REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No.  7934 of 2011
M/s US Technologies         ...Appellant(s)
International Pvt. Ltd.
Versus
The Commissioner      ...Respondent(s)
of Income Tax
With 
Civil Appeal Nos. 1258­1260 of 2019
J U D G M E N T
M.R. SHAH, J.
1. Feeling   aggrieved   and   dissatisfied   with   the
impugned judgment(s) and order(s) passed by
the   High   Court   of   Kerala   at   Ernakulam   in
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confirming   the   levy   of   interest/penalty   under
Section   271C   of   the   Income   Tax   Act,   1961
(hereinafter   referred   to   as   the   Act)   on   failure
of  the   respective  assessees  to  deposit  the  tax
deducted   at   source   (TDS)   (or   belated
remittance   of   the   TDS),   the   respective
assessees have preferred the present appeals.
CIVIL APPEAL NO. 7934/2011
2. The   facts   leading   the   present   appeal   in   a
nutshell are as under: ­
2.1 From   01.04.2002   to   February,   2003,   the
appellant   –   assessee,   engaged   in   a   software
development   business   at   Techno   Park,
Trivandrum   which   employed   about   700
employees,   deducted   tax   at   source   (TDS)   in
respect   of   salaries,   contract   payments,   etc.,
totalling   Rs.   1,10,41,898/­   for   the
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assessment year (AY) 2003­04. In March, the
assessee   remitted   part   of   the   TDS   being   Rs.
38,94,687/­   and   balance   of   Rs.   71,47,211/­
was   remitted   later.   Thus,   the   period   of   delay
ranged   from   05   days   to   10   months.   On
10.03.2003,   a   survey   was   conducted   by   the
Revenue   at   assessee’s   premises   and   it   was
noted  that   TDS   was  not  deposited  within  the
prescribed   dates   under   Income   Tax   Rules   (IT
Rules).   On   02.06.2003,   Income   Tax   Officer
(ITO) vide order  under   Section  201(1A)  of the
Act,   1961   levied   penal   interest   of   Rs.
4,97,920/­   for   the   period   of   delay   in
remittance   of   TDS.   On   09.10.2003,   the
Additional   Commissioner   of   Income   Tax
issued a show cause notice proposing to levy
penalty   under   Section   271C   of   the   amount
equal to TDS. That the assessee replied to the
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said   show   cause   notice   vide   reply   dated
28.10.2003.   That   on   06.11.2003,   another
order   under   Section   201(1A)   was   passed
levying the penal interest of Rs. 22,015/­. On
10.11.2003,   the   Additional   Commissioner   of
Income   Tax   (ACIT)   vide   order   under   Section
271C   levied   a   penalty   of   Rs.   1,10,41,898/­
equivalent to the amount of TDS deducted for
AY   2003­04.   That   order   of   Additional   CIT
levying the penalty under Section 271C came
to   be   confirmed   by   the   High   Court   by   the
impugned   judgment   and   order.   The   High
Court vide impugned judgment and order has
dismissed   the   appeal   preferred   by   the
assessee   by   holding   that   failure   to
deduct/remit   the   TDS   would   attract   penalty
under Section 271C of the Act, 1961. 
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2.2 Feeling   aggrieved   and   dissatisfied   with   the
levy   of   interest/penalty   under   Section   271C
of   the   Income   Tax   Act,   1961   on   late
remittance   of   TDS   is   the   subject   matter   of
preferred appeal(s).
CIVIL APPEAL NOS. 1258­1260/2019
3. The   facts   leading   to   the   present   appeals   in   a
nutshell are under: ­ 
3.1 By   order(s)   dated   26.09.2013,   the   ACIT   by
way   of   orders   under   Section   271C   levied
penalty   equivalent   to   the   amount   of   TDS
deducted   for   AYs   2010­11,   2011­12   and
2012­13   on   the   ground   that   there   was   no
good   and   sufficient   reason   for   not   levying
penalty.     
3.2 The   CIT   (Appeals)   dismissed   the   assessees’
appeals. By common order dated 01.06.2016,
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the   Income   Tax   Appellate   Tribunal   (ITAT)
allowed   the   assessees’   appeals   by   holding
that   imposition   of   penalty   under   Section
271C   was   unjustified   and   reasonable   causes
were established by the assessee for remitting
the TDS belatedly. By the impugned common
judgment   and   order   the   High   Court   has
allowed   the   Revenue’s   appeals   relying   upon
its   earlier   judgment   (which   is   the   subject
matter   of   Civil   Appeal   No.   7934/2011   as
above).   The   impugned   judgment   and   order
passed   by   the   High   Court   is   the   subject
matter of present appeals being Civil Appeals
Nos. 1258­1260/2019. 
