Delay in remittance of TDS does not attract penalty under S 271C of IT Act: Supreme Court
Last Updated on April 12, 2023 by Administrator
The Supreme Court has ruled that no penalty is levied under Section 271C of the Income Tax Act, 1961 for delay in remittance of tax deducted at source (TDS). The Apex Court set aside the Kerala High Court’s order upholding the levy of penalty under Section 271C for belated remittance of TDS.
The Income Tax Officer passed an order levying penal interest for delay in remittance of TDS, which was upheld by the Kerala High Court. US Technologies argued that late remittance of TDS was not a case of non-deduction, and was liable to pay penal interest under Section 201(1A). The Apex Court held that Section 271C(1)(a) was applicable to the case, as the words used are “fails to deduct” and not “non-deduction of TDS”.
“Penalty can only be imposed on non-payment of tax as required under Section 115-O (2) or under the proviso to Section 194B.” The Bench said.
The Supreme Court ruled that Section 201(1A) and 276B of the Act provide compensatory consequences for non-payment and/or late remittance of TDS. The Court allowed the appeal and set aside the Kerala High Court’s order, ruling that the assessee was not liable to pay the penalty under Section 271C of the Income Tax Act.
Case Title: M/s US Technology Private Limited v. CIT.
Ranjan Kumar Pandey, Counsel for Appellant.
Raj Bahadur Yadav, Counsel for Respondent.
Income Tax Act, 1961, Section 271(C): The Supreme Court has ruled that no penalty is leviable under Section 271C for delayed remittance of TDS, as the words “fails to deduct” cannot be read as “failure to deposit/pay the tax deducted”.
Written by: Srijan Raj
