of TDS could not be deposited into Central Government account within the time prescribed under the Act and as such there was no malafide intention in retaining the Government money by the assessee. When the assessee had acted in a bonafide manner, penalty should not have been levied (where amount of default is low and period of default is of few days) more particularly when the remittance of the TDS into Government account was made by the assessee. The Ld. AR further submitted that the company is not a natural person but merely a legal or juristic person and hence it cannot be punished. The Ld. AR submitted that the assessee would like to assert that the nature of business of the assessee is that of infrastructure development and the work is assigned by the State Government Departments. The Ld. AR relied upon the decision of Hon’ble Rajasthan High Court in the case of CIT vs. Dadu Vala Et Co (1988) 170 ITR 491 (Raj.) and the decision of Hon’ble Madras High Court in the case of CIT vs. Smt. Vijayanthimala (1977) 108 ITR 882 (Mad).

The Ld. DR relied upon the Assessment Order and the order of the CIT(A). The Ld. DR further submitted that it is undisputed fact that the assessee made delay in depositing the TDS between 7 to 20 days and in certain occasions it is between 15 days to 5 months. Thus, the Ld. DR submitted that the penalty under Section 221 of the Act was rightly imposed on the assessee.

We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee has not given any tenable reason or any supporting evidence to justify that the delay between 7 to 20 days and in certain cases 15 days to 5 months is not deliberate. Section 221 categorically mentions that when an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable under sub-section (2) of Section 220, be liable, by way of penalty, to pay such amount as the Assessing Officer may direct, and in the case of a continuing default, such further amount or amounts as the Assessing Officer may, from time to time, direct, so, however, that the total amount of penalty does not exceed the amount of tax in arrears. In the present case, the Assessing Officer has given reasonable opportunity of being heard to the assessee but the same was not availed by the assessee during the finalisation of penalty proceedings under Section 221 of the Act. But at the same time, the CIT(A) has given opportunity for explaining the delay. The delay in remittance of TDS was in fact a default and therefore, the Assessing Officer as well as the CIT(A) has rightly confirmed the penalty. In fact, the assessee also admits that there is a delay. The penalty payable when in default as per Section 221 of the Act is mandatory and cannot be escaped once the assessee was given reasonable opportunity of being heard and also that when the assessee has not proved this to the satisfaction of the Assessing Officer or the Revenue Authorities that the default was for good and sufficient reasons. In the present case, the assessee has not given any sufficient and good reason as to why the default took place. Accordingly, stating that the bills raised before the Government Departments are delayed for payment cannot justify the default on the part of the assessee as the assessee has not shown any supporting evidence that there was liquidity crunch. Besides this, the case laws of Hon’ble High Courts cited by the Ld. AR before the CIT(A) and before us will be applicable in cases where 3

In the result, appeal of the assessee is dismissed.