IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENN AI BEFORE SHRI ABARAHAM P.GEORGE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. ITA NO.1521/MDS./2011 ASSESSMENT YEAR:1992-93 ITA NO.1522/MDS./2011 ASSESSMENT YEAR:1993-94 ITA NO.1523/MDS./2011 ASSESSMENT YEAR:1994-95 M/S.SOLIDAIRE INDIA LTD., REGD.OFF . NO.12, 3 RD FLOOR, 1 ST MAIN ROAD, GANDHI NAGAR, ADYAR, CHENNAI -600 020. VS. THE INCOME TAX OFFICER, TDS WARD II(4), CHENNAI. PAN AAACS 5019 G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.SRIDHAR ADVOCATE DEPARTMENT BY : SHRI R.B.NAIK,C.I.T DR DATE OF HEARING : 12.01.12 DATE OF PRONOUNCEMENT : 13.01. 12 O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THESE THREE APPEALS ARE FILED BY THE ASSESSEE AG AINST THE ORDERS OF C.I.T.(A) IN APPEAL NOS.752, 754 & 75 5/06-07/A- IV DATED 26.07.2011 FOR THE ASSESSMENT YEARS 1992-9 3, 1993- 94 & 1994-95 AGAINST THE LEVY OF PENALTY U/S.221(1) OF THE ACT. PAGE OF 5 ITA.1521,1522 & 1523/MDS/11 2 2. SHRI S.SRIDHAR, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI R.B. NAIK, C.I.T. DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF OF THE REVENUE . 3. IT WAS SUBMITTED BY THE LD. A.R. THAT THE ASSE SSEE COMPANY HAD DEDUCTED TAX ON THE INTEREST TO BANKS. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD DEDUCTED TAX UNDER THE PROVISIONS OF SEC.194A(3)(III)(A) AND (B). IT WAS THE SUBMISSION THAT DUE TO FINANCIAL DIFFICULTY, ASSESSEE HAD BEEN UNABLE TO PAY THE AMOUNT TO THE GOVERNMENT ACCOUNT. IT WAS A LSO A SUBMISSION THAT THE ASSESSEE WAS NOT LIABLE TO DEDU CT TDS. IT WAS THE SUBMISSION THAT THE ASSESSEE WAS REFERRED T O THE BIFR AS IT HAD BECOME SICK. IT WAS THE SUBMISSION THAT REASONABLE CAUSE SHOULD BE ACCEPTED AND THE PENALTY AS LEVIED BY THE ASSESSING OFFICER AND CONFIRMED BY LD . C.I.T.(A) WAS LIABLE TO BE DELETED. 4. IN REPLY, LD. DR SUBMITTED THAT ASSESSMENT YEAR S INVOLVED WERE 1992-93, 1993-94 & 1994-95. ASSESSEE HAD DEDUCTED THE TDS IN RESPECT OF THE INTEREST PAID. THOUGH THE ASSESSEE HAS CLAIMED THAT INTEREST WAS NOT LIABLE T O BE DEDUCTED, THE FACT THAT ASSESSEE HAD DEDUCTED THE TDS SHOWS THAT THE ASSESSEE DID BECOME THE CUSTODIAN OF THE GOVERNMENT FUNDS, WHICH IT WAS LIABLE TO PAY TO THE PAGE OF 5 ITA.1521,1522 & 1523/MDS/11 3 GOVERNMENT ACCOUNT WITHIN THE DUE DATE PRESCRIBED. IT WAS FURTHER SUBMISSION THAT THE ASSESSEE HAD PAID THE A MOUNT TO THE ACCOUNT OF THE GOVERNMENT ONLY AT THE END OF MA RCH, 1996. IT WAS FURTHER SUBMITTED THAT NO EVIDENCE WAS PRODU CED TO SHOW AS TO WHEN THE ASSESSEE HAD BECOME A SICK COMP ANY. IT WAS FURTHER SUBMISSION THAT THE FINDING OF THE L D. ASSESSING OFFICER IN PARA NO.3 OF HIS ORDER THAT THERE WAS SU FFICIENT CASH BALANCE AVAILABLE IN EACH MONTH AT THE POINT OF TIM E HAS NOT BEEN REBUTTED. IT WAS THE SUBMISSION THAT THE CONT UMACIOUS ACT OF THE ASSESSEE COULD NOT BE CONDONED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ON CE TDS IS MADE BY THE ASSESSEE, THE PROVISIONS OF SEC.200 OF THE ACT COME INTO PLAY. THOUGH THE WORDING IN SEC.200(1) CO NTAIN IN ACCORDANCE WITH THE FOREGOING PROVISIONS OF THIS CH APTER. IT WOULD NOT COME TO RESCUE OF THE ASSESSEE IN SO FAR AS, THE ASSESSEE TOOK UPON HIMSELF TO DEDUCT THE TDS. THE ASSESSEE HAVING UNDERTAKEN THE DUTY OF DEDUCTING THE TDS, IT TAKES UPON ITSELF THE RESPONSIBILITY OF PAYING THE SAME T O THE ACCOUNT OF THE CENTRAL GOVERNMENT WITHIN THE PRESCRIBED TIM E. THE ASSESSEE HAS ALSO NOT BEEN ABLE TO REBUT THE FINDIN GS IN THE ORDER OF THE ASSESSING OFFICER AS ALSO THE C.I.T.(A ) THAT THE PAGE OF 5 ITA.1521,1522 & 1523/MDS/11 4 ASSESSEE, HAD AT THAT POINT OF TIME WHEN THE DEDUCT ION WAS MADE AND THE PRESCRIBED PERIOD WAS AVAILABLE, DID HAVE SUFFICIENT CASH BALANCES TO MAKE THE PAYMENT TO THE ACCOUNT OF THE GOVERNMENT. HAVING DEDUCTED THE TDS, IT IS NOW NOT OPEN TO THE ASSESSEE TO CLAIM THAT HE WAS NOT LIABLE TO DEDUCT TDS. FURTHER THE ASSESSEE HAS NOT PLACED BEFORE US ANY E VIDENCE, WHEN THE ASSESSEE HAS BECOME SICK COMPANY. IN THESE CIRCUMSTANCES, NO REASONABLE CAUSE HAS BEEN SHOWN F OR CANCELING THE PENALTY LEVIED U/S.221(1) OF THE ACT. CONSEQUENTLY, THE FINDING OF THE LD. C.I.T(A) ON TH IS ISSUE STAND CONFIRMED. IN THE CIRCUMSTANCES, APPEALS OF THE ASSESSEE ARE DISMISSED. 6. IN RESULT, APPEALS OF THE ASSESSEE ARE DISMISSE D. ORDER PRONOUNCED ON 13 TH JANUARY, 2012. SD/- SD/- (ABRAHAM P. GEORGE ) ( GEORGE MATHAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 13 TH JANUARY, 2012. K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE PAGE OF 5 ITA.1521,1522 & 1523/MDS/11 5 DATE INITIALS 1. DRAFT DICTATED ON 2. DRAFT PLACED BEFORE AUTHORITY 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S. 6. KEEP FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE 9. DATE OF DISPATCH OF ORDER