SHRI UMESH KUMAR BHARATI,VERNA vs. ADDITIONAL COMMISSIONER OF INCOME TAX, TDS RANGE, PANAJI

Heard both the parties. Case files perused.

It emerges during the course of hearing that the assessee’s identical sole substantive grievance raised in both these appeals challenges correctness of lower authorities action imposing sec.271C penalties of Rs.11,54,500/- and 2 ITA.No.02 & 03/PAN./2022 Rs.13,45,822/-, assessment year-wise, respectively, by way of pleading following substantive grounds : 1) “The order of CIT (appeals) is incorrect on facts and in law. 2) Levy of penalty is not automatic and the Assessing Officer has erred in not considering the genuine difficulties faced by the appellant. 3) There was a survey by Director General of GST Intelligence and they had impounded the records including invoices for financial year 2014-15 and 2015-16 on 01/11/2016. Thereafter again there was survey by Director General of GST Intelligence and they impounded records including invoices for financial years 2016-17 and 2017-18 on 03/05/2018 because of that the accounts of business could not be finalized nor could be audited to trance out any mistakes or defaults as such. The appellant could get release of impounded documents, records from Director General of GST Intelligence, only 23/07/2019 and 08/11/2019. As such it was not possible for the Appellant to determine whether there has been non/short deduction of tax. 4) The appellant was helpless, and he could not comply with notices from Addl. Commissioner of Income Tax, TDS Range, because he wanted the details of the 3 ITA.No.02 & 03/PAN./2022 payments which were not in possession of the appellant as all the documents were impounded by Director General of GST Intelligence as stated above. 5) The appellant is just 6th Standard pass and has been not well versed with accounting as well as tax compliances, he always depended upon his accountants and tax practitioners. Even there were frequent changes in accountants in the appellant’s office. There was no intention to delay the payment of tax and the delay was only on account of the ignorance and lack of knowledge of the appellant. 6) The appellant has paid all the TDS liability detected by the survey team. Considering this aspect, the penalty should not have been imposed. 7) The appellant was under bona fide belief that TDS provisions are properly complied by his accounts staff and even if there is any error or mistake is committed by them, since the receivers of payments are filing their income tax returns and paying taxes due on their income which include these related payments, there is no default.”

Both the learned representatives next invited my attention to the CIT(A)'s detailed discussion affirming impugned penalty(ies) as follows :

4 ITA.No.02 & 03/PAN./2022 5 ITA.No.02 & 03/PAN./2022 6 ITA.No.02 & 03/PAN./2022 7 ITA.No.02 & 03/PAN./2022 8 ITA.No.02 & 03/PAN./2022 9 ITA.No.02 & 03/PAN./2022

Learned authorised representative vehemently argued during the course of hearing that both the lower authorities have erred in law and on facts in imposing the impugned sec.271C penalty in assessee’s instant twin assessment years. He sought to buttress the point that this assessee has nowhere been a wilful defaulter in preceding assessment years. There was no intentional default on his part in not deducting TDS. And also that he could not comply with the impugned statutory provision requiring TDS deduction as well as filing of returns on account of the clinching fact that all of his corresponding records/books of accounts stood seized during the course of survey.

All these assessee’s arguments hardly deserve to be accepted. It is made clear that the assessee has himself filed a detailed paper book wherein it is evident from a perusal of the 10 ITA.No.02 & 03/PAN./2022 corresponding necessary details that he had not complied with the due dates prescribed for crediting/paying the TDS in issue. Learned counsel could not rebut that the assessee’s submissions in para-10 had duly accepted to have delayed payment of TDS in fourth quarter of F.Y. 2015-16 by 10-12 months followed by similar other instance in first and third quarters of F.Y. 2016-17, respectively. The assessee has not placed on record any material during the course of hearing that he had not maintained the corresponding books of accounts on e-platform and, therefore, it was only due to seizure of the regular books of accounts which ultimately lead to delay in compliance of the TDS provisions in issue. I, therefore, conclude that assessee has not been able to submit any “reasonable cause” or “justifiable” reason explaining his default in complying with the TDS deduction provisions under Chapter-XVII of the Act. Both these impugned penalties stand upheld therefore in light of CIT(A)'s detailed discussion extracted in the preceding paragraphs. Ordered accordingly.

This assessee’s twin appeals are dismissed in above terms. A copy of this common order be placed in the respective case files. Order pronounced in the open court on 24.01.2023.