      
4. Shri   Arijit   Prasad   and   Shri   C.N.   Sreekumar,
learned   Senior   Advocates   have   appeared   on
behalf   of   the   respective   assessees   and   Shri
Balbir   Singh,   learned   ASG   assisted   by   Ms.
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Monica   Benjamin,   learned   counsel   has
appeared on behalf of the Revenue. 
5. Shri   Arijit   Prasad,   learned   Senior   Advocate
appearing   on   behalf   of   the   assessee   in   Civil
Appeal   No.   7934/2011   has   vehemently
submitted   that   in   the   facts   and
circumstances of the case, the levy of penalty
under   Section   271C   of   the   Act,   1961   is   not
justifiable   at   all.   It   is   submitted   that   in   the
facts   and   circumstances   of   the   case   there
shall   not   be   any   penalty   leviable   under
Section 271C of the Act, 1961.   
5.1 It   is   further   submitted   by   Shri   Arijit   Prasad,
learned   Senior   Advocate   appearing   on   behalf
of   the   assessee   that   here   is   the   case   of   late
remittance of the TDS and not a case of non­
deduction   of   TDS   at   all.   It   is   submitted   that
therefore,   at   the   most,   the   assessee   shall   be
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liable to pay the penal interest leviable under
Section   201(1A)   of   the   Act,   1961.   It   is
submitted   that   however,   there   shall   not   be
any levy of penalty under Section 271C of the
Act, 1961 on mere late remittance of the TDS
though deducted. 
5.2 It   is   further   submitted   by   Shri   Arijit   Prasad,
learned   Senior   Advocate   appearing   on   behalf
of   the   assessee   that   Section   271C   would   be
applicable   only   in   case   of   non­deduction   of
whole or any part of the tax [Section 271C(1)
(a)].   It   is   submitted   that   Section   271C(1)(a)
shall   be   applicable   in   case   of   non­deduction
of whole or any part of the tax as required by
or under the provisions of Chapter XVIIB. It is
submitted   that   in   the   present   case   Section
271C(1)(b)   shall   not   be   applicable.   It   is
submitted   that   therefore   taking   into
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consideration   the   words   employed   in   Section
271C(1)(a),  there  shall  be levy   of  penalty  of   a
sum   equal   to   the   amount   of   tax   in   case   of
failure   on   the   part   of   the   concerned   person
who   fails   to   deduct   the   whole   or   any   part   of
the tax as required by or under the provisions
of Chapter XVIIB. It is submitted that in case
of   belated   remittance   of   the   TDS,   there   shall
not   be   any   levy   of   interest   under   Section
271C of the Act, 1961. 
5.3 It   is   submitted   that   as   per   the   cardinal
principle of law, a penal provision is required
to   be   construed   strictly   and   literally   and
nothing is to be added in the Section and the
penalty  provisions  are  required to   be  read  as
they are. 
5.4 It   is   submitted   that   so   far   as   the   belated
remittance   of   the   TDS   is   concerned,   the
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Statute   provides   for   penal   interest   under
Section   201(1A)   of   the   Act,   1961.   It   is
submitted that the penal interest levied under
Section 201(1A) is compensatory in nature. It
is   submitted   that   therefore,   when   the
Parliament   thought   it   fit   to   levy   the   penal
interest on late remittance of the TDS for the
belated   period,   there   shall   not   be   any   levy   of
the   penalty   under   Section   271C   for   belated
remittance of the TDS. 
5.5 It is submitted that if the stand taken by the
Revenue   and   the   views   taken   by   the   High
Court   that   even   on   belated   remittance   of   the
TDS   there   shall   be   penalty   levied   under
Section   271C   of   the   Act,   is   accepted,   in   that
case   it   would   tantamount   to   adding
something more than which is not provided in
the   Section.   It   is   submitted   that   words   used
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in Section 271C are “fails to deduct the whole
or any part of the tax.” It is submitted that it
does   not   speak   “fails   to   deduct   and   remitted
belatedly.” 
