The prime court docket famous that part 271C of the Act offers with penalty for failure to deduct TDS.
It famous the related phrases utilized in part 271C (1)(a) are ‘fails to deduct’ and it doesn’t talk about belated remittance of the TDS
The Supreme Court Monday held that no penalty shall be leviable beneath part 271C of the Income Tax Act over mere belated remittance of the tax deducted at supply (TDS) after its deduction by the assessee involved.
The prime court docket famous that part 271C of the Act offers with penalty for failure to deduct TDS.
It mentioned as per settled place of legislation, the penal provisions are required to be construed strictly and actually and as per the cardinal precept of interpretation of statute and extra significantly, the penal provision, “the penal provisions are required to be learn as they’re.”
“Nothing is to be added or nothing is to be taken out of the penal provision. Therefore, on plain reading of section 271C of the Act, 1961, there shall not be penalty leviable on belated remittance of the TDS after the same is deducted by the assessee,” a bench of Justices MR Shah and CT Ravikumar mentioned.
It mentioned part 271C of the Income Tax Act is kind of categoric and its scope and extent of utility is discernible from the supply itself in unambiguous phrases.
The bench delivered its judgement whereas coping with the authorized query which got here up for its consideration within the appeals in opposition to a judgement of the Kerala High Court which had confirmed the levy of curiosity/penalty beneath part 271C of the Income Tax Act, 1961 on failure of the respective assessees to deposit the TDS (or belated remittance of the TDS).
The prime court docket famous in its verdict that the counsel showing on behalf of the Income Tax division had submitted earlier than it that the thing and function of inserting part 271C was to “levy the penalty for failure to deduct tax at supply”.
It noted the relevant words used in section 271C (1)(a) are ‘fails to deduct’ and it does not speak about belated remittance of the TDS.
“Therefore, on true interpretation of section 271C, there shall not be any penalty leviable under section 271C on mere delay in remittance of the TDS after deducting the same by the concerned assessee. As observed hereinabove, the consequences on non-payment/belated remittance of the TDS would be under section 201(1A) and section 276B of the Act, 1961,” the bench mentioned.
It mentioned within the case earlier than it, because the respective assessees remitted the TDS, although belatedly, and it isn’t case of non-Âdeduction of the TDS in any respect, they don’t seem to be liable to pay the penalty beneath part 271C of the Act.
“….the query of legislation on interpretation of part 271C of the Income Tax Act is answered in favour of the assessee(s) and in opposition to the Revenue and it’s particularly noticed and held that on mere belated remitting the TDS after deducting the identical by the involved particular person/assessee, no penalty shall be leviable beneath part 271C of the Income Tax Act,” the bench said, while allowing the appeals.
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