Dharti Dredging & Infrastructure Limited, Hyderabad V. Deputy Commissioner of Income Tax, Circle 1(1) TDS, Hyderabad

ITA 509/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6064 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-B
• Assessment Year: 2018-2019
• Appeal Filed On: 09-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ROHIT MUZUMDAR
• Keywords: Reasonable cause; TDS
• Section: 201(1); 201; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 509 /HYD./201 9 ASSESSMENT YEAR: 201 8 - 19 M/S DHARTI DREDGING & INFRASTRUCTURE LTD. VS. DY.CIT, CIRCLE 1( 1 ) HYDERABAD TDS HYDERABAD [PAN: AA BC D 6612M ] (APPELLANT ) (RESPONDENT) FOR ASSESSEE : NONE FOR REVENUE : SH. ROHIT MUZUMDAR, CIT - D.R. DATE OF HEARING : 15 /02/2021 DATE OF PRONOUNCEMENT : 22 /04/2021 O R D E R PER S.S. GODARA, J.M. THIS ASSESSEES APPEAL FOR AY 201 8 - 19 ARISES AGAINST THE CIT(A) - 8 , HYDERABADS ORDER DATED 29.01.2019 IN CASE NO. 10217/ 2018 - 19 INVOLVING PROCEEDINGS U/S 221 RWS 201(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). CASE CALLED TWICE. NONE APPEARS AT ASSESSEES BEHEST. WE ACCO RDINGLY PROCEED EX PARTE. WE HAVE HEARD SHRI R.MUZUMDAR, LEARNED D.R. AND P ERUSED CASE FILE. 2. BOTH THE L EARNED LOWER AUTHORITIES HAVE LEVIED SEC. 221 PENALTY OF RS.23,68,000/ - ON ACCOUNT OF ASSESSEES DEFAULT IN NOT DEDUCTING THE ITA 509/HYD/2019 DHARTI DREDGING & INFRASTRUCTURE LTD. HYD 2 CORRESPONDING TDS AMOUNT. THE CIT(A)S DETAILED DISCUSSION TO THIS EFFECT READS AS UNDER. 5.0. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, THE ORDER OF THE AO AND THE WRITTEN SUBMISSIONS OF THE A.R. I N THIS CASE, PENALTY PROCEEDING U/S 221 OF THE ACT HAS BEEN INITIATED FOR NOT REMITTING THE TDS AFTER DEDUCTION INTO THE GOVT. ACCOUN T WI THIN THE DUE DATE. AS PER THE PROVISIONS OF SECTION 200(1) OF THE INCOME TAX ACT, ANY PERSON DEDUCTING ANY SUM IN A CCORDANCE WITH THE PROVISIONS OF CHAPTER XVII B OF THE ACT IS REQUIRED TO PAY THE SAME WITHIN THE PRESCRIBED TIME INTO THE GOV T AC COUN T. FURTHER, AS PER THE PROVISIONS OF SECTION 201(1) OF THE A CT, WHEN THE DEDUCTOR FAILS TO PAY THE DEDUCTED TDS INTO THE GOVT. ACCOUNT WITHIN THE PRESCRIBED TIME AS REQUIRED UNDER SECTION 200(1), THEN SUCH DEDUCTOR IS DEEMED TO BE AN ASSESSEE IN DEFAULT. FURTHER, AS PER THE PROVISIONS OF SECTION 221 OF THE ACT, IN THE CASE OF ANY ASSESSEE IN DEFAULT OR DEEMED ASSESSEE I N DEFAULT IN MAKING THE PAYMENT OF TAX, A PENALTY OF UPTO 100% OF THE TAX MAY BE IMPOSED BY THE ASSESSING OFFICER IN ADDITION TO THE TAX AND INTEREST TO BE PAID BY THE ASSESSEE. EXPLANATION TO SECTION 221(1) ALSO CLARIFIES THAT PENALTY U/S.221 MAY BE LEVIE D EVEN IF THE ASSESSEE PAYS THE TAX BEFORE THE LEVY OF PENALTY U/S. 221 BUT AFTER THE EXPIRY OF THE DUE DATE OF PAYMENT OF TAX. FURTHER, RELIANCE IS PLACED ON 'RELIANCE INDUSTRIES LTD. VS. COMMISSIONER INCOME TAX'; HIGH COURT OF BOMBAY, 715 TAXPUNDIT 79 , WHERE IT STATES THAT, IT MUST BE BORNE IN MIND THAT THE ASSESSEE CONTINUES TO BE IN DEFAULT IN CASE THE TAX HAS NOT BEEN DEPOSITED WITH REVENUE WITHIN THE TIME PRESCRIBED UNDER THE I.T. ACT. TAX DEPOSITED THEREAFTER BUT BEFORE PENALTY PROCEEDINGS ARE INIT IATED WOULD NOT CLEANSE THE ASSESSEE FROM BEING IN DEFAULT. 