5.6 Shri   Arijit   Prasad,   learned   Senior   Advocate
appearing   on   behalf   of   the   assessee   has
drawn   our   attention   to   Section   276B   of   the
Act, 1961. It is submitted that as per Section
276B   of   the   Act   “ if   a   person   fails   to   pay   to
the   credit   of   the   Central   Government   the
tax deducted  at source by him as required
by   or   under   the   provisions   of   Chapter
XVIIB,   he   shall   be   liable   to   be   prosecuted
and   shall   be   punishable   with   rigorous
imprisonment   for   a   term   which   shall   not
be   less   than   three   months   but   which   may
extend   to   seven   years   and   with   fine. ”   It   is
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submitted   that   therefore,   Section   276B   talks
about   “fails   to   pay,”   the   words   which   are
missing   in   Section   271C   of   the   Act.   It   is
submitted   that   therefore,   wherever,   the
Parliament   wanted   to   provide   for   the
consequences   on   non­payment   of   the   TDS,
the same is provided like Section 276B of the
Act.   It   is   submitted   that   therefore,   thus   the
words in Section 271C  and Section 276B  are
different and distinct. 
5.7 It   is   further   submitted   by   Shri   Arijit   Prasad,
learned   Senior   Advocate   appearing   on   behalf
of   the   assessee   that   even   otherwise,   the
impugned  judgment  and order  passed by  the
High   Court   has   been   subsequently   overruled
by the Full Bench of the Kerala High Court in
the   case   of   Lakshadweep   Development
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Corporation   Ltd.   Vs.   Additional
Commissioner   of   Income   Tax   (TDS)   and
Anr. (2019) 411 ITR 213 (FB) . 
5.8 It   is   further   submitted   by   learned   counsel
appearing   on   behalf   of   the   respective
assessees   in   respective   appeals   that   even
otherwise in exercise of powers under Section
273B,   no   penalty   shall   be   imposed   on   the
person   or   the   assessee,   for   any   failure,   if   he
proves that  there  was  a  reasonable  cause for
the   said   failure.   Reliance   is   placed   on   the
decision   of   this   Court   in   the   case   of   CIT   Vs.
Bank of Nova Scotia (2016) 15 SCC 81 . 
5.9 It   is   submitted   that   in   the   case   of   Civil
Appeals   Nos.   1258­60/2019,   the   ITAT   found
in   favour   of   the   assessee   that   there   was   a
reasonable   cause   for   the   assessee   for   the
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failure   to   remit   the   TDS   belatedly.   It   is
submitted  that  once  the  ITAT  found   the  case
falling under Section 273B, the same was not
required   to   be   interfered   with   by   the   High
Court   as   the   same   cannot   be   said   to   a
substantial question of law. 
5.10 Making the above submissions, it is prayed to
allow the present appeals and to hold that for
late remittance of the TDS, there shall not be
any   penalty   leviable   under   Section   271C   of
the Act, 1961. 
6. All   these   appeals   are   vehemently   opposed   by
Shri   Balbir   Singh,   learned   ASG   assisted   by
Ms.   Monica   Benjamin,   learned   counsel,
appearing on behalf of the Revenue.
6.1 Shri Balbir   Singh,  learned  ASG appearing  on
behalf   of   the   Revenue   has   vehemently
submitted   that   Section   271C   of   the   Act   has
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been   inserted   in   the   year   1987.   It   is
submitted   that   the   object   and   purpose   of
inserting   Section   271C   is   to   levy   the   penalty
for   failure   to   deduct   tax   at   source.   It   is
submitted   that   under   the   old   provision   of
Chapter   XXI   of   the   Income   Tax   Act,   no
penalty was provided for failure to deduct tax
at   source   though,   this   default,   however,
attracted prosecution under  the provisions of
Section   276B,   which   prescribed   punishment
for   failure   to   deduct   tax   at   source   or   after
deducting   failure   to   remit   the   same   to   the
Government   and   therefore,   Section   271C
came   to   be   inserted   to   provide   for   levy   of
penalty   for   failure   to   deduct   tax   at   source.   It
is   submitted   that   therefore,   in   a   case   where
though   the   assessee   has   deducted   the   tax
(TDS),   but   does   not   remit   the   same   to   the
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Government and/or belatedly remits the TDS
after  deducting, such  an  assessee is liable to
pay   the   penalty   under   Section   271C   of   the
Act.  
6.2 It   is   submitted   that   any   other   view   will
frustrate   the   object   and   purpose   of   insertion
of Section 271C  of the Act. Then, Shri Balbir
Singh,   learned   ASG   has   taken   us   to   the
CBDT   Circular   No.   551   dated   23.01.1998,
explaining   the   amendment   and   insertion   of
Section   271C.   It   is   submitted   that   the   object
and   purpose   of   insertion   of   Section   271C
seems   to   be   that   over   and   above   the
prosecution,   the   person   who   has   deducted
tax   at   source   but   not   remitted   the   same   to
the   Government   shall   also   be   liable   to   pay
penalty   and   that   is   why   Section   271C   has
been inserted. 
Page  16  of  31

6.3 Making the above submissions, it is prayed to
dismiss the present appeals. 
7. Heard learned counsel appearing on behalf of
the respective parties at length. 
7.1 The   short   question   which   is   posed   for   the
consideration   of   this   Court   is   in   case   of
belated remittance of the TDS after deducting
the TDS whether such an assessee is liable to
pay   penalty   under   Section   271C   of   the   Act,
1961? 
7.2 The   question   which   is   also   posed   for   the
consideration   of   this   Court   is   what   is   the
meaning   and   scope   of   the   words   “fails   to
deduct”   occurring   in   Section   271C(1)(a)   and
whether   an   assessee   who   caused   delay   in
remittance   of   TDS   deducted   by   him,   can   be
said a person who “fails to deduct TDS”?
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7.3 In   order   to   appreciate   the   rival   contentions
and   to   answer   the   aforesaid   questions,   it   is
necessary   to   have   analysis   of   Statutory
provisions. 
7.4 The relevant provisions are as under: ­ 
“Section 201(1A) of the Act
Without   prejudice   to   the   provisions   of
sub­section   (1),   if   any   such   person,
principal   officer   or   company   as   is
referred to in that sub­section does not
deduct the whole or any part of the tax
or   after   deducting   fails   to   pay   the   tax
as required by or under  this Act, he or
it shall be liable to pay simple interest,
—
( i )   at   one   per   cent   for   every   month   or
part of a month on the amount of such
tax   from   the   date   on   which   such   tax
was   deductible   to   the   date   on   which
such tax is deducted; and
( ii )   at   one   and   one­half   per   cent   for
every  month or part of a month on the
amount   of   such   tax   from   the   date   on
which   such   tax   was   deducted   to   the
date   on   which   such   tax   is   actually
paid,   and   such   interest   shall   be   paid
before   furnishing   the   statement   in
accordance   with   the   provisions   of   sub­
section (3) of Section 200:]
Section 271C of the Act
271­C. Penalty for failure to deduct tax
at source . (1) If any person fails to—
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(a) deduct   the  whole  or  any  part  of  the
tax   as   required   by   or   under   the
provisions of Chapter XVII­B; or
(b) pay the whole or any part of the tax
as required by or under,—
(i) sub­section (2) of Section 115­O; or
(ii) the second proviso to Section 194­B;
then,   such   person   shall   be   liable   to
pay, by  way of penalty, a sum equal to
the   amount   of   tax   which   such   person
failed to deduct or pay as aforesaid.]
(2)   Any   penalty   imposable   under   sub­
section   (1)   shall   be   imposed   by   the
Joint Commissioner.
Section 273B of the Act
273­B.   Penalty   not   to   be   imposed   in
certain   cases .—Notwithstanding
anything contained in the provisions of
clause   (b)   of   sub­section   (1)   of   Section
271,   Section   271­A   4203 [Section   271­
AA],   Section   271­B   4204 [Section   271­
BA],   4205 [Section   271­
BB,   4206 [Section   271­C,   Section   271­
CA],   Section   271­D,   Section   271­
E,   4207 [Section   271­F,]   4208 [Section
271­FA   4209 [,   4210 [Section   271­FAB,
Section 271­FB, Section 271­G, Section
271­GA,   4211 [Section   271­
GB,]]]   4212 [Section   271­
H,]   4213 [Section   271­I,]   4214 [Section
271­J,]   clause   (c)   or   clause   (d)   of   sub­
section (1) or sub­section (2) of Section
272­A,   sub­section   (1)   of   Section   272­
AA]   or   4215 [Section   272­B
or]   4216 [sub­section   (1)   or   sub­section
(1­A) of Section 272­BB] or sub­section
(1) of Section 272­BBB or] clause (b) of
sub­section   (1)   or   clause   (b)   or   clause
(c) of sub­section (2) of Section 273, no
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penalty   shall   be   imposable   on   the
person   or   the   assessee,   as   the   case
may   be,   for   any   failure   referred   to   in
the   said   provisions   if   he   proves   that
there was reasonable cause for the said
failure.