5.1 AS FOR THE CONTENTION OF THE ASSESSEE THAT NO OPPORTUNITY WAS PROVIDED TO IT BY THE AO, IT IS SEEN THAT IN THE WRITTEN SUBMISSIONS FILED BEFORE THE UNDERSIGNED, THE AR HAS ENCLOSED A COPY OF S UBMISSIONS FILED BEFORE THE AO DURING ASSESSMENT PROCEEDINGS. IT IS THEREFORE INCORRECT ON THE PART OF THE AR TO STATE THAT THE AO DID NOT PROVIDE ANY OPPORTUNITY BEFORE PASSING THE ORDER. MOREOVER, THIS IS A SURVEY CASE, AND IN THE COURSE OF SURVEY PROC EEDINGS ALSO, OPPORTUNITY WAS PROVIDED TO THE APPELLANT TO EXPLAIN THE DEFAULTS. THE APPELLANT, APART FROM STATING FINANCIAL CRUNCH AS THE REASON FOR NOT REMITTING THE TDS INTO GOVERNMENT ACCOUNT, DID NOT FURNISH ANY VALID EXPLANATION. DURING APPELLATE PR OCEEDINGS ALSO THE SAME REASON IS REITERATED. APART FROM THE FACT THAT FINANCIAL CRUNCH CANNOT BE CONSIDERED AS A VALID, REASONABLE AND SUFFICIENT CAUSE FOR DEDUCTING TDS AND NOT REMITTING THE SAME INTO GOVERNMENT ACCOUNT, NO PROOF OR EVIDENCE FOR THE SAID FINANCIAL CRUNCH ALLEGEDLY FACED BY THE APPELLANT HAS BEEN FURNISHED. THE ASSESSEE HAS THEREFORE RIGHTLY BEEN CONSIDERED BY THE AO AS AN ASSESSEE I N DEFAULT' SINCE THERE IS A CLEAR - CUT VIOLATION OF THE TDS PROVISIONS AND THE ASSESSEE HAS NOT BEEN ABLE TO BRING ITA 509/HYD/2019 DHARTI DREDGING & INFRASTRUCTURE LTD. HYD 3 FORTH ANY 'REASONABLE' OR 'SUFFICIENT' CAUSE WHICH PREVENTED IT FROM COMPLYING WITH THE SAID PROVISIONS. THE CASE LAWS RELIED UPON BY THE AR, ALSO DO NOT APPLY TO THE FA CT S OF THE CASE. WHEN THE TDS WAS DEDUCTED FROM THE PAYMENT MADE, THERE COULD BE NO REASONS WHATSOEVER FOR NOT REMITTING THE SAME INTO THE GOVERNMENT ACCOUNT, MORE SO WHEN THE ASSESSEE /APPELLANT IS ITSELF A LIMITED COMPANY , ADVISED BY QUALIFIED TAX PROFESSIONALS. AS BROUGHT O UT BY THE AO, THE ASSESSEE / APPELLANT DID NOT REMIT THE TDS DUE EVEN AFTER THE ISSUE OF NOTICE U / S. 221. THEREFORE, THE PLEA OF THE ASSESSEE THAT IT HAS ALWAYS BEEN CO - OPERATIVE IS BASELESS MOREOVER, THE PENALTY OF 10% LEVIED BY THE AO IS QUITE REASON ABLE. I, THEREFORE, SEE NO REASON TO INTERFERE WITH THE ORDER OF THE AO, AND THE PENALTY LEVIED IS CONFIRMED. ALL GROUNDS RAISED BY THE APPELLANT ARE DISMISSED. 3. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO ASSESSEES PLEADINGS AND R EVENUES ARGUMEN TS AGAINST AND IN SUPPORT OF THE IMPUGNED PENAL Y . WE FIND NO REASON TO ACCEPT ASSESSEES STAND THAT THERE EXISTED A REASONABLE CAUSE IN ITS FAILURE IN REMITTING THE TDS AMOUNT IN ISSUE. WE THUS QUOTE HONBLE APEX COURTS LARGER BENCH DECISION IN CIIT V S K V PILLAI & SONS (1967) 63 ITR 411 TO EXPRESS OUR COMPLETE AGREEMENT WITH THE CIT(A)S DETAILED REASONING THAT THE ASSESSING OFFICER HA D RIGHTLY LEVIED THE IMPUGNED PENALTY. THE A SSESSEE S SOLE SUBSTANTIVE GRIEVANCE RAISED HEREIN IS DECLINED ON ACCOUNT OF ITS FAILURE IN PROVING THE CORRESPONDING MITIGATING CIRCUMSTANCES QUA THE IMPUGNED PENALTY. THIS ASSESSEES APPEAL IS DISMISSED . ORDER PRONOUNCED IN OPEN COURT ON 22 /04/2021. SD/ - SD/ - (L.P. SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED: 22 ND APRIL, 2021 *GMV ITA 509/HYD/2019 DHARTI DREDGING & INFRASTRUCTURE LTD. HYD 4 COPY OF ORDER FORWARDED TO: 1. M/S DHARTI DREDGING & INFRASTRUCTURE LTD., 1 ST FLOOR, DDIL BHAWAN, B.S.MAKTHA, BEGUMPET, HYDERABAD 500 016, TELANGANA 2. DY.CIT, CIRCLE 1( 1 ), TDS, HYDERABAD . 3. CIT(A) - 8, HYDERABAD 4. CIT (TDS), HYDERABAD. 5. D.R. ITAT HYDERABAD 6. GUARD FILE