Section 276B of the Act
276­B.   Failure   to   pay   tax   to   the   credit
of   Central   Government   under   Chapter
XII­D   or   XVII­B .—If   a   person   fails   to
pay   to   the   credit   of   the   Central
Government,—
(a)   the   tax   deducted   at   source   by   him
as   required   by   or   under   the   provisions
of Chapter XVII­B; or
(b) the tax payable by him, as required
by or under,—
(i) sub­section (2) of Section 115­O; or
(ii) the second proviso to Section 194­B,
he   shall   be   punishable   with   rigorous
imprisonment   for   a   term   which   shall
not   be   less   than   three   months   but
which   may   extend   to   seven   years   and
with fine.”
7.5 At   the   outset,   it   is   required   to   be   noted   that
all these cases are with respect to the belated
remittance   of   the   TDS   though   deducted   by
the assessee and therefore, Section 271C(1)(a)
shall be applicable. At the cost of repetition, it
is   observed   that   it   is   a   case   of   belated
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remittance   of   the   TDS   though   deducted   by
the assessee and not a case of non­deduction
of TDS at all. 
7.6 As   per   Section   271C(1)(a),   if   any   person   fails
to deduct the whole or any part of the tax as
required   by   or   under   the   provisions   of
Chapter   XVIIB   then   such   a   person   shall   be
liable to pay by way of penalty a sum equal to
the amount of tax which such person failed to
deduct or pay as aforesaid. So far as failure to
pay   the   whole   or   any   part   of   the   tax   is
concerned, the same would be with respect to
Section 271C(1)(b) which is not the case here.
Therefore,   Section   271C(1)(a)   shall   be
applicable   in   case   of   a   failure   on   the   part   of
the   concerned   person/assessee   to   “deduct”
the whole of any part of the tax as required by
Page  21  of  31

or under the provisions of Chapter XVIIB. The
words   used   in   Section   271C(1)(a)   are   very
clear and the relevant words used are “fails to
deduct.”   It   does   not   speak   about   belated
remittance of the TDS. As per settled position
of law, the penal provisions are required to be
construed   strictly   and   literally.   As   per   the
cardinal   principle   of   interpretation   of   statute
and   more   particularly,   the   penal   provision,
the   penal   provisions   are   required   to   be   read
as they are. 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.
Section   271C   of   the   Income   Tax   Act   is   quite
categoric.   Its   scope   and   extent   of   application
Page  22  of  31

is   discernible   from   the   provision   itself,   in
unambiguous   terms.   When   the   non­
deduction of the whole or any part of the tax,
as   required   by   or   under   the   various
instances/provisions  of   Chapter   XVIIB   would
invite penalty under Clause 271C(1)(a); only a
limited   text,   involving   sub­section   (2)   of
Section   115O   or   covered   by   the   second
proviso   to   Section   194B   alone   would
constitute   an   instance   where   penalty   can   be
imposed in terms of Section 271C(1)(b) of the
Act, namely, on non­payment. It is not for the
Court   to   read   something   more   into   it,
contrary to the intent and legislative wisdom. 
7.7 At   this   stage,   it   is   required   to   be   noted   that
wherever   the   Parliament   wanted   to   have   the
consequences of non­payment and/or belated
remittance/payment   of   the   TDS,   the
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Parliament/Legislature   has   provided   the
same   like   in   Section   201(1A)   and   Section
276B of the Act. 
7.8 Section   201(1A)   provides   that   in   case   a   tax
has been deducted at source but the same is
subsequently   remitted   may   be   belatedly   or
after   some   days,   such   a   person   is   liable   to
pay   the   interest   as   provided   under   Section
201(1A) of the Act. The levy of interest under
Section   201(1A)   thus   can   be   said   to   be
compensatory   in   nature   on   belated
remittance   of   the   TDS   after   deducting   the
same.   Therefore,   consequences   of   non­
payment/belated   remittance/payment   of   the
TDS   are   specifically   provided   under   Section
201(1A).
7.9 Similarly,   Section   276B   talks   about   the
prosecution   on   failure   to   pay   the   TDS   after
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deducting   the   same.   At   this   stage,   it   is
required   to   be   noted   that   Section   271C   has
been amended subsequently in the year 1997
providing  Sections  271C(1)(a) and  271C(1)(b).
As   observed   hereinabove,   fails   to   pay   the
whole   or   any   part  of  the   tax   would   be   falling
under   Section   271C(1)(b)   and   the   word   used
between   271C(1)(a)   and   271C(1)(b)   is   “or”.   At
this   stage,   it   is   required   to   be   noted   that
Section 276B provides for prosecution in case
of  failure to “pay” tax to  the credit of Central
Government.   The   word   “pay”   is   missing   in
Section 271C(1)(a). 
8. Now   so   far   as   the   reliance   placed   upon   the
CBDT’s Circular No. 551 dated 23.01.1998 by
learned ASG is concerned, at the outset, it is
required to be noted that the said circular as
such   favours   the   assessee.   Circular   No.   551
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deals   with   the   circumstances   under   which
Section   271C   was   introduced   in   the   Statute,
for   levy   of   penalty.   Paragraph   16.5   of   the
above Circular reads as follows:  
“16.5:   Insertion   of   a   new   section
271C   to   provide   for   levy   of   penalty
for   failure   to   deduct   tax   at   source­
under   the   old   provisions   of   Chapter
XXI   of   the   Income   Tax   Act   no
penalty   was   provided   for   failure   to
deduct   tax   at   source.   This   default,
however,   attracted   prosecution
under   the   provisions   of   Section
276B, which prescribed punishment
for failure to deduct tax at source or
after   deducting   failure   to   pay   the
same   to   the   Government.   It   was
decided   that   the   first   part   of   the
default,   i.e.,   failure   to   deduct  tax   at
source should be made liable to levy
of   penalty,   while   the   second   part   of
the   default,   i.e.,   failure   to   pay   the
tax   deducted   at   source   to   the
Government which is a more serious
offence,   should   continue   to   attract
prosecution.   The   Amending   Act,
1987 has accordingly inserted a new
Section   271C   to   provide   for
imposition  of penalty on any person
who fails to deduct tax at source as
required   under   the   provisions   of
Chapter   XVIIB   of   the   Act.   The
penalty   is   of   a   sum   equal   to   the
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amount   of   tax   which   should   have
been deducted at source.
On fair reading of said CBDT’s circular, it
talks   about   the   levy   of   penalty   on   failure   to
deduct tax at source. It also takes note of the
fact that if there is any delay in remitting the
tax,   it   will   attract   payment   of   interest   under
Section 201(1A) of the Act and because of the
gravity of the mischief involved, it may involve
prosecution   proceedings   as   well,   under
Section   276B   of   the   Act.   If   there   is   any
omission   to   deduct   the   tax   at   source,   it   may
lead   to   loss   of   Revenue   and   hence   remedial
measures   have   been   provided   by
incorporating the provision to ensure that tax
liability to the said extent would stand shifted
to   the   shoulders   of   the   party   who   failed   to
effect   deduction,   in   the   form   of   penalty.   On
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deduction of tax, if there is delay in remitting
the amount to Revenue, it has to be satisfied
with   interest   as   payable   under
Section   201(1A)   of   the   Act,   besides   the
liability to face the prosecution proceedings, if
launched   in   appropriate   cases,   in   terms   of
Section 276B of the Act. 
Even the CBDT has taken note of the fact
that   no   penalty   is   envisaged   under   Section
271C   of   the   Income   Tax   Act   for   non­
deduction   TDS   and   no   penalty   is   envisaged
under   Section   271C   for   belated
remittance/payment/deposit of the TDS. 
8.1 Even   otherwise,   the   words   “fails   to   deduct”
occurring   in   Section   271C(1)(a)   cannot   be
read   into   “failure   to   deposit/pay   the   tax
deducted.”
Page  28  of  31

8.2 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.
9. In view of the above in all these cases as the
respective assessees remitted the TDS though
belatedly   and   it   is   not   case   of   non­deduction
of the TDS at all they are no liable to pay the
penalty   under   Section   271C   of   the   Income
Tax   Act.   Therefore,   any   question   on
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applicability of Section 273B of the Act is not
required to be considered any further. 
10. In   view   of   the   above   and   for   the   reasons
stated   above,   all   these   appeals   succeed.
Impugned judgment(s) and order(s) passed by
the   High   Court   are   hereby   quashed   and   set
aside   and   the   question   of   law   on
interpretation   of   Section   271C   of   the   Income
Tax   Act   is   answered   in   favour   of   the
assessee(s) and against the Revenue and it is
specifically   observed   and   held   that   on   mere
belated remitting the TDS after deducting the
same   by   the   concerned   person/assessee,   no
penalty   shall   be   leviable   under   Section   271C
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of   the   Income   Tax   Act.   Present   appeals   are
accordingly allowed. No costs.  
………………………………….J.
[M.R. SHAH]
………………………………….J.
[C.T. RAVIKUMAR]
NEW DELHI;
APRIL 10, 2023
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